Virgin Islands Stamp Tax - What to Expect at USVI Recorder of Deeds

You are about to buy or sell property in the United States Virgin Islands, what can you expect to pay in order to have the deed properly recorded?

 Expenses between buyer and seller

 Generally, when buying or selling property in the U. S. Virgin Islands, the Contract of Sale for the property sets out the expenses of each party to be accounted for at closing. A specific category of expenses are attributed to recording fees. These recording fees are what the Office of the Recorder of Deeds will require in order to properly record a deed in the U.S. Virgin Islands.  Examples of these fees include stamp taxes, recording of deed fee, release of lien, and release of mortgage fees. The recording of deed fee is almost always the responsibility of the buyer, while releases of liens and mortgages are almost always the responsibility of the seller. The fee that is most often bargained for is the stamp tax fee, sometimes this fee is allocated to the buyer, sometimes the fee is allocated to the seller, or the fee may be split between the two parties. No matter what the contract calls for, in order to record the deed you must produce the stamp tax fee at the Office of the Recorder of Deeds.

 Why is this important?

 Stamp taxes are based on the value of the property[1] and often times buyers and sellers believe that the value of the property is the contract price or the price that will be indicated on the deed. This is generally the case, but in a conveyance of real property where the stated value in the deed may be inadequate the assessed value for property taxes may be utilized to fix the amount of stamp tax due.[2] The assessed value of property in the U.S. Virgin Islands is determined by the Government of the U.S. Virgin Islands through the Tax Assessor’s Office. Currently, the Government of the U.S. Virgin Islands takes the position that any property value for recording purposes must be at least as great as the assessed value of the property for property tax purposes, otherwise the greater of the two values must be used to calculate the recording fees. So, for example, if you purchased a home for $300,000 this amount would be indicated on the contract and deed, but if the Tax Assessor’s Office has assessed the property tax value of this same property at $400,000 then you would calculate all recording fees and stamp taxes at the $400,000 property value amount.

 The following is a break down of stamp taxes in the U.S. Virgin Islands:

  • 2 percent for properties valued up to $350,000
  • 2 ½ percent for properties valued from $350,001 to 1 million
  • 3 percent for properties valued from $1,000,001 to $5 million
  • 3 ½ percent for properties valued over $5,000,001[3]

 Using the example above, the stamp tax calculated by the sales price would have been $6,000.   However, because the position of the Government of the U.S. Virgin Islands is that the property must be valued at the assessed value amount for recording purposes, the value of the property is $400,000, and therefore, stamp tax would be $10,000. As you can see, being aware of who is responsible for paying the stamp taxes, as well as what value the property will be valued at for recording purposes, is critical in any real estate closing in the U.S. Virgin Islands. Consulting an attorney who is competent in property law is always recommended before entering into a contract of sale for purchase of property within the U.S. Virgin Islands.

 

 

[1] 33 VIC §121

[2] 3 V.I. Op. Att’y Gen. 68. 2.

[3] (33 VIC § 121)

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