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New STJ villa tax

Docasch
June 29, 2017 03:07PM

Registered: 1 year ago
Posts: 23

Please help me understand why there's a proposed fourfold suggested increase on renting Villas in St. John. We nearly purchased a vacation home and we're still in the market, but this is discouraging .
1. Who does the increase in tax base benefit? I read in the Wall Street Journal that it's going primarily to pensions. Is that true or are there serious infrastructure issues?
2. Would double the efforts to collect back taxes on Rental's answer the same question?
3. Who will be the most affected by this tax increase? So far this year there's been an increase in sin taxed on alcohol, an increase in timeshare taxes and now a proposed increase of taxes on anyone not living in the vacation villa 180 days a year or more. Isn't this trend going to push St. John towards being a large resort all inclusive experience? That may not be the goal, but it could be the result. I think these changes will lead to more villa sales at lower prices. The profit margins on a vacation home are very narrow. Once it's obvious that many of the homes won't. Many won't be able to sell, but the island will still need a larger tax base could invite in larger resorts and all-inclusive's. That's not the island that I know and love.



Edited 1 time(s). Last edit at 06/29/2017 03:14PM by Docasch.

Re: New STJ villa tax

Docasch
June 29, 2017 03:16PM

Registered: 1 year ago
Posts: 23

Sorry for the misspellings. Siri is very unforgiving

Re: New STJ villa tax

fdr
June 29, 2017 05:55PM

Registered: 9 years ago
Posts: 1,127

1. Who - the governor, trying to bail a sinking ship. Allegedly all of us who need services our broke government provides, but I'm not holding my breath for it to trickle down past the corruption.

True - yes, and yes.

2. Unlikely most of that money could ever be collected. I don't believe the threat of property auctions will ever be carried out in a serious way around here, for many reasons.

3. People who don't live on he island and this do not vote for our representatives in the local government.

There is too much money being made for this business to go away anytime soon, even with more taxes.

Re: New STJ villa tax

ms411
June 29, 2017 06:07PM

Registered: 7 years ago
Posts: 3,296

To make it clear the villa tax, if enacted, will be assessed on all USVI villas - not just the ones on St John.

Re: New STJ villa tax

East Ender
June 29, 2017 06:24PM

Registered: 12 years ago
Posts: 4,846

There is no place to build all-inclusive hotels on either island, nor is there a will to do so. There was an attempt to turn the Renaissance Grand into AI many years ago. The Mexican management could not get the local workers behind the concept. It failed miserably.

I do have reservations about the large number of rental homes in the VI. The owners have little interest and contact with the territory. You don't have real neighborhoods, you have transient groups of visitors. But that is just my feeling from having a rental villa behind me with a darn rooster who ruins my sleep. It's not like I can walk up the them and ask them to try to get rid of the clutch of chickens in their trees. mad

Re: New STJ villa tax
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Exit Zero
June 29, 2017 08:16PM

Registered: 9 years ago
Posts: 2,209

Many, if not most, of the "villa' owners live off island - the rental money collected goes off island to pay the mortgages - they do not pay their 'Federal Income Tax' to our Govt. but to the IRS - so - many of the most expensive properties in the USVI just contribute to the local coffers, the hotel tax[hopefully] and property tax and also to the local economy what the renters spend on island.
Local homeowners pay their Income Tax to the VI IRB and it is a large portion of the local Govt. revenue -- seeing as all the high income taxpayers who own the Villas cannot legally pay their income tax here to the VI IRB - [ less than 180 days tax domicile] - has made their property tax a target for the Govt. here that is looking for creative ways to raise taxes anywhere that doesn't affect the local electorate. The "Sin Tax" has hit locals hard and was unpopular even before it was enacted and more so now that prices and the cost of living here have both escalated noticeably as a result.
The local economists see the most valuable properties as being undertaxed, owned by high income off island owners and rented by people who can probably afford the increase in the already serious money weekly rates, that money rarely reaches the island - and reason that they won't stop coming and renting.
Much of the AIR B+B competition is owned by local homeowners who have extra apts., room, or cottages at their personal house. That company recently reached an agreement with the local Govt. to collect the VI Hotel Tax on their site removing the intricacies of the Govt. collection process from many individuals doing short term rentals and will increase local tax income. It also alerts the VI IRB to local homeowners that may be not reporting the rental income from AIR B+B.

If one segment of the VI property owners own the most expensive properties, don't vote here or pay their income tax here, build houses that dwarf the local homes, stress the infrastructure, cause local adjacent property values to rise dramatically, often making their property tax rise to levels they cannot afford, so high that pieces of land that generations of Virgin Islanders have lived on in modest homes are forced to sell. -- then that segment of expensive villa properties becomes a lucrative target as a taxable population.
The proliferation of these unsustainable Villas [ most of which didn't exist before you could BUY fresh water] owned by seldom seen individuals or anonymous LLC's have certainly pushed many buttons that emphasize the economic chasm between them and local Virgin Islanders and I believe that is why that class of properties has drawn the attention of the Govt tax researchers.

Re: New STJ villa tax

Docasch
June 29, 2017 08:38PM

Registered: 1 year ago
Posts: 23

fdr
I appreciate your feedback. I want to respond to one comment.
"There is too much money being made for this business to go away anytime soon, even with more taxes."
We were very close to purchasing a vacation home on STJ in Coral Bay. I spent a great deal of time crunching budget numbers on several midrange properties and we discovered that the profit from renting generally covered expenses, but not the mortgage. We rationalized that paying for the mortgage was justified, because it represents the equity of the home you may recoop one day if we sold the home.
More taxes would likely price a family like us out of the market. I realize that we do not represent the exact financial situation of all potential buyers, but I imaging we are typical of many duel income, professional couples who look to make there dream of STJ ownership a reality by purchasing a midrange property.
There may "too much money being made", but I imaging many couples like us won't be willing to chip in this much more annually for the taxable privilege of having a rental villa. I realize the math changes for owners lucky enough to make more frequent or longer visits, because you're paying more for the time and resources you that you personally get to use. I suspect a tax increase will be cost prohibitive to midrange sales.
Higher end properties can justify charging higher rental prices for the amenities.
I agree with you that there is plenty of money to be made, but if midrange rentals increasingly struggle to make a profit, down the road the demand may draw renewed interest by the USVI in resorts and larger Grande Bay style condo complexes because they expand the tax base. I don't know the exact politics or geography, but if the WSJ is correct about the chance of bankrupcy, there may be a renewed motivation to create a larger tax base with resorts on any properties that become available or are cleared for development.

Re: New STJ villa tax
avatar

Exit Zero
June 29, 2017 11:47PM

Registered: 9 years ago
Posts: 2,209

Quote
Docasch

, down the road the demand may draw renewed interest by the USVI in resorts and larger Grande Bay style condo complexes because they expand the tax base..

I suspect that condos with the combined mortgage and monthly condo fees, [ and occupied less than 180 days a year] will also be subject to the 'villa' property tax increase since they are real property and that those 3 expenses would actually discourage new condo development and make new buyers think more than twice about a condo as a short term rental unit - and current rental owners more likely to sell --- increasing inventory, lowering the purchase cost of existing current rentals, encourage residents to buy a condo to live in full time, expand the local income tax base and limit the investment potential of new construction.



Edited 1 time(s). Last edit at 06/29/2017 11:53PM by Exit Zero.

Re: New STJ villa tax

Docasch
June 30, 2017 05:47AM

Registered: 1 year ago
Posts: 23

I suspect the asking prices will drop as well. But, if more condos and midrange villas reduced their prices, is there a good interest in people wanting to live on STJ full time? I was under the impression that the full time population of STJ is somewhat low right now.
Would 500-600k housing/condos draw a larger crowd of full time residents? Also, when we were shopping for our island home ,there was a significant number of houses that had been on the market an entire year or more with very little reduction in the price. Our real estate agent explained that many current owners are reluctant to reduce the perceived value of their dream home.

Re: New STJ villa tax

fdr
June 30, 2017 07:26AM

Registered: 9 years ago
Posts: 1,127

Quote
Docasch
More taxes would likely price a family like us out of the market. I realize that we do not represent the exact financial situation of all potential buyers, but I imaging we are typical of many duel income, professional couples who look to make there dream of STJ ownership a reality by purchasing a midrange property.

Possibly. And there will always be someone with more money than you have who will find it worthwhile. We have limited supply and too much demand.

Re: New STJ villa tax

Donnasculpts
June 30, 2017 07:37AM

Registered: 3 years ago
Posts: 39

Good news... apparently in response to massive outcry, social media, and phone calls/letters to both senators and Ms. Nicholson-Doty, the Bill has been pulled.

Re: New STJ villa tax

vicanuck
June 30, 2017 08:32AM

Registered: 7 years ago
Posts: 2,070

Quote
Exit Zero
It also alerts the VI IRB to local homeowners that may be not reporting the rental income from AIR B+B.

AirBNB does NOT provide any identifying information to the IRB on individuals who offer short term rentals in the territory nor anywhere else they do business.

It would be suicide for them to sell out their partners (the homeowners) and incredibly detrimental to their business.

Who told you that?



Edited 1 time(s). Last edit at 06/30/2017 08:35AM by vicanuck.

Re: New STJ villa tax
avatar

Exit Zero
June 30, 2017 01:23PM

Registered: 9 years ago
Posts: 2,209

Quote
vicanuck
Quote
Exit Zero
It also alerts the VI IRB to local homeowners that may be not reporting the rental income from AIR B+B.

AirBNB does NOT provide any identifying information to the IRB on individuals who offer short term rentals in the territory nor anywhere else they do business.

It would be suicide for them to sell out their partners (the homeowners) and incredibly detrimental to their business.

Who told you that?

When I said 'IT' also alerts' I really meant that as the hotel tax receipts start to come in from AAirBNB the IRB may realize how much income the rentals are generating --- NOT that AirBNB is identifying them - my statement was too vague in that respect and I made a mistake in wording it that way.

Re: New STJ villa tax

Alana33
June 30, 2017 08:30PM

Registered: 5 years ago
Posts: 11,580

I just received an email from STBOR (STT Board of Realtors.
I am sharing the information contained within.

PROPOSED NEW PROPERTY TAX CLASSIFICATION
A newly elected senator, Marvin Blyden, is proposing the creation of a property tax classification known as Villa Real Property.

The classification includes residential property that is rented, leased or otherwise hired out for a period of time that does not exceed 180 days. In other words – short term rentals. The proposed tax rate on “villa real property” is .014170 - quadruple the current residential property tax rate, and double the commercial rate (paid by hotels).

Keep in mind, rentals are already subject to Gross Receipts tax. VITAR estimates, based on MLS statistics, that approximately 50% of properties in the territory would be effected by this new tax and not just the “Peterborg” villas. Plenty of working class folks who rent their apartments short term would be crushed by this.


This new tax creates a chilling effect for buyers, a sell-off mentality for owners, and it ripples throughout the economy’s service industries.

VITAR is planning to enter testimony into the record at the July 7th hearing on this proposal on STX.



Edited 1 time(s). Last edit at 06/30/2017 08:33PM by Alana33.

Re: New STJ villa tax

STTsailor
July 01, 2017 01:02AM

Registered: 1 year ago
Posts: 451

Quote
Donnasculpts
Good news... apparently in response to massive outcry, social media, and phone calls/letters to both senators and Ms. Nicholson-Doty, the Bill has been pulled.

Can someone post reference for "good news"
Thanks

Re: New STJ villa tax

Alana33
July 01, 2017 01:33AM

Registered: 5 years ago
Posts: 11,580

The proposed creation of a property tax classification known as Villa Real Property, which was scheduled to present before the V.I Legislature on July 7th, has been pulled from the agenda.

Instead, Senator Marvin Blyden, the sponsor of this bill, has stated his intentions for scheduling a town meeting to introduce his idea to the public.

Needless to say, we encourage everyone to keep their eyes peeled for updates, which we will do our best to provide, so we can show force at this town meeting and register our opposition to a bill that will quadruple residential property taxes for

Re: New STJ villa tax

Gumbo
July 01, 2017 08:58AM

Registered: 3 years ago
Posts: 458

This would be the biggest mistake (if enacted) by the bloated missmanaged government yet. If they think medicade cuts are gonna hurt. Wait till the wealthy people find another paridise. (And they will)
Of course Mr. Blyden will find some support in a town hall structure. There is plenty of support for wealth redistribution. The people that service these rentals will suffer greatly. Along with the entire island economy. The BVI must love this stuff.

Re: New STJ villa tax

Alana33
July 01, 2017 02:12PM

Registered: 5 years ago
Posts: 11,580

If it passes, property taxes for short term vacation rental properties quadruple according to STBOR.

My sister who owns and manages modest vacation rentals in STJ said that she'd really have no choice but to convert to long term rentals if that happens.

Personally, I think the town hall meetings are a sham and they'll do exactly what they did with the sin tax bill which had huge opposition and pass it but
that doesn't mean we should be complacent and not voice opposition.

I'll post any information that I receive regarding the town hall meetings.
If anyone else hears of anything, please post and keep us informed. Thx.

The VI Government is broke, they're going to continue to tax us while spending money on frivolous crap and passing bills that can't be funded instead of buckling down and putting a real budget in place.

Re: New STJ villa tax

Donnasculpts
July 01, 2017 04:10PM

Registered: 3 years ago
Posts: 39

Per Blyden's FB page, The Townhall to discuss the issue is scheduled for July 19 at 6 PM on St. John. Here is the transcript:
From Senator Blyden's Facebook page.....

Good Day. Because of the overwhelming attention I have received regarding my proposed Bill No. 32-0073, I have removed it from the Agenda and so it will not be heard at the Finance Committee hearing next Friday. However, I have decided to hold a town hall meeting to hear your concerns.

The intent of the Bill is to give those that build Villa properties with the sole purpose of using them for business (with no intention of using them as a their personal residence) to have their own identity. It will not affect those that rent their properties long term, or use them in the AirBnB like programs who live in their properties but rent them occasionally. The Bill's intention is to protect the local property owners from being unfairly taxed out of the market, and from losing their homes.

The town hall will be held on Wednesday, July 19th beginning at 6pm at the Legislature on St. John, and will be televised on the Legislature channel (Channel 5) at the same time.

I encourage you to attend the town hall so you can voice your concerns, to which I am open to hearing.

Thank you for reaching out to me via email and phone, and I look forward to seeing you and hearing your concerns at the town hall on July 19th.

Enjoy your long weekend.

Re: New STJ villa tax

Alana33
July 01, 2017 04:57PM

Registered: 5 years ago
Posts: 11,580

Thank for posting.

Re: New STJ villa tax

Alana33
July 01, 2017 06:21PM

Registered: 5 years ago
Posts: 11,580

Senator Blyden's email address:
senatorblyden@gmail.com

Here is a Letter I just emailed him and copied to VI Daily News:

Dear Senator Blyden,

This is in response to your proposed bill to quadruple property taxes for vacation rentals in the VI.

I am a 12th generation Virgin Islander and a licensed VI Realtor.

My questions and comments to you on this proposed legislation are as follows:

Questions:
How do you differentiate between vacation rental owners who live on island, pay taxes here, pay their business licenses, room tax, gross receipts taxes, homeowners and liability insurance from off island owner who's sole purpose is using them for business?

There's a lot of grey areas here.
Additionally, while those owners use them as businesses, there are many residents that also have vacation rentals solely as businesses and derive there income solely from their short term rentals whose season is quite short, usually mid Dec - end of April with summer/fall months basically inactive.

These rentals whether locally owned or not, still bring much needed revenue to the VI.

Their guests use local help to clean and maintain their properties, pay taxis, ferries, grocery stores, go to beaches, bars, restaurants, nightlife, shopping, go sailing, diving, snorkeling, pay admittance into the National Parks, take tours, these businesses pay taxes and fees, pay WAPA, buy water, require landscaping, plants, handyman services, buy and register cars here, buy gas, rent cars, support local businesses when buying new appliances, big and small, indoor or outdoor furniture, pay for phone, internet, cable TV, etc.
The list is endless.

Then there are those who dream of living here, warts and all, who are willing to buy a modest condo and rent to offset the expense while paying mortgage, HOA fees,homeowners and liability insurance and all of the above until they can fulfill their dream of moving here full-time that will be scared off from their dreams due to having their property taxes go up in addition to the already high costs associated with living in the USVI.
It makes it unaffordable.

Costs associated with vacation rentals is already extremely high. Some break even, some make a little profit, some don't, for some it's a write off.

When taxes are raised, because our VI Government cannot seem to budget itself and continues to waste, misuse, misspend, mismanage and in some cases, outright steal our money and resources, it is not up to the taxpayer to constantly be forced to be the source of revenue for the government's recklessness, dereliction of duty and fiscal irresponsibility.

What will happen is vacation rental owners, especially our local residents who depend on this meager income, will either attempt to sell their properties, convert to long term rentals, prices will go up on those that remain and our guests will look to the BVI and neighboring Caribbean Islands for a better value for their money.

Go ahead, kill another goose that lays a golden egg.
I am opposed to your proposed legislation.
Thank you for your consideration in this matter.

Sincerely,

Re: New STJ villa tax

Donnasculpts
July 01, 2017 08:26PM

Registered: 3 years ago
Posts: 39

Well said! Thank you.

Re: New STJ villa tax

Gumbo
July 01, 2017 09:16PM

Registered: 3 years ago
Posts: 458

Nice Job Alana! Thank You!

Re: New STJ villa tax

Alana33
July 01, 2017 10:08PM

Registered: 5 years ago
Posts: 11,580

Thanks but y'all need to speak up as well.
I've copied information and letter to various family members friends, villa owners, STBOR, VITAR, VI Source, posted on Facebook.
The more awareness and opposition, the better.
Don't be shy.
This legislation impacts everyone.

Speak out, call your senators, email them, attend town hall meetings.
They are supposed to work for you, not the other way around.
Stand up or bend over.
The choice is yours.

Please share information as you see fit.

Re: New STJ villa tax

Docasch
July 01, 2017 10:22PM

Registered: 1 year ago
Posts: 23

"The intent of the Bill is to give those that build Villa properties with the sole purpose of using them for business (with no intention of using them as a their personal residence) to have their own identity."

Any their identity is....squeezed off the island. I feel bad for the villa owners who will punished by this bill for investing their life savings in the USVI. I'm sure many timeshare owners and now villa owners will struggle financially when they cannot sell their homes bc the investment can no longer pay the expenses. There are already many homes on the market that are not selling.
Are there many people looking to relocate who will be able to afford these homes when weekly rentals are no longer viable for the owners? Is there a brisk market for longterm rentals?

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