Your password will need to be updated. Use the “forgot password” feature to create a new password.

Join discussions on moving to and living in the USVI, ask questions, share info & tips!
(Vacationing? Visit Travel Message Board)

New STJ villa tax  

Page 1 / 5 Next
  RSS
Docasch
(@Docasch)
Eminent Member

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.

ReplyQuote
Posted : June 29, 2017 6:07 pm
Docasch
(@Docasch)
Eminent Member

Sorry for the misspellings. Siri is very unforgiving

ReplyQuote
Posted : June 29, 2017 6:16 pm
fdr
 fdr
(@fdr)
Noble Member

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.

ReplyQuote
Posted : June 29, 2017 8:55 pm
ms411
(@ms411)
Islander

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

ReplyQuote
Posted : June 29, 2017 9:07 pm
East Ender
(@East_Ender)
Islander

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. :-X

ReplyQuote
Posted : June 29, 2017 9:24 pm
Exit Zero
(@exit-zero)
Noble Member

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.

ReplyQuote
Posted : June 29, 2017 11:16 pm
Docasch
(@Docasch)
Eminent Member

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.

ReplyQuote
Posted : June 29, 2017 11:38 pm
Exit Zero
(@exit-zero)
Noble Member

, 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.

ReplyQuote
Posted : June 30, 2017 2:47 am
Docasch
(@Docasch)
Eminent Member

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.

ReplyQuote
Posted : June 30, 2017 8:47 am
fdr
 fdr
(@fdr)
Noble Member

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.

ReplyQuote
Posted : June 30, 2017 10:26 am
Donnasculpts
(@Donnasculpts)
Eminent Member

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.

ReplyQuote
Posted : June 30, 2017 10:37 am
vicanuck
(@vicanuck)
Noble Member

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?

ReplyQuote
Posted : June 30, 2017 11:32 am
Exit Zero
(@exit-zero)
Noble Member

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.

ReplyQuote
Posted : June 30, 2017 4:23 pm
Alana33
(@Alana33)
Islander

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.

ReplyQuote
Posted : June 30, 2017 11:30 pm
STTsailor
(@STTsailor)
Island Expert

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

ReplyQuote
Posted : July 1, 2017 4:02 am
Page 1 / 5 Next
Close Menu
  
Working

Please Login or Register