BVI Current Trends
In the midst of a challenging market, real estate in the Bvi is still regarded as a solid investment. The appeal of owning property in the Bvi is enhanced by prevailing lower home prices. The islands are already quite attractive because of the variety of properties available, the pristine and calm waters, the proximity to the us virgin islands and Puerto Rico resulting in easy travel connections, and to the eastern Caribbean with its sister sailing destinations of Antigua, Barbuda and st lucia.
it’s always a good idea to have a basic estate plan. stamp duty
on transfers, even under a will, can be significant, for these duties
are calculated as a percentage of the value of the property. Real property can be held by a company, corporation, llC or in a trust, which facilitates the distribution of the property to your heirs without the cost, delay and publicity of probate, and can reduce duties and taxes payable. Holding property in a joint tenancy, where the property automatically passes to the surviving owner or owners on death, is
also an option. However, real property in the Bvi cannot be held by a partnership in any form, even an llP or lllP.
The major tax applicable to real estate is stamp duty on transfer, which is 4% for Bvi citizens and belongers, and 12% for foreigners. Property taxes are assessed annually, determined by the size and use of the property.
There are several exemptions for foreign owners. stamp duty:
1. does not apply to transfers from to the legal spouse, children or grandchildren of the landowner, exclusively, to a trustee of a trust which has any of those persons as its only beneficiaries, or from the trustee of such a trust to another trustee or to any of those beneficiaries. The exemption also applies when property in the name of a company is transferred to any such relations of the beneficial owner of the company, or the trusts above described.
2. on leases is at a reduced rate of 1.5%.
3. exemptions may be granted by the governor, where a company transfers property to another company which has the same beneficial ownership.
Property owned by more than one person must be owned either as a joint tenancy or as a tenancy in common. in a joint tenancy there is a right of survivorship as explained above. in a tenancy in common, each owner has a share, and the deceased’s share passes into his estate. A joint tenancy is presumed unless there is a specific indication on the title that the property is owned in shares.
Security of Title
All land is registered in a central land Registry, which reflects the details and history of ownership, and other interests in the land such as mortgages (called charges) leases, and easements. evidence of title is the land register for each property. Title is government guaranteed, with a fund to compensate for any loss caused by fraud or manifest error. Title insurance is therefore not used. An instrument of transfer in the standard form must be registered to effect ownership changes.
Procedure for Purchasing
Usually a non-binding letter of intent is executed and a deposit made. The parties then negotiate an Agreement for sale, which allows time for due diligence on the property, and, if required, licensing. Financing is readily available from the national Bank or any of the branches of five leading international banks.
A landholding license is required for all persons who are not Bvi citizens or belongers. The prospective purchaser must provide evidence of identity, means, and character along with an appraisal and the Agreement for sale, and certain other property details. if you intend to rent the property while it is not in use, this will have to be specifically stated in the license, and a trade license for property rental obtained. The landholding licence is personal to the holder, and applies only to the specific property mentioned within it. A separate license is needed for each property.
USVI Current Trends
Like many real estate markets, the usvi has undergone a significant downturn in recent years, both in terms of sales volume and prices. For potential investors or people interested in moving to the usvi or owning a vacation home here, this means there are many opportunities in the current market. villas, homes, condominiums and land are all available at prices comparable to those prevailing a decade or more ago. Although prices are down, the USVI remains an appealing destination for would-be property owners. it is the only predominantly english speaking, us flag destination in the Caribbean. The three major islands offer a contrast in styles: st Croix, the largest island, is known for its historical attractions and laid back lifestyle; st. Thomas bustles with shopping, nightlife, resorts and beautiful beaches; st John offers unparalleled natural beauty on an island that consists of two-thirds national park land.
Procedure for Purchasing
Usually a binding contract of sale is entered into and an initial $1,000 deposit made. The buyer then frequently has a 10-14 day inspection period during which time the contract can be canceled and the deposit returned if the buyer determines that the property’s condition is not satisfactory. if the buyer does not cancel, he will then typically be required to post an additional deposit equal to 10% of the purchase price which is at risk if he fails to close. many contracts will also be contingent on financing which is readily available locally from multiple sources. Closings involving bank financing are currently taking between 45 and 90 days to close; “cash” closings can happen more quickly.
All contract terms are negotiable and purchasers often retain legal counsel to advise them prior to signing a contract.
The usvi imposes a stamp tax on the transfer of an interest in real property by deed at rates varying from 2% for properties up to $350,000 to 3.5% for properties over $5,000,000. exemptions are available for certain intra-family transfers and for certain transfers between parent and subsidiary corporations. The seller typically bears the cost of the stamp taxes, but this, too, can be negotiated.
Property taxes are assessed annually. The property tax system in the usvi has been in a state of flux for years, and the government is in the process of getting caught up on assessments. once caught up, however, the rates on residential properties and condos will be .377% and on land will be .4946%, with higher rates for commercial properties and timeshares. These rates are significantly lower than in many us jurisdictions.
Foreign persons (i.e., non-us persons who do not have legal us residency) are subject to a withholding tax of 10% of the sales price of their usvi property (11% for corporations). This tax can be reduced or eliminated in appropriate cases (such as when there is no profit on the sale) by application to the usvi Bureau of internal Revenue.
Property owned by more than one person can be owned either as a joint tenancy or as a tenancy in common. in a joint tenancy there is a right of survivorship – a survivor automatically becomes the owner of the property on the other person’s death. in a tenancy in common, each owner has a share, and upon death of an owner, that owner’s share passes into his estate. A tenancy in common is presumed unless there is a specific indication on the title that the property is owned otherwise, or unless the property is owned by husband and wife. Husbands and wives can hold property as “tenants by the entirety” a kind of joint tenancy that cannot be severed except by divorce, death or a conveyance in which they both join.
Security of Title/Title Insurance
All deeds and other interests in land that the parties wish to have recorded are recorded at the office of Recorder of deeds, which has offices on st Thomas (for st Thomas and st John) and st Croix. most arm’s length transactions are done by warranty deed, although other types of deeds with limited or no warranties are also acceptable. Title insurance is readily available with us-based underwriters including Chicago Title, Fidelity Title and stewart Title. since the Recorder’s office is a record keeping service only and does not guarantee title, title insurance is always advisable.
The usvi does not impose any restrictions on foreign ownership of usvi property. non-resident aliens should be aware of the withholding tax on sale of their property, as discussed above.
if you become a usvi property owner, you will need to include your property here in your estate plan. while there is no usvi estate tax, us citizens may be subject to federal estate tax. in addition, for individual owners of real property, a usvi judicially supervised probate process is required, even if the primary probate is conducted elsewhere. For non-residents, probate can be avoided by holding property in a corporation, limited liability company, partnership or a trust. us residents can generally use their us established trusts to hold their usvi real property. Holding property in a joint tenancy as discussed above is also an option. whatever your plan, do not assume you can change your mind later at nominal cost. some transfers, even for estate planning purposes, can be subject to the stamp tax discussed above.
For further information, Please contact Willa Tavernier(firstname.lastname@example.org).
This article is general in scope and is not intended to be comprehensive. It is not a substitute for legal advice.