What About Property Taxes?
For many jurisdictions along the east and west coast of the United States, our property taxes would be considered quite reasonable. Revised tax rates established in 2008 legislation were first put into effect in the 2013 tax bills. Under that system, the residential the rate is .00377 times the assessed value; for undeveloped, non- commercial land it is .004946; for commercial properties it is .007110 and for time shares the rate is .014070. If you are purchasing a property as your primary residence, there are exemptions you can apply for with the Tax Assessor. They are: a homestead exemption ($400), veterans’ exemption ($650), Seniors ($500) or Disabled Persons Exemption ($500).
What Can I Anticipate I Will Pay for Property Insurance?
Hazard insurance (covering earthquake, flood, hurricane and fire) is expensive primarily due to the cost of the hurricane or windstorm coverage. Even though it has been 19 years since the U.S. Virgin Islands experienced a major storm, insurance rates are set on a more global basis. Certain factors can bring down the cost of insurance including concrete construction, hurricane shutters for all doors and windows, the new higher impact glass developed in recent years, etc.
For a fully shuttered concrete residence (owner occupied), you can anticipate full insurance coverage will cost @1.5% of replacement cost per year.
What is a Cistern?
When many communities are dealing with water shortages, the Virgin Islands in this regard is ahead of the nation. Each home is constructed with a cistern for the collection and storage of rain water from the roof. Usually the cistern is made of concrete and is at the bottom of the house—where your basement might be—and is sealed so that it is water tight. The water is then pumped into the house for drinking, bathing and washing. Homeowners may chlorinate the water or install a filtration system but since it is rain water that is collected, the water quality is good to begin with. If you run low on water in your cistern, water produced commercially through desalinization may also be purchased and delivered via trucks. Some waterfront homes and condo complexes also employ desalinization systems.
What About the Cost of Electric?
Besides islanders interest in being ‘green’, one reason such importance is put on home design that takes advantage of the cooling breezes is our high cost of electricity. Because of the reliance by WAPA (VI Water and Power Authority) on fossil fuels, the cost per kilowatt hour is substantially higher than the national average of 12 cents per kwh (Dept. of Energy, April 2009). As of this writing, our electric cost is 49 cents per kwh. WAPA has a solar project underway as well as a project to convert to the use of propane that is anticipated to reduce the KWH cost. In the more recent years, some homeowners have made the investment to make their homes fully solar powered. While solar hot water heaters have been popular for a long time, more homes are now employing solar pool pumps and a few have explored wind generators. Many homes and most businesses have generators installed for back- up power as power outages are a common occurence.
If I Decide to Build Rather than Buy an Existing Home, What is the Cost of Construction? How Long Would it Take?
Cost of building, as might be expected, is higher in the islands than in the continental United States. For a quality home constructed of concrete block, you can anticipate that your building costs will run around a minimum of $300 per square foot; depending upon the finishing materials used, this cost figure can be substantially higher, $500 per foot or higher. From the time you secure your permits to completion of construction will take approximately 12 months to 18 months. Factor in an additional 6 months’ time for permitting if the land you are buying is waterfront in the Coastal Zone Management tier one.
What Do I Need to Know About Owning and Operating a Property as a Vacation Rental Villa?
The U.S. Virgin Islands is a great place to own a rental home. With consistent temperatures from 78-82 degrees Fahrenheit all year long, 47 beaches for visitors to choose from, easy access to St. John and the British Virgin Islands, diving and boating excursions and a wide range of restaurants from casual to fine dining, the island promotes itself. That it is a U.S. territory is also attractive to many travelers. Beachfront condos and appropriately appointed homes with a pool, great ocean view and ideally a bathroom for each of the bedrooms are the types of properties best suited to vacation rental. There are a number of companies that specialize in vacation villa rental management. Some owners have opted to be more hands on and advertise their properties themselves on web sites such as VRBO (Vacation Rentals By Owner), Home Away, Flip Key on Trip Advisor and Airbnb. You will need to license the villa and pay the VI Government gross receipts tax (5% of gross rental income) and hotel tax of 10% which is paid by the guest.
What About Foreclosures?
Lenders in the Virgin Islands have historically been conservative in their lending practices. Therefore, we did not experience the subprime problem much of the Continental United States has experienced. Contrasted with those markets heavily laden with foreclosures and overbuilding which will take a long time to turn around in terms of property values, we have experienced a stable real estate environment with a limited number of foreclosures.
Essential resources tips to help you purchase real estate in the United States Virgin Islands.