With the 2013 property tax bills currently arriving in St. John residents’ mailboxes, many are hoping that the circuit breaker tax credit provision will help them.
The circuit breaker tax credit is available to property owners whose property tax bills increased by 125 percent or more and whose household gross income is less than $135,000. The circuit breaker tax credit is 40 percent of the property tax increase for homestead and unimproved property but not more than $5,000.
There has been some confusion about when to apply for the circuit breaker tax credit, but Shawna Richards, spokesman in the Lieutenant Governor’s office, clarified that tax payers have until the tax bills are due to apply for it. Tax payers can apply at the lieutenant governor’s offices on all three islands or by downloading an application from the lieutenant governor’s website.
“They need to provide proof of income from their 2012 tax returns,” Richards said.
If they send in the application, it will need to be notarized. Richards said that is not the case if they do it at the lieutenant governor’s office.
Richards said that only people eligible for homestead exemptions or those with unimproved property qualify for the circuit breaker tax credit. This means that vacation villa owners who don’t live in the Virgin Islands but own houses in the territory cannot get the circuit breaker tax credit. However, if they own vacant land, they’re eligible. They can apply through the Office of the Lieutenant Governor or online.
Myrtle Barry of the V.I. Unity Day Group is gathering information on how the tax bills on St. John shaped up. She said she’s finding many instances where increases over the 2012 tax bills were just low enough so the property owners wouldn’t be eligible for the circuit breaker tax credit.
“It’s designed that way. They don’t want people to qualify,” Barry said.
St. John resident Catherine Stephen is not happy about her tax bills.
“I have cried,” she began, launching into a list of similar words that describe the way she feels.
Stephen said that while the value on the house where she lives went down, the taxes doubled. Another very modest house she owns on Gifft Hill was reassessed after she complained when the 2008 tax bills went out, Stephen said. She said the valuation is now reasonable, but the tax bill is still too high.
She said her biggest shock came with a half acre of vacant land she owns in Pastory, a neighborhood of mainly modest homes. She said it’s assessed at about $199,000.
“If the government wants to give me $200,000 for it, I will take it,” she said.
According to an Aug. 8 press release from the lieutenant governor’s website, market value, the tax rate and exemptions impact tax bills. The 2013 property tax bills are based on fair market value. Residential property taxes are calculated using a mil rate of .003770. The mil rate for unimproved commercial property is .004946. For commercial property, the mil rates stands at .007110. For timeshares, it is at .014070.
Until the 2013 bills were finalized, residents paid property taxes at the 1998 valuations unless there were improvements on the property. The 1998 bills were based on 60 percent of the assessed value with a mil rate of .0125.
The 2005 revaluations came about after commercial property owners in St. Thomas filed suit because they felt their properties were unfairly valued. Known as the Berne case, it was settled in 2011.
While the Berne case was pending, the government delayed sending out bills except for one effort in 2008 when it issued the 2006 bills. Residents were shocked at the high property taxes on their bills. After they complained loudly, the government backed down and the Office of the Lieutenant Governor rescinded them.
Barry said she’s finding many instances where the 2013 tax bills are even higher than they were in 2008.
If property owners pay their taxes before Oct. 6, they’ll get a 5 percent discount, she said. The bills are due Dec. 6. After that date, they’re delinquent and penalties will apply.
Richards said taxpayers unhappy with their assessments can file an informal appeal with the tax assessor’s office. If they are not satisfied with the results of the informal appeal, they can file by Dec. 23 with the Board of Tax Review regarding tax assessments. Taxpayers who plan to appeal must pay their taxes by the due date. If the appeal is successful, the taxpayer will receive a credit on the next tax bill.
The Unity Day Group has a pending suit in District Court because Barry said the 2005 property valuations are flawed. She said that issue has not been addressed and, since property values will be redone every five years, this problem needs to get solved.
Property owners are also eligible for other tax credits but the date to apply for them was May 20.
The homestead tax credit of $400 is available to people whose primary residence is in the Virgin Islands as of Jan. 1 of the tax year.
Virgin Island legal residents who are veterans can get a $650 tax credit with proof of eligibility.
Disabled people can receive a $500 tax credit by providing proof of eligibility from the Social Security Administration.
A tax credit of $500 is available to senior citizens when one spouse is 60 or over on Jan. 1 of the tax year and has an adjusted gross income of less than $30,000. The household income can’t exceed $50,000.
A tax credit of 20 percent of the property tax called visitable home is also available to people who built their homes to be accessible by disabled people. To quality, the homeowner needs a certificate of visitability from the Planning and Natural Resources Department.
To get the Class I inheritance tax credit, applicants must be owners of unimproved property of five acres or less. The property owner must have acquired the property through inheritance. The credit is equal to 80 percent of the real property taxes levied until $5,000 or more of improvements are made on said property.
Tax credits are also available for Virgin Islands farmers, who are required to obtain certification from the Department of Agriculture.
Email Barry with your St. John property tax information at www.viunitydaygroup@gmail.com.
