Tax on property income in Guam
April 10, 2012
Effective Tax Rate on Rental Income
|Click here to see a worked example|
Global Property Guide research
The Government of Guam adopts a mirror copy of the US income tax structure where the ‘Government of Guam’ is put in place of ‘the Government of the United States’.
Nonresident individuals are liable to tax on their income in Guam. Married couples can opt to be taxed jointly or separately.
Income of nonresident individuals is generally taxed at a flat withholding tax rate of 30%.
30% Withholding Tax
Nonresident individuals earning rental income and other fixed and determinable annual or periodic income which are not effectively connected with trade or business are taxed at a flat rate of 30%, withheld by the tenant.
Electing Business Income Option
Nonresident individuals earning rental income can elect to consider this income as effectively connected with trade or business. Through this option, the taxpayer will be taxed on his net income at progressive rates.
CAPITAL GAINS TAX
Capital gains incurred for the transfer of property in Guam is taxed as in the US. The taxable gain is computed by deducting the acquisition costs (adjusted for inflation) and transfer costs from the selling price.
Long-term capital gains are currently taxed at 15%. Short-term capital gains or gains realized within twelve months are taxed at ordinary income tax rates.
Local corporations can be fully owned by foreign individuals. A minimum of three incorporators are needed to set up a local company, and at least one incorporator should be a Guam resident.
Local corporations are taxed on their worldwide income. Taxable income is generally computed as gross income less all ordinary and necessary income-generating expenses, including depreciation, investment allowances, set-offs of losses, investment tax credit and foreign tax credit. Taxable income is then taxed at progressive rates.
CORPORATE INCOME TAX RATES
|TAXABLE INCOME (US$)||TAX RATES|
|Up to US$50,000||15%|
|US$50,000 – US$75,000||25%|
|US$75,000 – US$100,000||34%|
|US$100,000 – US$335,000||39%|
|US$335,000 - US$10,000,000||34%|
|US$10,000,000 – US$15,000,000||35%|
|US$15,000,000 – US$18,333,333||38%|
|Source: Global Property Guide|
Taxable income is computed by deducting income-generating expenses (such as maintenance and repairs, property taxes, management fees, etc.) and depreciation costs from the gross rent.
Capital gains derived by legal entities are included in the gross income and are subject to the standard progressive corporate tax rates. Capital losses may normally be set off against taxable profits under general rules.
Real Property Taxes
Real property tax is levied upon land and/or buildings. The rates are 0.5% on the assessed value of land and 1% on the value of the buildings. The assessed value is 35% of the appraised value or market value of the property.