Property Taxes

The paying of property taxes is mandatory in Costa Rica and payable to the local Municipality, regardless if we are talking about raw land, single lots, condominiums, or regular houses owned by individuals or Costa Rica Corporations. So, you need to observe:

The reported value matches at least the assigned value to the area where the estate is according to the Local Municipality, by the book the reported value should be what you paid.

Pay quarterly, at least, the Costa Rica Property Taxes, you can choose also a yearly payment.

To update that price every 5 years

Employee benefits

Terminations

Owning Real Estate through a Company

If you own a Corporation in Costa Rica you also have responsibilities, even if you get your Costa Rica Corporation only for your Real Estate investment, for instance:

If yours is not an income-generating property, then you don’t have to worry about paying any other tax, not even Capital Gains Taxes, but the Yearly Education and Culture Stamp, which is a minor tax over the stock equity of every corporation (S.A. or SRL) registered in Costa Rica, Assets Declaration, RTBF declaration, and Corporate Tax.

If yours is an income-generating property, vacation rental for instance, then you have to keep proper records of your incomes and expenses and report that to the Costa Rican Tax Administration.

Keep in mind that if your tenant needs to write off the rent payment, then the payments made to your Costa Rica Corporation might be reported by the tenant; therefore, the Tax Administration would know there is a taxable activity taking place.

Although there is a lot of confusion when it comes to the Corporations Tax, it is still up, so both active and inactive corporations are liable for those Tax, 2015 is the last year, according to Costa Rican Supreme Court.

Autonomous institutions

Set up a corporate structure to meet your equity, privacy, and offshore taxes needs

Luxury Home Tax

Costa Rica has made many recent changes in its complicated tax laws. One of these is a luxury tax on high-value homes, established in 2009 and officially known as the Solidarity Tax for the Strengthening of Housing Programs.

The stated purpose of luxury taxes in Costa Rica is to build homes for people living in poverty and to reduce the number of crudely built shanties throughout the country.

Whether you must pay this tax depends on the value of your constructed home, along with other improvements such as ranchos, swimming pools, walls, internal streets, sports fields, etc. The threshold at which the tax kicks in applies only to these types of construction and improvements, not to the land itself.

However, if you meet the threshold, you must then add the value of the land to the value of the construction and pay the tax based on the entire amount.

Thresholds for luxury taxes in Costa Rica

If you own a Corporation in Costa Rica you also have responsibilities, even if you get your Costa Rica Corporation only for your Real Estate investment, for instance:

The threshold at which the tax kicks in rises every year. For 2020, that threshold was 133,148,400 colones (about $233,900). So, if your constructed home (not the land underneath it) was worth less than this, you don’t have to pay the tax. But if the home was worth more than this, you had to add the value of the land to the value of the home and other improvements, and then pay the tax based on the total value of the property.

The tax ranges between 0.25% and 0.55%, again depending on the value of the home. Payment must be made by Jan. 15 each year, or penalties will be imposed. The Costa Rican government expects homeowners to have their homes assessed, determine the amount of tax due, and pay it on their own, although it may check to verify that the correct amount has been paid.

Every three years, those affected must fill out a form called “Formulario Único de Inscripción, Declaración y Pago Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, Ley 8683.” But the tax must be paid annually.

The good news is, Smart Accounting Costa Rica takes care of all these complicated tax issues on your behalf.

If you want us to help you figure out if your property falls into this category please subscribe to our Screening Service, although depending on your situation you may wish to consult a real estate attorney and we also assist you on this.