Legal Ease – Estate Planning

Ivan Granados - MAY 04, 2017
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As a real property owner in Costa Rica, with no business conducted on your property, you should be aware about taxes that need to be paid. Failure to pay them would generate penalties and lead to a collection process.

PROPERTY TAX & GARBAGE COLLECTION FEE

Real property owners must pay the Impuestos Bienes Inmuebles (Property Tax) to the municipality/county where the real property is located.

This property tax is 0.25% of the registered value of the property, which is either the purchase price paid or the value assigned by the Tax Office.

The garbage collection fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and whether the property is used for residential or commercial purposes.

The Municipality of Santa Cruz does not always charge both in the same statement, causing confusion and problems to owners. The municipality has attributed this to “lack of updated records and/or to administrative errors within the system”. Therefore, please review your statement carefully to avoid unpleasant surprises.

This property tax and garbage collection fee can be paid a year in advance or quarterly. However, if paid quarterly, you must pay before the end of each quarter in order to avoid interest. The first quarter of the year ends on March 30th.

Owners must fill out a form to update the value of the real property every five years. Failure to do so can lead to a Municipality assessment and fines.

LUXURY TAX

The Impuesto Solidario para el Fortalecimiento de Programas de Vivienda (Solidarity Tax for the Strengthening of Housing Programmes) law 8683, also known as “luxury tax”, applies to both houses and condominiums but not to vacant lots. This tax is based on the construction value. If the construction value is equal to or greater than the amount defined by the Tax Office for a given year, then the property is subject to the luxury tax. For the year 2017, the Tax Office set the taxable construction value at 126.000.000 colones, approximately US $229,0000.

Those liable for this tax need to complete a form called ‘Formulario Único de Inscripción, Declaración, y Pago de Impuesto Solidario para el Fortalecimiento de Programas de Vivienda’ every 3 years. This tax must be paid annually on or before January 15th of each year to avoid interest and penalties.

Proper guidance from a licensed appraiser to determine the proper amount to be paid is highly advisable.