10 things you should know when buying Tamarindo real estate
Pt. 4: Various Taxes in Costa Rica
In part one of this ten-part series, we discussed the Costa Rican legal system and how it differs from the U.S. legal system. In part two, we discussed how to choose a realtor. In the third installment, we discussed property managers and the services they provide in maintaining and renting your vacation home. In this fourth installment, we will discuss taxes. Costa Rica has relatively low tax rates compared to the U.S. The collapse of the global housing market has put pressure on many economies to find alternative sources of revenue. Costa Rica is no different and has created two new taxes that may affect Costa Rican homeowners. Below we will discuss the most common taxes that one might incur when owning Tamarindo real estate.
Costa Rica has a property tax equal to .25% of the declared value of the property. The owner of the property is responsible to declare the value every five years. If an owner does not declare the value of his property every five years, the local municipality is authorized to appraise the property and set the value. Property taxes are due in advance. Taxes on Tamarindo real estate can be paid at the Caja window at the municipality in Santa Cruz. Anyone can pay the property tax. To facilitate payment, you should bring the receipt of the previous year’s taxes. If you do not have the previous year’s receipt, the cashier can find your property with the finca filial number of the property or the cédula jurídica (company number or personal ID number) of the owner of the property.
In 2008, the Costa Rica government created a new tax on homes with a value of more than $200,000. The tax is due on the first day of January of each year. The owner of a property is obligated to have his home appraised and sign a sworn declaration of its value. Owners who are found to have under-declared the value of their home are subject to a fine five times the value of the correct amount due. The tax is calculated on a sliding scale. Homes with a value of $200,000 to $1,500,000 pay .25% of the declared value. Homes with a value of $1,500,001 to $2,500,000 pay .35% of the declared value. Homes with a value of $2,500,001 to $3,500,000 pay .45% of the declared value. Homes with a value in excess of $3,500,000 pay .55% of the declared value. You will need a notary to create the declaration of value. Many residents have their accountant arrange the valuation and declaration of their home, as well as pay the tax on their behalf.
Many homeowners choose to hold their Tamarindo real estate in a corporation as a way to shield their home from their personal or corporate liabilities. The Costa Rican corporation tax is an annual tax that is adjusted each year. As of 2013, the tax is approximately $380 if the corporation that holds your property conducts commercial activity. For example, if you rent your home, it produces income and therefore is commercially active. This is the case even if your revenue does not exceed your costs for any given year. If the corporation that holds your property does not engage in any commercial activity, then the cost of the corporation tax, as of 2013, is approximately $190. The corporation tax may be paid at any Bank of Costa Rica by presenting the number of the corporation (cédula jurídica) to the clerk and telling them you would like to pay “el impuesto de sociedades.”
Costa Rica still enjoys relatively low tax rates compared to other parts of the world. You can avoid any additional fees or fines by having your property appraised and paying your taxes on time.
PPV Tamarindo Real Estate is an Eco-conscious, residential Ocean View community located on Costa Rica’s beautiful Pacific Coast. Our development offers more luxury than you would ever expect at an affordable price. Our development is close to beautiful beaches; offers Ocean View Condos; lots offering panoramic Ocean views; and affordable tropical residential lots.