Costa Rica Property Taxes: What You Need to Know

June 26, 2024
Apartment

Gap Real Estate in Costa Rica offers top-notch service for your real estate needs. Before you get your dream property, know about property taxes. This is especially key for foreign property investors and non-residents’ tax obligations.

Owning a house in Costa Rica means dealing with various taxes. These include annual corporate taxes and solidarity (luxury) tax. Also on the list are rental income taxes, municipal property taxes, and value-added tax (IVA/VAT). However, getting to know about tax breaks for retirees and smart planning can lower your total tax bill. So, let’s check out the real estate tax rates and property ownership costs in this beautiful country.

Key Takeaways

Costa Rica has a relatively low property tax rate of 0.25% of the property’s declared value.
Luxury properties valued at over $250,000 are subject to an additional “solidarity” tax ranging from 0.25% to 0.55%.
Corporate taxes in Costa Rica are based on a company’s gross revenue, with rates ranging from 25% to 50% of the base salary.
Rental income in Costa Rica is taxed at a flat rate of 15% on 85% of the rental income.
Costa Rica recently introduced a law requiring companies to declare shareholder details to combat tax fraud.

Annual Corporate Taxes

Even when they’re not making money, companies must pay about $120 each year in corporate taxes. The tax rates for land and property depend on how much money the company makes. In Costa Rica, the government measures a company’s tax by looking at a part of a government worker’s monthly pay. This base salary is 450,200 colones, which is close to $790.

If a company makes less than 120 times this base salary (around 54,024,000 colones), they pay a basic tax. For them, the tax is 25% of the base salary, which means about 112,550 colones (roughly $200). A company earning between 120 to 280 times this base salary (54,024,000 to 126,056,000 colones) will pay 30% of the base salary. It’s approximately 135, 060 colones (about $235). For companies that make over 280 times the base salary, the tax is 50% of the base salary, which is around 225,100 colones (almost $390).

Inactive Companies

Companies that are inactive and not earning must also pay their share. They pay 15% of the government worker’s monthly base salary in property and homeowner taxes.

Gross Revenue Thresholds

Let’s talk more about these tax thresholds. If a company makes less than 54,024,000 colones a year, their tax is 25% of the base salary. For those earning between 54,024,000 to 126,056,000 colones, the tax increases to 30% of the base salary. And if a company makes more than 126,056,000 colones annually, their tax rate is 50% of the base salary.

property tax assessment

Solidarity Tax (Luxury Home Tax)

In 2009, Costa Rica started taxing luxury homes. It’s called a solidarity tax. This tax is for homes over a certain value, but this value includes the house and any improvements, not the land. For 2023, the cutoff was 148,000,000 colones ($250,000). If your costa rica luxury property is worth more, you must pay this tax based on the total property value.

Threshold and Rates

The tax rate for costa rica property tax can be 0.25% to 0.55%. For homes valued at $215,000 to $3,255,000 USD. This ends up being an extra $550 to $17,900 for every $100,000 of home value.

Filing Requirements

You need to pay this tax by January 15th each year. Also, every three years, there are special forms to fill out to calculate the tax. If you want to buy a costa rica luxury property, remember this tax.

Rental Income Taxes

If you rent a vacation home, condo, or apartment in Costa Rica, you must pay taxes. The government says 15% of the rental income goes to expenses. So, they only tax the remaining 85%. This 85% is taxed at a 15% rate. But, things change if you have an employee. If you have a housekeeper, for example, you can use a different way to calculate taxes. Then, you pay just once a year on the final profit. This method can be beneficial for some.

Foreign property owners in Costa Rica need to know the rules about rental income tax. It’s important when you look at property transfer taxes and what it costs to own a place. Talking to a local tax expert will make sure you do everything right in Costa Rica.

Shareholder Declaration

Costa Rica has made a big step to stop tax fraud and make things more clear. They’ve passed a law that says every company there must tell who their shareholders are. This report has to show how many shareholders there are, what part of the company they own, and the kind of ownership they have.

Requirements and Penalties

Companies need to fill out a special form about their shareholders. They can only do this online. First, they have to get a digital signature from a bank in Costa Rica. This step is for people who are from Costa Rica or have the right to live there.

If a company doesn’t fill this form out, they could be in big trouble. They might have to pay a fine. These fines can be from about $2,000 up to almost $79,000.

The deadline for this form is April 30th every year. It’s very important for companies to follow this new rule. The rule matches others around the world. And it’s meant to help stop people from trying to avoid paying taxes or doing illegal things with money.

If a company misses this deadline, they could face some financial problems. They might have to pay more money or other sorts of penalties.

Municipal Property Taxes

In Costa Rica, you pay a property tax of 0.25% of the buying price or assessed value. It’s the owner’s job to check their property’s value every five years. If you don’t, there might be fines. Also, the local government will decide your property’s value.

You must pay for garbage collection when you pay your property taxes. Both go to your local government. Costa Rica has lower property taxes than many places. But, this tax helps the government provide public services.

Tax Rate and Calculation

The property tax rates in Costa Rica are 0.25% of your property’s worth. For instance, if your property costs $200,000, you would pay $500 a year in taxes.

Valuation and Assessment

It’s your duty in Costa Rica to assess your property’s value every five years. If you don’t, there could be penalties. The local government might then figure out your property’s value for you. This ensures you pay the right tax amount.

Figuring out costa rica property tax exemptions and how assessments work can be hard. It’s smart to get help from a local tax pro or real estate expert. They’ll make sure you understand all your tax duties. Plus, they can help find any tax breaks available to you.

Property Transfer Taxes

In Costa Rica, there are municipal property taxes and property transfer taxes. The latter is paid when buying or selling a property. These taxes range from 1% to 5% and depend on the sale price. Normally, the buyer pays all of it. Sometimes, both the buyer and seller share this cost.

When buying property in Costa Rica, remember these property transfer taxes. They’re key for both foreign investors and locals. Knowing the tax rates and details helps make your property purchase go smoothly.

Costa Rica Property Taxes

Municipal Property Tax

In Costa Rica, properties are charged a 0.25% tax based on their stated value. This tax rate is lower than many other places. But, it helps the government collect money for public services.

Solidarity Tax (Luxury Tax)

Costa Rica also has a luxury tax for high-priced homes. Properties worth ¢148,000,000 or more pay this tax. The tax rate varies between 0.25% and 0.55%, depending on the property value. It must be paid in the first weeks of January each year.

Tax Valuation and Assessment

Every five years, property owners in Costa Rica must report their property’s value. If they don’t, they could face fines. The local government might then decide the property’s value. It’s important for owners to follow the tax valuation and assessment process to avoid overpaying on their real estate taxes.

Income Taxes for Residents

Costa Rica’s income tax rules depend on where you’re from and where you work. If you have certain types of residency, like rentista or pensionado, you can’t work in the country. This means you won’t be taxed on money you make outside Costa Rica.

But, if you’re a permanent resident or have the right to work here, you might have to pay taxes. These taxes are determined by your role (worker, pensioner, freelancer, or business owner) on a sliding scale. This means different amounts of tax for each group.

Tax Exemptions

In Costa Rica, there are ways to reduce your taxes through exemptions and incentives. For example, you might get tax breaks for investing in things like renewable energy, agriculture, or manufacturing. Some foreign retiree income may also be exempt.

Knowing about these tax perks is key to lowering your tax bill as a Costa Rica resident. This is especially true if you own property or plan to invest in Costa Rica.

Tax Rates and Calculations

Figuring out how much income tax you owe in Costa Rica can be tricky. The amount depends on where you’re from, how you make your money, and what you do for work. If you’re a permanent resident or can work here, your employer might take taxes out of your pay.

But if you’re on your own, like a freelancer, you’ll likely need to calculate and pay taxes yourself. for freelancers and independent workers, handling taxes monthly is common. It might be a good idea to get advice from a local tax expert. They can help make sure you follow Costa Rica’s tax laws correctly.

Import Taxes

Costa Rica places import taxes on items not made in the country. These taxes can be 1% for books up to 49.27% for electronics. They help fund the government as other taxes like property and income taxes are low. Import tax rates are based on the item’s total value, including shipping. To figure out how much importing will cost, you can use tools from freight forwarders or importers.

Tax Rates on Imports

Tax rates on imports in Costa Rica change based on what you’re bringing in. Books have a 1% tax, but electronics face a 49.27% tax. These taxes can significantly raise the price of goods, which is why it’s important to consider them when buying from abroad.

Calculating Import Taxes

In Costa Rica, import taxes apply to the full value of goods being brought in, including shipping. Importers and freight forwarders offer tools to calculate these costs. Knowing how to work out these costs is key for budgeting and planning your international purchases in Costa Rica.

Item	Import Tax Rate
Acoustic Drums	24.30%
Adjust Hand Wrench	14.13%
Air Conditioning Single Body	75.04%
BBQ Tool	29.95%
Fitness Accessories	24.30%
Makeup	29.95%
Nintendo Wii Xbox PlayStation Accessories	55.71%
Swimming Wear	29.95%
Transformers	14.13%
Water Heater – Electric	68.60%

Value Added Tax (IVA/VAT)

Costa Rica started using a value-added tax a few years back. This tax adds a 13% fee to most service charges and bills. But, some things are either exempt or taxed less. If you work in Costa Rica, you might have to charge and pay this IVA tax monthly. It’s an extra cost to think about when buying goods or services.

IVA Tax Rate

In Costa Rica, there’s a 13% IVA tax on most items and services. It’s calculated on the full selling price, along with any extra fees. This tax helps fund the government. So, don’t forget it when planning for things like property tax filing or property tax deadlines.

IVA on Services and Invoices

The 13% IVA tax also affects a variety of services and bills. This includes things like professional services, utilities, and rent. It’s critical for both companies and people to charge and pay this tax every month. Not following tax laws can lead to heavy fines, affecting the overall property tax rates in Costa Rica.

Property Tax Exemptions and Deductions

In Costa Rica, property owners can sometimes get special privileges when it comes to property tax. This is especially true if the property is used for farming or is owned by someone with low income. Also, homeowners might be able to reduce their tax by using part of their mortgage as a deduction. Knowing about these special tax breaks and deductions can really help cut down costs.

It’s worth checking what exemptions on property taxes costa rica are offered where your property is located. This could be a great way to lower your yearly taxes and get more out of your investment. So, property owners should look into these benefits to see if they qualify.

Exemption Type	Eligibility Criteria	Tax Savings
Agricultural Property	Property used for agricultural purposes	Up to 50% reduction in property taxes
Low-Income Homeowner	Homeowners with limited financial resources	Varies by municipality, up to 100% exemption
Mortgage Interest Deduction	Homeowners with active mortgage payments	Deduction of a portion of mortgage interest from property taxes

By looking into these property tax discounts costa rica options, property owners can navigate their taxes smarter. This can lead to more value from their investment in the long run.

Tax Filing and Deadlines

Costa Rica’s property taxes should be paid by the year’s end. If you miss the property tax deadlines costa rica, you may face a penalty. This penalty is often 5% to 10% of your total tax bill. To avoid extra costs, make sure you know when to file and pay your property tax rates costa rica. Also, remember that some taxes have monthly or quarterly deadlines.

Property Tax Due Dates

The property transfer taxes costa rica need to be paid every year. You can also pay them quarterly or get a 2% discount for paying all at once. It’s key for property owners to know the deadlines and how to pay. This helps avoid penalties and late fees.

Penalties for Late Payment

If you don’t pay your property taxes on time in Costa Rica, you’ll pay more. Late fees range from 5% to 10% of the total tax. These extra costs can really mount up. So, it’s vital to stay on top of your taxes. Keep current with the property tax deadlines costa rica to prevent these hefty fines.

Appealing Property Tax Assessments

In Costa Rica, property owners can appeal if they think their property taxes are too high. The process differs depending on the area. But it usually includes sending a letter to the local tax assessor. If the appeal works, the tax bill might go down. Getting help from a tax expert or a real estate lawyer is smart because the process can be tricky.

Gap Real Estate has more than 20 years of experience across Costa Rica. They aim to offer the best service for your real estate needs. Knowing the costa rica tax code and its rules is key, especially for property tax assessment costa rica. By understanding how to appeal and talking to experts, property owners can make sure they’re paying the right taxes. This way, they can make the most of their investment in Costa Rica.

Conclusion

Property taxes are a big deal for people from other countries and those retiring in Costa Rica. While Costa Rica’s tax burden is low worldwide, the rules can be confusing. You need to know about different taxes like municipal property tax and luxury tax. Also, know about rental income taxes, and what deductions and exemptions you might get.

Being smart about taxes can make owning property here a better experience. Gap Real Estate has over 20 years of experience in Costa Rica. They offer top-notch service for your real estate needs. For details, contact them at WhatsApp +506 4001-6413 or email [email protected].

In Costa Rica, property taxes for a $200,000 home are low, about $500 a year. This tax is 0.25% of the property’s value. Plus, there’s a 1.5% real estate transfer tax when you sell. But there are other taxes too, like capital gains tax. Knowing these taxes can help you decide if buying property here is right for you.

FAQ

What are the annual corporate taxes in Costa Rica?

Even companies that don’t do business still pay about 0 yearly. Businesses that are active pay a share of their yearly income. This share varies between 25% and 50%.

What is the solidarity (luxury) tax in Costa Rica?

Costa Rica imposes a tax on fancy houses’ improvements, not the land. Depending on the home’s value, the tax is between 0.25% and 0.55%. In 2023, homes above 0,000 face this tax.

How are rental income taxes calculated in Costa Rica?

If you lease a property, you’re taxed on 85% of the rent at 15%. The government considers 15% as your costs. But you can also choose to pay tax only on the profit after deducting your expenses.

What is the shareholder declaration requirement in Costa Rica?

In Costa Rica, businesses must report who their shareholders are. This is to follow global tax laws. If not reported, fines may range from ,000 to ,000.

How are municipal property taxes calculated in Costa Rica?

The tax is 0.25% of what you bought the property for or its assessed value. You must check and report your property’s value every five years. If you don’t, the city might do it for you.

What are the property transfer taxes in Costa Rica?

When a property changes hands, transfer taxes of 1% to 5% apply. Buyers normally take care of these taxes.

What are the main property taxes in Costa Rica?

In Costa Rica, there’s a 0.25% tax on property controlled by the city. Homes worth over 0,000 face a 0.25% to 0.55% levy too. Property owners must tell the value of their home every five years.

How are income taxes calculated for residents in Costa Rica?

Most residents in Costa Rica don’t pay tax on money they earn outside the country. Those who can work locally pay a tax that depends on how much they make.

What are the import taxes in Costa Rica?

Costa Rica taxes goods coming in from other countries. The tax can be from 1% to almost 50%. These taxes are an important part of the government’s income.

What is the value-added tax (IVA/VAT) in Costa Rica?

In Costa Rica, a 13% tax is added to most payments for services or products. Some things might not have this tax, or they might be taxed at a lower rate.

Are there any property tax exemptions or deductions available in Costa Rica?

Sometimes, you can avoid or pay less on property taxes in certain areas. Usually, this is for farms or if you don’t make much money. Knowing these can help you lessen what you owe.

When are property taxes due in Costa Rica, and what are the penalties for late payment?

You have to pay property tax by the end of each year. If you’re late, there’s a fee of 5% to 10% extra. Other types of taxes, like IVA/VAT or rent, might be due every few months. Late on those and you’ll also face fines.

Can property owners appeal their tax assessments in Costa Rica?

Yes, if you think your property tax bill is too high, you can dispute it. The process to do this changes from place to place. A tax expert or a real estate lawyer can guide you.

Source Links