Taxes should be a major consideration for people looking to make a move to Costa Rica improve their lifestyles.
Income taxes, sales taxes, property transfer taxes and property taxes should be carefully examined. This land is filled with stunning scenery, sunshine and smiles but there are taxes here too…
In the USA the 46,000 page tax code with 481 separate tax forms has become such an absurd and complicated monstrosity that US taxpayers in 2002 spent approximately US$200 billion in the ‘professional preparation’ of their tax forms – almost 10% of what the IRS actually collects…
Thankfully, Costa Rica taxes are not quite that complicated.
To rent or buy this 54 minute video with Costa Rica Attorney Roger Petersen please visit our Video On Demand page here.
When buying a home in Costa Rica, property taxes and property transfer taxes must be considered but thankfully there is not much to worry about since Costa Rica property taxes are only 0.25% of the recorded property value which is not always the real market value.
Property Taxes on my Vacation Home.
Admittedly, I paid late but, on my 1,638 square foot country home which is a two bedroom, one large bathroom Cypress wood home on 4,300 square meters of picturesque land (46,268 square feet – just under one acre) in a gorgeous area of Costa Rica – my quarterly property taxes were US$17.70
That may sound expensive (Cough! Cough!) But that adds up (he said sarcastically)… I mean for the entire year, I’ll be paying whopping US$70
But seriously, they are charging me too little, I should be paying about US$300-$375 per year and we will report this to the local municipality.
It is important to note that Costa Rica Property Tax Law requires homeowners to file a declaration (Declaracion de Bienes Inmuebles) with the Municipal government declaring the value of the home every five years.
Costa Rica Property Taxes Video Interview with Attorney Roger Petersen.
Property Transfer Taxes.
Another kind of property tax that you need to be aware of when you buy or sell a property is the property transfer tax (Impuesto de Traspaso) which is 1.5% of the value indicated in the transfer deed or the registered tax value of the property, whichever is higher and will apply when the title of a property is transferred from the seller to the buyer.
Thankfully this can be avoided when the property is owned in the name of a corporation, then you can buy and sell the corporation which would include the home. You must be careful to verify that their are no ‘surprise’ obligations associated with that corporation …
How does US$104 per month compare to the property taxes that you are paying at home?
Written by Scott Oliver, author of How To Buy Costa Rica Real Estate Without Losing Your Camisa and Costa Rica’s Guide To Making Money Offshore.
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