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Scott,this may be a dumb question. From the tax tables posted, it looks like any house under 100,000,000 colones does not get taxed at any rate. I thought the real estate tax was currently 0.25% on any home. Does this mean lower valued homes will not be taxed, or is it being lowered for homes that are under that threshold?
Good question and I do not know the answer but will try and find out for you … My accountant will be back in town on Monday
Scott Oliver – Founder
WeLoveCostaRica.comHi:
Currently the tax that you pay for any house or property in Costa Rica is the Municipal tax,which is used by the local Municipalidad (Local Goverment)to keep in good shape the location where you live, the tax tables posted are for “luxury houses” and if the tax bill passes, then it will be an additional tax to pay to the CR Goverment, not the Municipalidad
Hope this Answer your question.
Randall Zamora/WLCR Accountant
Randall – in some of the articles the tax rate is expressed as “0.25%” which is 1/4th of 1%. In other places, it is expressed as “.025” which is 2.5%. The mathematical calculations that are published seem to indicate that 2.5% is correct – can you please confirm?
ThanksDoes the new law stipulate how home values will be determined?
The traditional practice is for the attorney who records the purchase to record it at half the actual amount paid. That becomes written in stone until either the property is resold or a mortgage against it is recorded. In the latter case, the mortgage amount becomes the basis for the annual property tax. If the owner of vacant land pays cash for construction of the house, the building itself is never taxed.
Since there are no governmental tax appraisers, how will home values be determined?
You saw this yes?
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Costa Rica Awards BearingPoint $20 Million Contract to Modernize National Tax System
McLean, Va., Aug. 29, 2007 – BearingPoint, Inc. (NYSE: BE), one of the world’s largest management and technology consulting firms, has been selected by the Costa Rican Ministry of Finance to develop and implement a new tax system for the country. The contract is valued at $20 million over two years.
Costa Rica will use an SAP solution specialized for the Public Sector for its new tax system, which will be able to interoperate with the country’s legacy system, and will also be one of the first such systems to combine both customer relationship management (CRM) and financial management functionalities.
The new system is anticipated to allow the Ministry of Finance to improve revenue flow through more efficient collection of taxes, help reduce the amount of tax fraud and allow Costa Rican citizens to access their tax records electronically.
“BearingPoint is proud to have been chosen by the nation of Costa Rica to implement a new collection and disbursement solution for the country,” said James Horner, senior vice president of BearingPoint’s Emerging Markets practice. “This project will improve the financial position and capabilities of the country, while also enabling e-government services such as electronic filing and records access for its citizens.”
BearingPoint’s Emerging Markets practice is active in approximately 50 nations worldwide, providing management, economic and technology consulting services to developed and developing economies. Core areas of expertise within the Emerging Markets practice include:
* Accelerating public sector reform, promoting economic growth and improving public services
* Creating an environment to support private sector growth, attract new investment and increasing employment
* Using information technology to build capacity and enhance competitiveness@@@@@@@@@@@@@@@@@@
From
This was NOT specifically about property taxes but times-are-a-changing …
Scott Oliver – Founder
WeLoveCostaRica.comDavid, Costa Rica will need assessors to value property in the coming years. There is no way they can equitably manage value and collections unless they do. Carving by half the value of a home is, what can I say, Corrupt. There has to be a mindset change by Ticos, and expats, and international owners, in order to help solve this dilemma. Maybe Ticos can’t afford the real estate taxes, but I bet enough of us foreigners can. Possibly we should be charged more…OUCH! Did I just say that. Sorry guys, I know it adds expense and another layer to the burdensome bureaucracy that exists there already, and most of us want to avoid that. It is one of the reasons we want to go to Costa Rica anyway. Still, the country needs to run, and it needs money in order to do so.
If the real estate taxes on a home in CR were half what I pay in the US, it would still be a steal and not deter us from going there.Randall, Thanks. I see how it works, and now it makes sense. I think it is a good idea and should benefit Costa Rica. I just hope they can come up with a way to justly value homes.
Actually a handbook will be published, so you will know step by step how to value your property depending on the location, construction materials and systems, etc. This handbook comes also with a whole set of fines for those that under value their property.
Very Besth
Anytime, if you have any other question please feel free to contact me at rzamora@costaricaabc.com
Very best
Randall, I thank you for the offer. I am sure we will be needing your services when we finally settle there.
Muchas gracias por todo,
AlfredRandall – still looking for an answer to my earlier question…. is the tax 2.5% (.025) of value or .025% (.0025) of value? Obviously, the former is 10 times greater than the latter.
By the way, I live on the water in Florida and my taxes are .00375% of the taxable value, so if the taxes on my new home in Costa Rica are based on 2.5% (.025) of value, then my tax rate in Costa Rica will be over 6 times greater than in Florida, so the argument that “this is still better than in the U.S.” doesn’t hold much water. If the taxes are in fact based on 2.5% of actual value, I predict the new tax will slow development of new properties (not necessarily bad) and adversely impact the sale/resale of existing properties (bad).
Of course, it all depends on the CR government’s yet-to-be-seen book on how to value your property and the interpretations that it allows.Property taxes in Costa Rica are computed at 1/4 of one percent of the declared value of the property as recorded in the National Registry.
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