Property Taxes In Costa Rica (Plus Luxury Home Tax and Corporation Tax)

May 13, 2023 in Tips for Buyers, Real Estate in Costa Rica, Tips for Sellers, Life in Costa Rica

It is tax season here in Costa Rica and we are fielding a lot of questions from our client base and others who look to us for information (want to join our weekly newsletter to stay current on news and properties in South Pacific Costa Rica, sign up here).

Annual Property Taxes In Costa Rica 

Taxes in Costa Rica are relatively low when compared to many other places around the world, including other expat havens. Simply put, the annual property tax is 0.25% in Costa Rica. However, there is something called a luxury property tax that can elevate the tax rate on your property if your property is valued over a certain amount. Global annual property taxes compared:

  • Costa Rica: 0.25% - 0.8%
  • Mexico: 0.1%
  • Panama: 0.5% - 1%
  • United States: 0.5% - 1.5%
  • Canada: 0.25% - 1.3%
  • Indonesia: 0.3%
  • Spain: 0.4% - 1.16%

How to Pay Taxes in Costa Rica

Property taxes in Costa Rica are administered by the local municipal government where the property is located and can as such be paid locally. This can be paid annually, biannually, or every trimester. Every five years, a property owner in Costa Rica must file a Property Declaration Form with their local municipality declaring the value of their property, based on the purchase price or an appraisal. This value is reviewed by the municipality, which may audit the filing if they deem the value to be lower than their established parameters dictate within their database.

What do property taxes in Costa Rica pay for?

According to Costa Rica Law, the breakdown of how taxes are used is:

  • 1% goes to pay the appraisal training that the National Revenue Department provides to the local Municipal governments.
  • 3% goes to the National Property Registry
  • 10% goes to the Board of Education for each regional Canton
  • 10% is earmarked for Administrative expenses in collecting the tax.
  • 76% which is the balance does directly to the Local Municipal government.

Luxury Property Tax in Costa Rica

The luxury property tax applies to houses, condos, and apartments with a construction value beyond $215,000 USD (as of 2021). This value is determined by the municipality, as described in the previous section. Depending on the declared value of your property’s construction, this tax rate can be anywhere between 0.25% and 0.55% (a tiered tax with seven rates). This tax is in addition to the annual property tax of 0.25%. This equates to roughly $250 to $500 per $100,000 of your declared property value.

$215,000 $540,000 0.25% $550 $1,350
$540,000 $1,085,000 0.30% $1,600 $3,250
$1,085,000 $1,625,000 0.35% $3,800 $6,700
$1,625,000 $2,170,000 0.40% $6,500 $8,700
$2,170,000 $2,710,000 0.45% $9,750 $12,200
$2,710,000 $3,255,000 0.50% $13,550 $16,300
$3,255,000   0.55% $17,900  

How the assessed value is calculated can depend on who does the evaluation, which makes this tax quite nuanced and based on the specific characteristics of your property. Generally, the property will be modern or have an ocean view to be classified as a luxury property. The luxury home tax is paid in the first half of January for the previous year. The market value is reassessed every three years. Raw land with no legal dwellings, agricultural land, and commercial properties are exempt from this tax. This tax is officially called the Solidarity Tax for the Strengthening of Housing Programs in Costa Rica and goes towards subsidizing low-income housing in Costa Rica.

Annual Corporation Tax in Costa Rica

Since most expat homeowners in Costa Rica have their assets held in a Costa Rican corporation, the corporate tax is important to mention. Inactive corporations (those simply holding assets and not generating an income) pay a fixed annual rate of $120. Active corporations pay an annual fee of between $120 and $380, depending on generated income. To learn more about how Costa Rica real estate works, contact our expert team at info@osatropicalproperties, or sign up for our informative weekly newsletter below.

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