There are some things to remember when relocating to Costa Rica, approach things with a positive…
Local municipal governments in the area where the property is located are responsible for managing property taxes. In the past, there was a “wild wild west” approach to people under-evaluating their property to the government to undercut the taxes they needed to pay. In recent years the government has been cracking down on this behavior. With that being said, to this day property taxes in Costa Rica are still typically inexpensive compared to many other countries.
How property taxes are evaluated
Every 5 years, the property owner must submit a “Property Declaration Form” (Declaración de Bienes Inmuebles) to the municipality where the property is situated. Although the owner fills out the form indicating the value, the municipal government reviews it to ensure the disclosed values are within bounds. Many have a database of property values, and they anticipate you to set values in your declaration that go inside their valuation guidelines. If it believes that the value stated in a file is lower than the values established in its valuation manuals, it may audit the filing. This declaration applies to all properties last declared in 2017 or before, even those that have never made a valuation declaration previously, and is due on November 30, 2022. Some jurisdictions have started enforcing penalties for failure to file, such as a fine that might be the same as the new appraisal’s value and the amount of property taxes you previously paid. You can file anytime between September 1, 2022, and November 30, 2022.
The annual property tax that must be paid in all of Costa Rica is 0.25% of the assessed value, as recorded in the municipality from whence the tax obligation stems according to Law 7509 Ley Sobre Impuestos de Bienes Inmuebles. The majority of municipal governments will require property taxes to be paid every 3 months (quarterly) and give you the option to pay for the entire year. Most towns will provide a discount if you pay for the whole year in advance. Certain towns may not accept credit cards, while others have an online payment system. Given that this varies, it is advantageous to learn about potential future, less complicated online payments made using a BCR account.
The municipality where the property is situated is also responsible for collecting luxury taxes. The luxury home tax levies any residences where the construction is valued at ₡138,000,000 colones or approximately $220,000 USD. You may pay this every 3 months (quarterly) or in advance for 1-2 years.
Each January, corporations must pay their yearly taxes. The administrative charge for the Ministerio de Hacienda (the tax authorities) is about ₡80,000 colones or about $126.90 USD.
If you do not pay your corporate taxes you face the danger of having your business dissolved, which might delay the selling of your property. We advise constantly keeping up with your taxes because fixing this could cost thousands of US dollars in legal expenses.
Shareholder’s Declaration or RTBF yearly declaration’s goal is to update the information that corporations have about their current shareholders and beneficial owners. Every year, the deadline is April 30.
The assets, liabilities, and equity of inactive corporations that don’t engage in any commercial activity or company must nevertheless be disclosed in Costa Rica. It takes a public accountant to complete this procedure. You can file this duty through your Costa Rican attorney, and it is applicable to all corporations in the country. The yearly filing deadline for this declaration is March 15.
What Happens to the Property Taxes?
From our understanding, the breakdown of the property taxes landowners pay to their local government is as follows: 1% of the cost of assessment training for local municipal governments is covered by the National Revenue Department; 3% goes to the National Property Registry; the Board of Education receives 10% of the money from each regional Canton; tax collection-related administrative expenses are allocated 10% of the budget; the remaining 76% is given directly to regional municipal authorities.
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