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New solidarity tax on luxury property in Costa Rica

A new solidarity tax took effect October 1st in Costa Rica, adding a tax on luxury property. Unlike the regular property taxes which are paid at a local level, this is a tax levied by the country, a social tax to be used to provide better housing for the poor. This new graduated tax ranges from .25% to .55% and is based on the value of the improvements on the land, not the land itself.  ** This “temporary” tax for the next 10 years is estimated by the Costa Rican government to bring in $45 million/year and they estimate 40,000 people are living in inadequate housing. For the gringos who don’t like seeing substandard housing – now you’ll be doing something about it. At least they’re upfront enough to call it a Social Tax.  Read what one luxury colleague in Costa Rica has to say:

Yalile Alpizar

Questions and Answers on the tax

Since this is a tax only on the improvements, there won’t be any additional taxes on lot purchases.

**  10/20/2009.  Clarification just received: while there is no tax on vacant land in luxury locations, gated communities and resorts, for those properties with improvements, the tax covers both the improvements and the land.

Spoken by Sharon Simms | Discussion: No Comments »

Costa Rica to raise property taxes on luxury homes

Knowing that low property taxes are one of the attractions of Costa Rica property, we were a bit concerned when we read on our recent trip to Costa Rica that property taxes were going to increase. Putting it in perspective, though, property taxes there at the new rate are still 1/3 of the rates here in Florida.

Below is an explanation from my colleague and friend, Yalile Alpizar, in San Jose. She’s also a fellow member of Who’s Who in Luxury Real Estate.

Yalile Alpizar of Costa Rica Luxury Estates

Yalile Alpizar of Costa Rica Luxury Estates

The Solidary Tax or Impuesto Solidario será recolectado por el Ministerio de Hacienda con base en la siguiente tabla de cálculo
By Yalile Alpizar, President CostaRicaLuxuryEstates  Dated: Jun 26, 2009

Numbers are in millions of colones:
Below 100 exent
above 100 up to 250 0.25%
above 250 up to 500 0.30%
above 500 up to 750 0.35%
above 750 up to 1,000 0.40%
above 1,000 up to 1,250 0.45%
above 1,250 up to 1,500 0.50%
above 1,500 and above 0.55%
The new tax will be applied over a period of ten years starting on July 2009. The income produced by this
tax will be used for erradication of tugurios or shack homes. The government has calculated that there are
approximately 40,000 shack homes in Costa Rica.
Owners will be asked to declare their fiscal value of their property every three years. Values are based on
the value of the constructions and the value of the land is not part of the calculations.

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