FAQ | Property Tax and other taxes to pay when buying property in Costa Rica
Don’t you want to know how much property tax to pay before buying property in Costa Rica? Learn now how much, when, and where to pay Costa Rica property tax, as well as other taxes.
After you purchase a property in Costa Rica, you have to pay several property-related taxes:
Property Transfer Tax
When you purchase a property in Costa Rica, the first tax you will be paying is the property transfer tax – Impuesto de Traspaso. The property transfer tax is 1.5% of the purchase price.
There are also a few stamps involved. The National Registry Stamp is 0.5%, and the document stamps are scaled and less than 0.01%. See here for a complete calculation of all closing costs.
The property transfer tax is part of the total closing cost, usually shared 50/50 between buyer and seller, unless negotiated differently.
At closing, the notary public retains this tax and pays it to the tax authorities.
The annual property tax – Impuesto sobre Bienes Inmuebles – in Costa Rica is 0.25% of the last value registered in the municipality. Property owners must update the value of their property every five years in the city administration – Departamento de Bienes Inmuebles. Learn more about that here.
Property owners must pay the property tax quarterly at the municipal offices. However, they will give you a small discount if you pay annually. Some municipalities have an online system, but I recommend you pay the tax in person in most cases.
Luxury Home tax
Luxury homes pay an annual luxury home tax – Impuesto Solidario para el Fortalecimiento de Programas de Vivienda. It is not so easy to calculate this tax. You need to understand Spanish and be computer savvy. The Tax Authorities website will explain to you how to calculate. Ask your realtor or real estate attorney if the property you are buying has to pay luxury home tax or not before signing a purchase agreement!
In 2021, property owners were exempt from this tax for less than ¢133.000.000 (: 638 =$208,464), which is only the construction value, not including the land value.
The tax is calculated on a sliding scale from 0.25% – 0.55% and paid before January 15th. This tax can be paid in Banco de Costa Rica, BAC San José, Coopenae, or Banco Nacional de Costa Rica.
Property owners who have the property registered in a Corporation have to pay corporation tax – Impuesto de las Personas Jurídicas.
This corporation can be a Sociedad Anónima (S.A.), a Sociedad de Responsabilidad Limitada (S.R.L.), a Sociedad en Nombre Colectivo (S.N.C.), or a Sociedad en Comandita Simple (S.C.S.).
I recommend you talk to your legal advisor before purchasing a corporation that owns a property.
Do you already own a corporation with a property? Then there are several issues that you should ask your legal advisor about:
- Mandatory corporation tax every year,
- Digital signature,
- Shareholder registration in Registro de Transparencia y Beneficiarios Finales (RTBF)
If you don’t know how to handle this, click on the banner below. We have the solution at a very affordable cost.
There are different charges for an active and inactive corporation, and they change when the legal base salary changes. Here you can check how much tax is owed by a corporation, but you’ll need to register first. Then, just fill out the corporation ID #.
The tax authorities are always late in updating their information, therefore check for an update here. For the year 2021, the corporation tax to be paid is as follows:
Inactive corporations have to pay 15% of a base salary which is ¢462.200,00 in 2021 = ¢69.330,00 ($108.49 at an exchange rate of 639.06 on January 1st, 2021)
Active corporations have to pay
25% of a base salary if the total gross income is lower than 120 base salaries, which is ¢462.200,00 in 2021 = ¢115.550,00 ($180.82 at an exchange rate of 639.06 on January 1st, 2021)
30% of a base salary if the total gross income is between 120 base salaries and 280 base salaries, which is ¢462.200,00 in 2021 = ¢138.660,00 ($216.98 at an exchange rate of 639.06 on January 1st, 2021)
50% of a base salary if the total gross income is more than 280 base salaries, which is ¢462.200,00 in 2021 = ¢231.100,00 ($361.63 at an exchange rate of 639.06 on January 1st, 2020)
Be aware that the base salary changes every year.
Capital Gains tax
Capital gains tax – Impuesto sobre Ganancias de Capital is paid when you sell, not when you buy. Starting in August 2019, investment property owners will have to pay capital gains tax when they sell.
First residences are exempt from this tax.
Investment properties all have to pay 15% capital gains over the profits when the property sells. To calculate the capital gains tax, you take the registered value when you bought the property, then deduct the sales value, and multiply the balance by 15%.
Would you like to find out more about all the taxes charged by the Costa Rican Government? Then go here now.
We do appreciate your real estate referrals. If/when you purchase property in Costa Rica, we’d like to assist. We are the real estate experts, from coast to coast. Contact us now.
Feel free to leave your comments on this blog. If you like this article, please feel free to share it on your social media.
If you like this blog, subscribe to our newsletter by clicking the banner below.