FAQ | Property Tax and other taxes to pay when buying property in Costa Rica
Don’t you want to know what property tax to pay before you buy property in Costa Rica? Of course, you do, this is a frequently asked question by many buyers.
There are several taxes to be paid when you purchase property and after:
Property Transfer Tax
The first tax you will be paying is the property transfer tax, which is 1.5% of the purchase price. This is called “impuesto de traspaso”.
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 cost.
The property transfer tax is part of the total closing cost. Closing costs are usually shared 50/50 unless negotiated differently.
This tax is retained at closing and then paid by the notary public.
The annual property tax in Costa Rica is 0.25% over the registered value in the municipality where the property is located.
Property owners have the obligation to update the value of their property every 5 years, in the same municipality. Learn more about that here.
The property tax is paid annually (with a small discount) or every quarter, at the municipal offices. Some municipalities have an online system, but in most cases, it is recommendable to pay the tax in person.
Luxury Home tax
Luxury homes pay an annual luxury home tax, or “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 2019, property owners are exempt from this tax for less than ¢133.000.000 ($233,296), which is only the construction value. This does not include the land value.
The tax is calculated on a sliding scale from 0.25% – 0.55% and has to be paid before January 15th. This tax can be paid in Banco de Costa Rica, BAC San José, Coopenae, or Banco Nacional de Costa Rica.
Those property owners who have the property registered in a Corporation have to pay corporation tax or “Impuesto de las Personas Jurídicas”. I recommend you ask your legal advisor about getting involved in buying or constituting a corporation BEFORE signing a purchase agreement.
Have you paid your mandatory corporation tax every year? Did you get your mandatory digital signature yet? Did you register the shareholders with the government? If your answer is NO and you don’t know how to resolve this, click on the banner below. We have the solution, at a very affordable cost.
There are different charges for an active and an in-active corporation and they change when the legal base salary changes. Here you can check how much tax is owed by a corporation, just fill out the corporation ID #.
For the year 2020, the corporation tax to be paid is as follows:
Inactive corporations have to pay 15% of a base salary which is ¢450.200,00 in 2020 = ¢67,530 ($118.45 at an exchange rate of 570.09 on Jan. 1st 2020)
Active corporations have to pay
25% of a base salary if the total gross income is lower than 120 base salaries, which is ¢450.200,00 in 2020 = ¢112,550 ($197.42 at an exchange rate of 570.09 on Jan. 1st 2020)
30% of a base salary if the total gross income is between 120 base salaries and 280 base salaries, which is ¢450.200,00 in 2020 = ¢135,060 ($236.90 at an exchange rate of 570.09 on Jan. 1st 2020)
50% of a base salary if the total gross income is more than 280 base salaries, which is ¢450.200,00 in 2020 = ¢225,100 ($394.85 at an exchange rate of 570.09 on Jan. 1st 2020)
Be aware that the base salary changes every year, you can look it up here.
Capital Gains tax
Capital gains tax 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 except for this tax. Investment properties all have to pay 15% capital gains over the profits, if the property sells after August 2019. More info here.
Would you like to find out more about all the taxes charged by the Costa Rican Government? Then go here now.
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