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FAQ | Property Tax and other taxes to pay when buying property in Costa Rica

FAQ | Property Tax and other taxes to pay when buying property in Costa RicaDon’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.

Property Tax

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 ¢131.000.000 ($218,333), 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.

Corporation tax

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.

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 #.

Inactive

Inactive corporations have to pay 15% of a base salary which is ¢446,200.00 in 2018 = ¢66,930 ($111.55 at an exchange rate of 600)

Active

Active corporations have to pay

25% of a base salary if the total gross income is lower than 120 base salaries, which is ¢446,200.00 in 2018 = ¢111,550 ($185.91 at an exchange rate of 600)

30% of a base salary if the total gross income is between 120 base salaries and 280 base salaries, which is ¢446,200.00 in 2018 = ¢133,860 ($223.10 at an exchange rate of 600)

50% of a base salary if the total gross income is more than 280 base salaries, which is ¢446,200.00 in 2018 = ¢223,100 ($371.83 at an exchange rate of 600)

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.

Other taxes

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.


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Ivo Henfling

Your West-side of San Jose real estate agent, covering Escazu and Santa Ana, Rohrmoser and Ciudad Colon.If you are looking to buy a home in Costa Rica or invest in a condo anywhere in the Central Valley or looking for any property for sale in Escazu or Santa Ana, you need to contact Costa Rica real estate agent Ivo Henfling. Ivo has been selling Costa Rica real estate on the westside of San Jose, in the locations of Rohrmoser, Sabana, Escazu, Santa Ana and Ciudad Colon for over 20 years and can show you hundreds of happy buyers of real estate in Escazu and those other areas. For Ivo, a deal is not a good one unless both buyer and seller are happy.

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