by Ivo Henfling
This week I have received an amazing amount of phone calls from home owners who did not know what to do about the Luxury Home tax Costa Rica 2013 and though I am not an expert on the Luxury home tax issue, I decided to update you all in a blog.
This tax, created by Ley Nº 8683, has to be paid before the 15th of January every year.
The Luxury home tax law or Impuesto Solidario, was invented and approved by the Laura Chinchilla government in October 2009 to eradicate the slums on Costa Rica and they decided the rich should pay for that. If you are reading this blog, you might be rich in the eyes of the Costarican tax department and you better keep reading.
Some of the people who call me to ask questions tell me things like "oh, my attorney told me my house does not qualify". Has your attorney been to your house? Does your attorney know anything about property values? Does he know about construction values? Probably not and that is the reason you should read on.
The Luxury Tax Appraisal
Most of the calls I receive are because people don’t know if they should pay or not. Some use the appraisal services of any crook who wants to make a buck. I hear about a several gringos offering to do the appraisal for only $150, one even sight unseen. You don't want to get caught for not paying, do you? a great way to get goose bumps is to check below how much the fine is for not paying.
Others have been charged up to $500 by some architect, some engineer or even a surveyor or two, to do an appraisal. And unbelievably, some people who had these so called appraisals done think they are covered if tomorrow the tax department shows up on their door step. I would like to get some important facts on the Luxury tax out of the way so I can refer those who call or email with questions to this blog.
The main issues on the Luxury Home Tax
For a quick desktop calculation, if you house is a regular home no older than 5 years with regular finishes, use the size of your total construction in m2 (see 2) and multiply by $800. For every year of construction, deduct 2% off the value. This ONLY serves for a quick idea if you need to hire an appraiser or not.
1. You are exempt of the Luxury home tax if the value of your fixed structures is under ¢ 117,000,000 (including but not limited to perimeter walls, internal streets and sidewalks, bodega, gazebo, swimming pool, tennis court and others and guesthouses).
2. The value of the land is included in the calculation of your Luxury home tax. BUT to calculate if your property applies or not, you ONLY use the total construction value as in 1.
3. You can safely assume the value of your land to be what your municipality assesses it at. You can find the map of your area by clicking here. You will need Adobe Acrobat Reader 8.0 or superior to see these files.
4. WARNING !! If you are in doubt if you have to pay the tax or not you should hire a certified appraiser. To satisfy the tax department, the appraisal has to be done by a certified appraiser. Not one by some gringo who probably doesn’t even speak Spanish.
5. I have recommended Valor Inmueble to all my own clients and they have done a real good and responsible job. You can reach them through Ing. María Nella Pacheco A., Commercial Manager, Phone: 2291-8820 ext: 106 but feel free to surf on Google to find any other serious appraisers. I can not find any list of private appraisers recommended by the tax department.
6. The Tax department also has appraisers in the different tax offices of each province, but you will be on a waiting list.
7. ONLY YOU, the home owner, are responsible for paying the tax and of hiring an acceptable appraiser by the tax department. If they decide you should have paid and your gringo – architect – engineer – surveyor gave you a different opinion, it is YOUR responsibility.
8. When you purchase Costa Rica real estate and the tax is not paid before closing, YOU become the responsible person for not paying it.
9. If you want to calculate it all yourself, you can do so by downloading attorney Roger Petersen’s Luxury Home Tax Guide for very little money. Again, this is your ENTIRE responsability of doing it right.
10. When you hire an appraiser, insist they also fill out the form D-179 for you so you only have to pay in the Banco de Costa Rica (the ONLY bank who accepts these payments). You can download the form by clicking here.
11. The tax declaration has to be presented every 3 years with the new tax value. So for 3 years, the value stays the same and you just have to check with the tables shown in the picture on the right how much you should pay.
12. The tax has to be paid on the 15th of January at the latest, every year. People who do not comply with the declaration and payment of the solidarity tax are exposed to a penalty of ten times the amount of tax that is left to pay.
14. Here you can download an excel sheet from the tax department’s website where you can calculate your taxes to be paid.
If you don’t live in Costa Rica or have any other doubts, you can check on the Ministerio de Hacienda for more information in Spanish.
Of course, if you are interested in buying a home in Costa Rica or know of someone who does, I will appreciate your business. My blogs are meant to show you that GoDutch Realty knows its business like few other real estate agents in Costa Rica do. Thanks for your business or recommendation. Contact me NOW if you want to do Costa Rica real estate business with us.
Our latest update on this blog is that Costa Rica Real Estate attorney Roger Petersen has done a fantastic video on YouTube to explain the Luxury home tax.
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I DO want to remind our readers that we appreciate any referrals you can send us. I know you all meet people on the plane, in the supermarket, at yoga, at the gym, at the Blooms ladies club, at the potluck organized by your community. Please remember the GoDutch Realty agents when you talk about your home in Costa Rica, when you meet someone who wants to purchase one, we appreciate it.