Time flies, this also applies to taxes and the property tax on luxury homes which is no exception to the rule. Officially starting on the 16th November 2010, the collection process for the next tax year has started and the deadline is 15th January 2011.

Here’s a quick reminder of how it works:

The target of this tax are all the owners, individuals or corporations, of houses, apartments, condominiums and every building used for housing purposes even if they are within the Maritime Zone which worth more than US$197,238 based on the Official Value Guideline used by the Costa Rican Tax Administration which are as follows:

In order to figure out the market value the Costa Rican Treasury has designed a guide so called Unit Base Values by Constructive Typology Manual, which includes the guidelines to be used in order to report the appropriate value of the building; the initial value should be up graded every 3 years using the guidelines on the current manual at that point.

If there is any improvement to the building from the first report then the value of the building should be updated and the calculation basis will change for the following tax year.

Keep in mind that the first screening is run only on the building itself, not the entire estate, so after that screening if the value of the building is under US$197,238 you don’t have to worry about this tax, but if the screening tells you that your house worth more than US$197,238 then you need to take the next step which is to come up with the value of the land by using the same above mentioned guideline to run a screening process; then you will be ready to file and pay the tax, otherwise you don’t have to file any tax return or make any payment.

The good news is that you don’t have to hire an appraiser, engineer or architect to run this screening process for you, since the Tax Administration launched a software that you can download and use, of course you will need good Spanish language skills, but at least this tells you that there are some other ways to make sure, officially that your house do not falls into this category.

To rent or buy this one hour video with Costa Rica Tax Expert Randall Zamora, please visit our Video On Demand page here.

What is new in property taxes in Costa Rica for the second year?

The tax remains exactly the same, the only difference is that the 3,529 payers who filed and paid this tax back on 2010, will only have to pay the very same amount that they did pay using the form D110, and that amount will remain the same for 2012 as well.

Now, the first timers will have to run the screening process based on the new Unit Base Values by Constructive Typology Manual, which will be updated as of 30th November 2011 and it may be released sometime in December 2010, then start the process from scratch which means:

• The individual or corporation who is the owner of the house must be registered with the Costa Rica Tax Administration and …
• File the tax return and make the payment based on the rates listed above.

Final Costa Rica Property Tax Recommendation?

Just figure out the value of the property, again you don’t have to spend hundreds of dollars doing that, for instance, our firm provides this service using the official software designed by the Tax Administration and you get a copy of the report with the official value based on the official Guideline.

The information entered does not enable the Tax Administration to track your property, so that is one simple way to have a official document that will let you sleep well at night, but make sure that you are using the official software provided by the Tax Administration.

Written by Randall Zamora who is the President and CEO of CostaRicaABC.com, former CFO and Head of Accounting Department of multinational companies like Four Seasons Resort Costa Rica, active member of the Interamerican Accounting Association, Pro Bono Local Partner of The World Bank and contributor to their yearly publication “Doing Business Report.”

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.