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Can anyone tell me if what I heard is true? My wifes cousin, bolth Ticas, told her that if you are a US citizen you will pay property tax to the United States if you own a home in Costa Rica. My wife will talk to our attorney in San Jose, but really I believe that this forum is also a great place to ask this question. I’m not asking for any legal advise, just first hand experience.
that is preposterous. Think about it for a second; A citizen’s income can be taxed but property taxes are levied BY the country wherein the property lies FOR the infrastructure that surrounds the property. What would be the reason for a U.S. tax on Costa Rican land? Also, how would the IRS even know you own property in costa rica if you purchased it via a corporation (sociedad anonima)?
A man goes to a baseball game, buys his ticket which is taxed and goes to his seat 400 feet from home plate. A batter comes up and with a smashing hit drive the ball for the blechers where the man sits. A mob jumps on the ball but with a bloody face the man comes up with the ball. Home run numer 756 for Barry Bonds! The man is escorted out by police and security. Later he find out he will now have to sale the ball, which he will need to pay income tax on, or pay a capital gains tax on it. A 5 dollar ball that is now worth a half a million dollars. Now that sounds preposterous! The question I asked was told to my wifes cousin, who is Costa Rican, by an attorney where she lives in Boston with her husband, a north American doctor. My wife asked if this is true and I said I don’t know for sure but I would ask this forum since it seems that the comments are made by intelligent people. Thanks for the reply
Your wife’s cousin has been misinformed. First, the property tax is, indeed, a domestic tax levied to support public services, infrastructure, schools, etc. It is levied by the local government only. The various taxing authorities in the United States have no more interest in the taxation of real estate in Costa Rica than they do in the taxation of real estate in Panama or Great Britain. If that were not true, you can rest assured that the U.S. would be taxing property in Tokyo and Hong Kong long before they would be taxing property in Costa Rica.
What’s more, since property taxes are levied by local governments, to whom in the United States would this tax be paid? The U.S. Internal Revenue Service does not collect real estate taxes from anyone. We, like many expats, have no residency in any particular state in the U.S., so there is no state, no county, no city or town in any legitimate position to levy a tax on us.
Whatever you have to worry about, don’t worry about paying real estate taxes on Costa Rican real estate anyplace in the U.S.
Maybe he was referring to Capital Gains taxes, if you sell your real estate in CR , and come away with a truck load of money. Then it would be income, that would have to be declared on your income taxes if you still hold U.S. citizenship. The U.S. can not collect any property taxes in a foreign country.
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