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We are working on an article about this but it will take some time as most ‘tax experts’ are finishing up their client’s taxes right now.
I look at many things in life like the stock market where from time time, it breaks out of an established trading range and goes to an extreme and then has to bounce back to create a new trading range. I believe that this is what we are seeing now because “if” that article is correct, those rates will most likely have a detrimental effect on the real estate market.
As you well know I have promoted the idea on this site that we should have much higher property taxes in Costa Rica – maybe double. But even if our property taxes are at .5% (double the existing .25%) they will still be far lower than what most us were accustomed to ‘back home.’
Having said that sophisticated real estate investors and people looking for a more affordable place to live will not tolerate paying first world property taxes for third world infrastructure.
How do you feel about this ‘HappyGirl’? Not so happy I guess…
Scott Oliver – Founder
WeLoveCostaRica.comI feel pretty much the same way you do, that property taxes are not high enough. Having said that I do not want my taxes to go from $500 a year to $10,000! I don’t think I would be very happy if that happens!
That will not happen…
Costa Rica needs to base their property taxes on the real market value of a home and not on the “recorded value” which is invariably a fraction of the real market value.
If they did that – even without raising taxes – that would raise billions more per annum. They are of course starting the process by remapping the entire country so it’ll come but it’ll take some time…
Scott Oliver – Founder
WeLoveCostaRica.comThanks Scott. I knew I would get a straight and sensible answer from you. I hope this thread does not turn into a discussion about the sad state of American affairs.!
FYI: I am in the process of closing on my house in Playa Bejuco. I will have the registry entry at the contract price of $102,000 not the $50,000 the Lawyer has put forth. I expect the tax situation will come around as the municipality sees actual sale prices in our area and I believe we should all pay the market rate anyway.
I expect to see an increase over the years too. But like you say, Scott, it is peanuts compared to the situation here in south Florida. We have homestead and a 3% cap on yearly increases called the “save our homes” amendment to our constitution. This of course does nothing for the speculators holding high dollar, vacant, condos and ocean front homes purchased in the 03-05 boom. Not to mention homeowners insurance running very very high for everyone after the 04 hurricanes. Mine is $4800/yr on a 1700 sqft island home, 200m to the beach. Flood insurance is cheap from the federal government at $700/yr.
I believe the resale market for existing homes will come roaring back in a few years for beachside property in south Florida. Stay tuned for the tax/insurance debacle. Costa Rica will look fantastic then.Poppel,
I too am a South Florida resident (Miami) and have a similar insurance and tax situation. My Costa Rican property was reported at a much lower value by the attorney than I paid for it. But even at the full value, it is still peanuts compared to here. I may rectify the reported amount next time I am in CR.I am always encouraged to hear anyone forecasting future home price increases for South Florida. I have read this in a few other places. We have high employment here and better weather than just about anywhere else in the U.S. and foreigners as well as northern Boomers continue to look here for investment as well as retirement.
How much increase will homes experience here and when is the bigger question. My own window is 4 to 5 years. In the meantime, prices here should continue to fall drastically. Most predict an upturn well after next year and perhaps even as late as 2010. Watching this U.S. economy and how it relates to the Costa Rican economy and specifically the real estate markets is turning out to be a real show.
Unless something changes, the tax scenario for Costa Rica looks the same as it does for Florida only on a smaller scale: Real Estate prices driven artificially high due to speculation followed by out of line property taxes due to assessments being based on the inflated property values. This is one of many reasons (oversupply being the biggest)why nothing is moving in Florida.
There is a plausible argument being made that South Florida is still playing catch up with other high value real estate markets. Property started out from a very undervalued position in 2000. When the boom hit, it accelerated the rise here to a more fair value in relation to homes in Southern California and the north east where, even with the continuing correction, are still valued at twice as much as South Florida homes.
I’ll bet something similar happens in Costa Rica after the coastal properties top off. The Central Valley will catch up a bit with those high values eventually.
I would agree and have invested accordingly… San Jose and the Central Valley probably will catch up with higher prices eventually…
In the face of all the negative news coming out of the US real estate market, I have recently committed (November 2007) to a substantial real estate investment in San Jose.
The price is most definitely on the very high end for this area at $2,000M2 but compared to most ‘cosmopolitan’ areas in stable capital cities, it’s still a bargain.
In reading about Manhattan real estate at $1,804 average price per sq ft for a four bed apartment, I am delighted to be paying just $183 per square foot for a brand new luxury penthouse.
I know San Jose is not Manhattan but, there’s very little in Manhattan that I can’t get here now and that’s without outrageous property taxes, high monthly condo fees, freezing weather in the winter, stifling hot in the summer and three weeks of “Spring.”
Here we enjoy about 48 weeks of ‘Spring’ – I love this place …
Scott Oliver – Founder
WeLoveCostaRica.comScott,
I have an acquaintance in the central valley who sells real estate. (He has met you a few times) I bought from him and keep in touch and visit when I am down there. He tells me things are heating up in the area. When last I visited him, he was in the process of deals well into multiples of millions of dollars. It is so tempting to dip a toe into the water right now…….
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