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I hate to bring up this ugly subject once again, but has anyone attempted (or succeeded) in calculating their luxury tax under the new guidelines and formulas?
I have paid it each year since its inception and intend to do so again this year, but I can’t find any information on the required re-calculation(s).
The new law was established in november 2008.
It is called “Ley de Impuesto Solidario para el Fortalecimiento de Programas de Vivienda”
The term “luxury tax” was probably created by us “Gringos”
It applies to assets worth (valor fiscal) more than 100,000,000 Colones, and not only to “Gringo” style homes. By law, the luxury-home owner has to fill in a new tax declaration every 3 (!!) years.
There are a bunch of complicated formulas and methods in order to do a real appraisal, but one probably has to be an appraiser in order to understand them.
Therefore the municipalities are providing a list of land values for each area (not taking into consideration certain details, such as paved public road front or horrible gravel private roads etc.
They also give you an idea about the current value of an existing building, but they rarely go out to do an appraisal.
I would guess, 80 % of all property owners are cheating when it gets to declare the taxes, and/or when they want to sell their homes… Guess in which case the value is much higher ? 8)
[quote=”costaricabill”]I hate to bring up this ugly subject once again, but has anyone attempted (or succeeded) in calculating their luxury tax under the new guidelines and formulas?
I have paid it each year since its inception and intend to do so again this year, but I can’t find any information on the required re-calculation(s).[/quote]
I just checked the tax departments webpage and found a lot of information about that tax. They offer a program to calculate the value of the buildings that anyone can download and it is easy to use. It is called SOLIDARIO.
On this page:
http://dgt.hacienda.go.cr/tiposdeimpuestos/Paginas/Impuestosolidario2013.aspx , this page gives a lot of information about the tax and how to declare and pay it. To download the programm, click on:
c. Descargue el programa de ayuda ISOFOPROVI para el período 2013Download and install the program on your computer.
If the value of the buildings comes out to be over 117 million Colones, you have to pay the “luxury tax”.
For land value you can use this page :
For not-spanish speakers, better hire an accountant or attorney who is familiar with tax issues.
Thanks for the info.
I have had this site for a couple of weeks and installed it and tried and tried to get it to open. I keep getting to the first input page and then before I can make the first entry I get either a “server error” or “runtime error” message.
Once it told me that the program would not run on a 64 bit windows program, only the 32 bit version.
I don’t know, I have read that the average increase for category 8 houses is 68%, so I think I’ll fill out my form d-179 form and show a 55% increase, pay it and be done with it.
I am going through this luxury property tax BS right now and it would appear that the Hacienda (the Costa Rica tax department) is deliberately targeting the owners of the San José building where I live in and we all feel as if they are probably going to try and make an ‘example’ out of us.
We all received another email from the Hacienda earlier today …
I pay property taxes based on the Hacienda’s own 01/12/2010 valuation and as far as I can see that property value hasn’t changed much – up or down – in the last two years.
Scott
I have had problems too with the programm at the first try. I deinstalled and installed again, and then it worked.
Scott, the tax is not for San Jose only. It applies to all properties where the value of the buildings is above a certain amount. The mentioned program not only calculates the value of the property but also how much tax you have to pay.
In real live, construction and land value did not increase during the last 2 years, many property owners/sellers dropped their prices (which reflects the market), but the government has its own rules when it is to their benefit.
This Newsletter arrived to day from an attorney friend that works for Facio & Canos, a very well-respected law firm in San Jose
[i]”[b]Tax on luxury homes[/b]
This Tuesday, January 15th is the deadline to submit and pay the solidarity tax, so below you will find some information that will help you to fulfill this obligation.
This tax declaration should be done every three years, so that those taxpayers who declared before January 15, 2010, are required to file the return again this year adjusted to the new published values, and respecting the new tax sections. The solidarity tax return is made on Form D-179, which was made available to the taxpayer recently (21-Dec-12). In fact, although new values of building typologies were released several months ago, the official tool for calculating the solidarity tax (or luxury homes) was very recently updated (21-Dec-12).
Although the press reported otherwise, the new calculation bases imply that, on average, properties have risen 68% compared to the value they had three years ago when the last return was presented. This average is higher for condominiums (between 80% and 90%) than for houses (between 50% and 70%), between building typologies VC07, VC08 and VC09, which are the majority of those we have attended. Is our understanding that the VC10 typology (= super luxury homes) increases a little more, but we’ve only had one valuation of this type, so we do not dare to draw general conclusions.
The soil or land in general, did not change in value.
Not only is it possible, it is very likely, that houses or apartments that were within the exempt range are now taxed. This happens mostly with properties that were about ¢ 10 million or less below the limit of the exempt range.
In addition there are several items that have changed since the previous statement:
– In general, building square meter (basic unit valuation that has variations depending on the materials) rose from ¢ 370,000 to ¢ 700,000.
– Grass areas increased from 900 to 2000 m2.
– Some condominium elements (such as lakes, prefabricated bridges) were not covered and now they are.
– Some elements of the houses were not covered and now they are contemplated:
o Septic tanks (classified according to the number of people serving the dwelling unit, and are priced independently of the unit)
o “middle area”: terraces, inner patios, open garages, open porches, etc..), previously valued as the rest of the building and is now valued at only 50% (one of the few “favorable” points for the taxpayer).
o welded steel mesh (when no wall).The declaration may be presented in two ways:
• In paper: downloading the D-179 form, filled it manually and presented it along with three copies in any of the collection agencies.
• Online: fills the statement on the website of Direct Taxation ‘and payment is made through connectivity in any of the collection agencies, or is presented at the bank with an official receipt of payment.However, taxpayers who declared for the first time in 2011 or 2012 shall make only the payment of the tax, either through electronic payment (via the internet), or directly at the bank with an official receipt of payment. However, the payable amount should be updated, and before making the payment, exempt base should be considered in order to determine if your home has to pay the tax or not. Those residential assets whose fiscal value of the construction, including the value of the fixed and permanent installations, do not exceed the amount of ¢ 117 million, are exempt.
Remember that the deadline to submit the declaration and the payment due on Tuesday, January 15th, and we do not recommend doing that the last day because the computing platform of the Ministry of Finance is supersaturated. “[/i]
[b]Scott, I don’t think you or your neighbors are targeted any more than me or my nrighbors….. I think once again it shows the 100% total ignorance of the CR government.[/b]
Their thinking MUST BE,
[i]”OK, we originally thought 12,000 to 14,000 homeowners and condo owners would pay this tax, but the first year there were only 1,500 or so and now we are up to 3,500 – so let’s tax the hell out of those that were honest enough to VOLUNTARILY pay the tax in year 1, and 2 and 3 and that will help![/i]I only wish the CR gov’t would take a look at what they are doing to those of us that “are are already here and willing to pay our fair share” and how many of us would gladly leave if only the buyers were not already sophisticated enough to know that the CR government is out to get extranjeros, no matter where we are from!
Right now, my home is has a value of maybe 60% of what it costs to build, and the CR gov’t is trying raise my taxes 60% or more – OK, taxes are indeed low, but still, where is the logic?
bk
I only have one question! I pay the new corporate tax, and the property luxury tax, on two properties; in Guanacaste. Where the hell is the money going! I have friends who relocated from Costa Rica to Panama, who constantly send me their sympathies!
[quote=”Sailor”]I only have one question! I pay the new corporate tax, and the property luxury tax, on two properties; in Guanacaste. Where the hell is the money going! I have friends who relocated from Costa Rica to Panama, who constantly send me their sympathies![/quote]
yep
it’s that double tax..actually in your case your paying taxes 3times.
corporate tax
normal property tax
and the luxury tax :D:D:D:D:DI am proud of the progress costa rica achieved on relation to this taxation.
all these new taxes.. and everything stays the same 😀
[quote=”costaricabill”][b]Scott, I don’t think you or your neighbors are targeted any more than me or my nrighbors….. I think once again it shows the 100% total ignorance of the CR government.[/b]
Right now, my home is has a value of maybe 60% of what it costs to build, and the CR gov’t is trying raise my taxes 60% or more – OK, taxes are indeed low, but still, where is the logic? bk[/quote]
Great post – thank you ….
The Hacienda is emailing us at our personal email addresses Bill so that’s why we think the owners in our building is being made an example of… Are they emailing you?
IMHO – Referring to government and logic together is illogical!
Scott
Would appreciate comments on the following:
We originally thought we would have to pay the luxury tax due to the price of our property. Our attorney told us that, because there are two houses on the property, we do not have to pay the tax. Essentially, the total value is halved, with 50% of the value applied to each house, so no luxury tax applies.
[quote=”VictoriaLST”]Would appreciate comments on the following:
We originally thought we would have to pay the luxury tax due to the price of our property. Our attorney told us that, because there are two houses on the property, we do not have to pay the tax. Essentially, the total value is halved, with 50% of the value applied to each house, so no luxury tax applies.[/quote]
Oh dear VLST – I am afraid you received some bad advice! The “price of the property” has NOTHING to do with the requirement to pay the Luxury Tax until AFTER you compute the value of the IMPROVEMENTS constructed (or in place) on the property. If, after you compute that total value of all of those constructed improvements and the value is LESS than the threshhold value required to pay the tax can you then forget about the “price of the property”.
Now, if your property is split into two different corporations, and your improvements are clearly split onto the two separate properties and the value of each those separate improvements fails to meet the threshold value of the tax – you are OK. If not, I am afraid you received some very bad legal advice, because the “price of the land” is the very last determinant in the calculation of the luxury tax!
For further advice I can refer you to a neighbor that tried the same approach (scam) and lost, but I doubt that he is willing to talk about it!I think Bill is on the right track with this, Victoria. If the two houses exist on the same (single) titled property, then that property and all the improvements (the two houses, etc) are what are used to determine your luxury tax liability.
We have a main house and a guest house both of which are on the same registered plot of land. When I did the computation three years ago, I had to add the values of the two houses together.
On the other hand, if the property was split into two separate registered plots when you purchased it (or subsequently), and if each house was built on its own plot, then their values should be computed individually. It’s the same situation as the fact that our property and our next door neighbor’s are treated separately.
When you delve into this process, you’ll see that it is very thorough and painstaking. It even accounts for paved areas, grass areas, retaining walls, pools, and (maybe) the value of the landscaping.
Wow. And we have a very good attorney! Our property is one corporation and had two houses when we bought it. We thought we were safe from the luxury tax. What a headache.
Thanks to both of you for the excellent information!
Finally got into the system after loading and uninstalling it several times.
I entered all the information exactly as 3 years ago (except that the house is 3 years older and I “got the benefit” of 3 additional years depreciation!) and the tax went from $915 to $1,405, more than 50% increase!
That’s the penalty for being honest and paying in the tax in the first place!!!
As Sailor correctly pointed out, you now pay tax 3 times if the property qualifies for the “Luxury Tax” and still twice if it doesn’t!
Ecuador is looking better all of the time!
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