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Published Monday, January 25, 2021
Government seeks to create a
new 0.5% tax on luxury homes
By the A.M. Costa Rica staff
Luxury house owners would pay a 0.5% tax as a government measure to increase their income through taxes and face the economic and fiscal crisis in the country, according to bill No.22382 "Tax on luxury properties" of which the Ministry of Finance presented to Congress for analysis.
The new tax will be applied to properties whose value is equal to or higher than ¢150 million colones, approximately $245,379.
“This tax applies to every house, urban or rural located, that contains one or more buildings that constitute the property, used as a regular, occasional or recreational home, even if it is located on independent farms or in singular buildings,” stated in the bill text.
The new tax is exempted to homeowners if the property is carried out productive activities such as agricultural, livestock, forestry, natural resource conservation, agro-industrial or commercial activities.
According to the ministry, the new tax will generate an income for the Housing Mortgage Bank of approximately $6.5 million. The bank is a public organization in charge of facilitating loans for the construction of houses.
Also, the bank provides financing to public aid programs for the eradication of informal settlements, so-called “slums'' and donate houses to people classified as living in poverty.
The tax must be paid before Feb. 15 of each year.
According to the ministry, the tax, if it is approved in Congress, replaces the current luxury home tax which had to be paid before Jan. 15 to avoid penalties.
The bill is expected to be approved or rejected by
the deputies of Congress during this
week.
The current luxury homes tax, known as Solidarity Tax for the Strengthening of Housing Programs, applies to all properties with a value of over 133 million colones, approximately $216,895.
The solidarity tax is levied on the value of the residential real estate, used on a regular, occasional or recreational basis, including under construction, fixed and permanent installations.
Every three years, an affidavit should also be presented declaring the updated fiscal value of the real estate. If it exceeds the value recorded by the administration, the new declared value automatically modifies the applicable tax base for the fiscal period in which it is declared, the ministry said.
When the property belongs to several co-owners, they must declare it jointly.
The owner of two or more adjoining or overlapping properties must consolidate them in a single declaration for the tax, the ministry said.
In the condominium property system, the declaration of each condominium must include the proportional value that belongs to the common areas.
In case of transfer of ownership of the real estate, the new owner will be jointly liable for the tax payment of the fiscal period enforced at the date of acquisition, as well as the interest, according to the current rules.
The amount to be paid is calculated by the Tax Administration Department, based on a table with a range of amounts, that applies according to the value of the property. But those who do not pay by the deadline will be fined based on the amount of the tax.
To know the tax amount, homeowners should request the information at the Ministry of Finance by calling (506) 2539-4647 or (506) 2284-5000.
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What have you heard about paying a yearly tax for living in a luxury home in your country? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com
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