Costa Rica Real Estate – All Costa Rican titled properties are subject to the Ley Sobre Impuestos de Bienes Inmuebles or the Property Tax Law 7509 and are administered by the local municipality. This law governs and regulates all matters concerning property taxes.
Payment of property taxes are peremptory in Costa Rica and payable thru the local municipality whether the property being discussed is raw land, condominiums, single lots or regular houses owned by both individuals and corporations alike. If several periods are pending, interests are charged and the case may be sent to judicial process which could lead to payment of legal fees, or worse foreclosure of the property, due to debt incurred.
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Currently, the annual property tax in Costa Rica is set to flat rate 0.25 per cent of the cadastral value of the property assessed by tax authorities or local government responsible for the property. This rate is notably lower than most North American countries, including the United States, making it a major force for purchasing real estate properties in this country. Real Estate tax in computed on a calendar year basis and have to be taken cared of annually, semi annually or trimester depending on the procedures established by the municipality. However, if you are able to pay in advance then you can get a discount, which is normally offered by the municipality.
Tax Basis
The law stipulates that the property owner has to fill out a “Property Declaration Form” or locally known as Declaración de Bienes Inmiebles every five years, indicate the value of the property and submit it to the municipal government who has jurisdiction over the land. In the event the local government determines that the stated value is below the internal valuations in the area, then the local government has the right to audit or amend the declaration. On the other hand, if the property owner does not submit a “Property Declaration Form” then the local authorities can send out an appraiser to the property in question to assess the value of the land. Once the assessment has been completed, the local government will serve the owner with the valuation; the owner has the right to accept or appeal the government assessment.
Another method used to appraise the value of a property for tax purposes is through the public property records from the National Registry. When a property is purchased or mortgaged, the deed is recorded in the property section of the National Registry, which the municipal government has access to. The value declared in the deed can be used to increase the value of the property if the declared amount on the deed is higher than the actual valuation of the municipality.
Tax Exemptions
The Property Tax Law 7509 states two exemptions; the first exemption is stated on Article 4 where individuals who only own one property can get an exemption for a property whose value is not greater than 12,141,000 Colones; the second exemption expounded on Article 14 is for properties dedicated to Agricultural or Agro-industrial use; improvements or constructions done in the property for the benefit of the workers, like housing related to agricultural activities, must
not be taken into account. Furthermore, Law 7779 Article 49 states that 40 per cent of property tax appraised is exempted on any agricultural property being used in accordance to customary soil conservation and management methodologies. To get a tax exemption, the property needs to be verified by the Ministry of Agriculture.
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