Tax On Luxury Homes in Costa Rica

Many of our clients regularly request us information about how what are the brackets that make property owners to be subject to luxury tax for their homes in Costa Rica and what are the rates for it, how should it be declared and how often and other important questions about this tax. For all those questions that we regularly have we have created this post.

The Luxury Tax in Costa Rica

The luxury tax (impuesto solidario in spanish), is a tax that has been created by the costarican law applicable to the luxury homes with values superior to 137,000,000.00 colones ($208,000.00 approximately with the current exchange rate), the homes with values over this amount are subject to filing the return every 3 years, and paying the annual tax. The luxury tax is part of a social help program for financing projects of social help as housing and aid for families that have no access to a proper home.

How Do I Know If My House Is Held This Tax

In order to determine the value of the home, the house owner should separate the value of the property from the value of the home. In order to do this the easiest way is to get the last property declaration filed at the municipality, this document details the value of the home and the value of the property as separate items, those items should be the refference for the values to be included in the luxury tax form. If the value declared in the tax form for the house is over the $208,000.00 then you are now sure that you should file and pay luxury tax for your house.

When you don’t have a way to determine the value of the house through the property declaration from the municipality you should request assistant from your accountant, since the other methods require a calculating tool and standard values from the national cadaster to estimate the value of the home, the difference from the purchase value and the home value will be the property value.

How Do I File The Luxury Tax Form

In order to file the luxury tax form you should first determine if the corporation or you as individual has filed requirements at the tax administration before, if so you or your accountant should have the access to file the corresponding forms, the procedure should be registering your property id as a tax payer for the luxury tax, and then file the tax return, this should be done every 3 years, and the tax should be paid annually, if the corporation or individual hasn’t filed tax forms before a D-140 for enabling the access to file tax forms should be filed. In order to make this process easier you can request your accountant to file this form for you.

If My House Was Valued Less Than The Minimum Amount But I Have Done Improvements To My Home What Should I Do?

If your house was not subject to the luxury tax in the past but now, due the amount of improvements made to the property you estimate it could reach over the minimum amount to be subject to luxury tax then the best way to determine will be updating your property declaration at the municipality and finding out what is the amount that their systems will update to the new home value, then if the value exceed the minimum you now can complete the registration for your home for complying with the luxury tax.

What Are The Tax Brackets for The Luxury Tax in Costa Rica?

As of 2022 the following are the tax brackets for the luxury tax:

If you have any inquiries about the luxury tax in Costa Rica or need assistance with it, don’t hesistate to contact us anytime.

In ConsultantsCR Advisory, we’re business consultants, we provide assistance with the operation of your business, from taxes and finances to legal and operations.

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