Costa Rican tax law has largely deferred to local governments on the issues of property taxes, but there are some guidelines that you can learn that will largely apply to your real estate dealings in Costa Rica. While it is best to contact Meléndez & Bonilla directly for advice on your exact real estate holding and tax situation, this page will help you with some basic information on the Costa Rican property tax environment.
Similarly to the United States, local governments are tasked with performing routine appraisals of the real estate property located in their jurisdiction. These appraisals are then used to develop a property tax for a particular piece of real estate which is ultimately the responsibility of the local government to collect. Because of all of these local statutes, individual experiences may vary, but there are some common tenets these property taxes usually follow.
The local government also has the ability to set a payment schedule for property taxes. While annual payments are most common, it is also possible for a local government to decide on biannual or quarterly payments for property taxes in that region. You should contact your local tax office for details on when and how payments are to be made.
The general rate of property tax is 0.25 percent of the registered value of the property, usually determined by the appraisal commissioned by the local government responsible for the piece of land. The Costa Rican level of property taxation (currently 0.25 percent) is quite a savings from most North American countries, the United States included.
Those low property taxes and a lack of capital gains tax in Costa Rica makes real estate investment a viable opportunity for foreign investors. Meléndez & Bonilla has experience dealing with these types of arrangements and can assist you as you pick a property, purchase it and then manage it. Having a local company on your side to keep you informed on changes in the tax code will also help you as you monitor your investment either from within Costa Rica or from your home elsewhere.
On a side note, one interesting piece of information that you might consider when contemplating buying real estate in Costa Rica is the Zona Marítimo Terrestre. The Zona Marítimo Terrestre is a law passed by the Costa Rican government banning the personal ownership of beachfront property throughout Costa Rica.
Local governments can waive this ban, but if you are looking to purchase beachfront property in the country, you should know that governments are prohibited from issuing waivers for foreigners that have not lived in Costa Rica for at least five years.
Meléndez & Bonilla has lawyers that specialize in these types of cases and would love to help you set up your dream home or dream investment property in Costa Rica. Low property taxes and a lack of capital gains taxes have inspired other investors and retirees to do just that. We invite you to contact us directly for information on your specific tax situation and to help you establish long-term property prosperity in Costa Rica.