Real Estate Tax in Costa Rica

Real Estate Tax

The real estate tax is established in Law 7509. this tax is assessed on land and permanently affixed structures and buildings, and is paid to the municipality. The municipality in responsible for collection of the tax within its jurisdiction, and for carrying out, determining, and overseeing property appraisals. Likewise, it sends tax bills, collects, and administers its tax revenue. If property owners fail to pay the tax, the municipality proceeds with collection by court action and an auction sale of the respective properties.

Who is subject to this tax?

All property owners holding a title recorded in the Public Registry, and owners of properties that are not recorded in the Public Registry; concession holders, permit buildings or occupants of the border zone or Terrestrial Maritime Zone, but only for permanent buildings or structures, as a special municipal tax are assessed on the land for using a public asset.

Is any property exempt from this tax?

Yes; property owed by the State, municipalities, and autonomous institutions; property in watersheds, forest, indigenous, or biological reserves or national parks; and property that is the sole asset owned by an individual with multiplied by 45 base salaries. The current base salary is “200,200 colones” which multiplied by 45 base salaries results in a deduction from the tax base of 9 million colones. If the property has a values of less then or equal to 9 million colones, no property taxes are due. By way of example, if a property is valued at 50 million colones and the exemption of 45 base salaries is applied, the property owner would only pay the tax on the difference, in this case on 41 million (41M x 0.25% tax rate), for an annual tax of 102,500 colones. The tax is paid to the regional City Hall.  Also exempt is real estate owned by churches and religious organizations, but only when used as place of worship; diplomatic offices and residences of diplomats and consular agents, with the applicable limitation in each casa; and, lastly, international organizations and the Red Cross.

Where do I have to go to pay this tax?

The tax is generally paid at the regional City Hall building, where you will be given a payment receipt. Tax is collected annually, with the tax year coinciding with the calendar year running from January 1 to December 31. real estate taxes are calculated on the value of each property and receipts are issued by the municipalities on a quarterly basis.  However, in most of the country’s municipalities, you will be told which public or private bank has agreement with the municipal government for collection of the tax.  In that case, the bank issues the payment receipt.

Do I have to file a tax return for this tax?

Pursuant to article 16 of Law 7509, property owners are required to declare the value of their real estate to the municipal government where the property is located at least once every five years. The tax Administration, through the Technical Standardization Authority for Property Appraisals, may amend the declared value though an appraisal of the property, at all times respecting the procedure available to the taxpayer to contest the appraisal value