The administration of property taxes is the responsibility of the municipal governments that are located in the area where the property is situated. People used to take a “wild, wild west” strategy to undervaluing their property in order to reduce the amount of taxes that they were had to pay in the past. This approach was known as the “wild west.” Over the past few years, the government has become increasingly strict against this activity. In spite of this, property taxes in Costa Rica are generally low-cost in comparison to those in a great number of other countries.
How property taxes are evaluated
The owner of the property is required to provide the municipality in which the property is located with a “Property Declaration Form” (Declaración de Bienes Inmuebles) at regular intervals of five years. Even if the owner is the one who fills out the form stating the value, the municipal government nevertheless looks it over to make sure that the values that are given are acceptable. Many of them keep a database of property values, and they want you to set values in your declaration that are consistent with the criteria they have established for property valuation. It is possible that it will conduct an audit of the filing if it considers that the value mentioned in a file is less than the values that it has established in its valuation manuals. This declaration is due on November 30, 2022, and it applies to all properties that were either previously declared in 2017 or earlier, as well as those properties that have never made a valuation declaration in the past. Some local governments have begun to implement penalties for failing to file, such as a fine that might be equivalent to the sum of the new appraisal’s value and the amount of property taxes you have already paid on the property. You have the ability to submit your application at any time between September 1, 2022 and November 30, 2022.
According to Law 7509 Ley Sobre Impuestos de Bienes Inmuebles, the annual property tax that is required to be paid is 0.25% of the assessed value, which is documented in the municipality from where the tax obligation comes. This is the case throughout the entirety of Costa Rica. The vast majority of local governments will ask you to make payments on your property taxes every three months (quarterly), but they will also provide you the option to pay for the entire year in advance. If you pay for the entire year’s worth of services in advance, most municipalities will offer you a discount. It’s possible that certain communities won’t take credit cards, while others might have an online payment system. Due to the fact that this varies, it is to your interest to learn about potential future online payments that may be done using a BCR account that are less cumbersome.
Additionally, the collection of luxury taxes falls under the purview of the municipality in which the property is located. Any residence that has a construction value at 138,000,000 colones, which is approximately $220,000 USD, is subject to the luxury home tax. You have the option of paying this every three months (quarterly) or in advance for a period of one to two years.
Companies are required to make their annual tax payments in the month of January. The administrative fee for the Ministerio de Hacienda (also known as the tax authorities) is approximately 80,000 colones, which is equivalent to approximately $126.90 USD.
If you do not pay your corporate taxes, you run the risk of having your company dissolved, which could slow down the process of selling your property. This risk is increased if you do not pay your corporate taxes. Because correcting this could result in legal fees costing thousands of US dollars, we strongly recommend that you stay on top of your taxes at all times.
The purpose of the Shareholder’s Declaration, also known as the RTBF yearly declaration, is to ensure that organizations have the most recent information possible regarding their beneficial owners and shareholders. The deadline is always on April 30 of each year.
The assets, liabilities, and equity of inactive corporations that don’t engage in any commercial activity or company must nevertheless be disclosed in Costa Rica. In order to finish this process, you will need a certified public accountant. This obligation can be satisfied through the representation of a Costa Rican attorney, and it is applicable to all corporations operating inside Costa Ricat. The 15th of March serves as the annual filing deadline for this declaration.
What Happens to the Property Taxes?
According to our knowledge, the following is the breakdown of the property taxes that homeowners pay to the government in their respective communities: The National Revenue Department pays for 1% of the cost of assessment training for local municipal governments; 3% goes to the National Property Registry; the Board of Education receives 10% of the money from each regional Canton; administrative expenses related to tax collection are allocated 10% of the budget; and the remaining 76% is given directly to regional municipal authorities.
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