​Owning property in Costa Rica comes with the benefit of relatively low property taxes, making it an attractive destination for investors and homeowners alike. Here’s an overview of how property taxes work in Costa Rica

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​ANNUAL PROPERTY TAX

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• Costa Rica charges a 0.25% property tax based on the registered value of the property. This value is determined by the local municipality, which periodically assesses properties to ensure accurate valuations.

• Payment Schedule: Property taxes can be paid annually or in quarterly installments, depending on what works best for you.

• Who Collects: The tax is managed by the local municipality (Municipalidad), and payments can usually be made in person, online, or through your property manager.

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LUXURY HOME TAX

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• If your property qualifies as a luxury home (valued over approximately $230,000 USD, including land and construction), an additional Luxury Home Tax applies. This tax is calculated on a sliding scale starting at 0.25% and increases with the value of the property.

• Purpose: Revenue from the Luxury Home Tax is used to fund affordable housing programs in Costa Rica.

• Due Date: This tax is paid annually, and it requires a separate declaration of property value.

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The luxury home tax, also known as the "Solidarity Tax for the Strengthening of Housing Programs", applies to properties that are valued above a specific threshold, including both land and construction. For 2024, the threshold starts at 154 million Costa Rican colones (approximately $230,000 USD).

The tax is calculated using a progressive scale, meaning the rate increases as the property value rises. Below is a breakdown of the brackets in USD, based on the most recent rates:

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LUXURY HOME TAX BRACKETS

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• $230,000 – $578,000 USD: 0.25%

• $578,001 – $1,156,000 USD: 0.30%

• $1,156,001 – $1,734,000 USD: 0.35%

• $1,734,001 – $2,312,000 USD: 0.40%

• $2,312,001 – $2,890,000 USD: 0.45%

• $2,890,001 – $3,468,000 USD: 0.50%

• $3,468,001 USD and above: 0.55%

 

How It Works

• The tax applies only to the portion of the property's value that falls within each bracket.

• For example, if your property is valued at $600,000 USD:

  • The first $578,000 is taxed at 0.25%.

  • The remaining $22,000 is taxed at 0.30%.

 

Payment Details

• This tax is due annually and must be declared and paid between January 1st and January 15th of each year.

• Property owners must file a separate declaration of the property's value to calculate their tax obligations.

 

Exemptions and Notes

• This tax is specific to luxury homes and does not apply to properties valued below $230,000 USD.

• The funds collected from this tax support social housing programs for low-income families in Costa Rica.

 

By understanding these brackets, property owners can better plan for their tax obligations while contributing to Costa Rica’s efforts to improve housing for all

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TRANSFER TAX

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• When purchasing property in Costa Rica, a 1.5% transfer tax is levied on the property’s sale price. This tax is typically split between the buyer and seller, but this can be negotiated during the transaction

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CAPITAL GAINS TAX

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Law 9635 introduced a 15% Capital Gains Tax, applicable to income earned from investments and real estate. Capital gains are calculated as the difference between the asset's value at the time of purchase and its value at the time of sale. All amounts must be expressed in colones, using the official exchange rate at the time of purchase and sale. If the calculated value is positive, it is subject to the 15% tax.

Simplified Calculation Formula:

(Purchase price + Value of investments and improvements - Sales value) × 15% = Capital Gains Tax

The law outlines three exceptions to the 15% capital gains tax:

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1. One-Time Exemption for Pre-2019 Property Owners:
   Property owned before July 1, 2019, qualifies for a one-time reduced tax rate of 2.25% on the gross sale price.
   Formula: (Selling price × 2.25% = Capital Gains Tax)

2. Primary Residence Exemption:
   The sale of a primary residence is always exempt from capital gains tax. The law defines a primary residence as a property primarily used for shelter, protection, and as the owner's home.

3. Non-Domiciled Seller Provision:
   If the property is owned by a foreign corporation or an individual without a Costa Rican domicile ("non-domiciled person"), the law mandates that the buyer withhold 2.5% of the property's purchase price to ensure any potential capital gains tax is paid.
   Formula: (Selling price × 2.5% = Tax Holdback)

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​ADDITIONAL CONSIDERATIONS

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• Deductions: There are no deductions for property taxes in Costa Rica, but the overall rates are much lower compared to many other countries.

• Late Payments: Penalties and interest may apply for late payments, so staying on top of your tax obligations is essential.

• With its straightforward system and low rates, Costa Rica’s property tax framework is designed to encourage investment while maintaining a fair contribution to local communities. Whether you're purchasing your dream vacation home or investing in rental properties, Costa Rica's property taxes are a manageable part of owning a slice of paradise.