When buying or selling property in Costa Rica, taxes are a critical part of the transaction and one of the areas where clarity matters most. In our recent interview, Javier Sauma from Sauma Rossi Real Estate Legal Firm guides us through the core tax obligations that apply to most real estate transactions, offering practical insight into how these taxes work in real world scenarios.
This article builds on that conversation, outlining the main real estate taxes in Costa Rica, how they are typically handled, and where buyers and sellers should pay close attention.
INTERVIEW: Understanding Real Estate Transaction Taxes in Costa Rica
Real Estate Transfer Taxes in Costa Rica: The Big Picture
Real estate transfer taxes in Costa Rica are relatively straightforward compared to many jurisdictions, but the details matter. The tax impact of a transaction can change depending on whether the property is owned personally or through a corporation, how long it has been held, and how the sale is structured.
As explained in the video, most transactions involve three primary tax considerations. Each applies at a different moment and serves a distinct purpose.
- 1
Capital gains tax
- 2
Transfer tax
- 3
Dividend tax
Capital Gains Tax on Property Sales
Capital gains tax in Costa Rica applies when a property is transferred and a gain is realized. It is generally calculated based on the difference between the acquisition value and the sale price, subject to specific rules, elections, and exemptions.
For many sellers, this is the most significant tax associated with the transaction. Investment properties and second homes are especially affected, and factors such as holding period, documentation, and declared value at purchase can materially influence the final calculation.
It is important to distinguish capital gains tax from other taxes that may arise later, particularly when proceeds are distributed through a corporate structure.
Transfer Tax: Legal Obligation vs Customary Practice
The transfer tax is triggered when ownership of the property changes. Under Costa Rican law, this tax is considered a solidary obligation, meaning both the buyer and the seller are legally responsible for its payment.
Read more about who pays real estate transaction costs in Costa Rica →
In practice, however, the buyer almost always covers this cost. As Javier Sauma explains in the video:
“By law it is supposed to be a solidary tax, payable by both parties, seller and buyer. Although by customary practice, it is usually covered by the buyer.”
While this custom is widely accepted, it should always be clearly addressed in the purchase and sale agreement to avoid ambiguity at closing.
Dividend Tax When Selling Through a Corporation
Dividend tax becomes relevant when a property is owned by a corporation and the proceeds from the sale are distributed to shareholders. This tax does not apply when an individual sells property in their personal name.
15%
In Costa Rica, the dividend tax rate is currently 15 percent, applied to the distributed dividend amount. This tax is separate from any capital gains tax generated by the sale of the property itself.
As highlighted in the video, confusing dividend tax with capital gains tax is a common and costly mistake. Each tax has a different basis, trigger, and planning strategy.
Why Structure and Advice Matter
Understanding real estate taxes in Costa Rica goes beyond knowing percentages. Ownership structure, transaction timing, and how sale proceeds are handled can all significantly affect the final outcome.
For higher value properties and investment focused purchases, the decision to hold property personally or through a corporation should always be evaluated with both legal and tax implications in mind.
If you are planning to buy or sell and want clarity around real estate taxes in Costa Rica, our team can help coordinate experienced legal guidance so the process is structured properly from the start.
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