There are costs associated with owning or buying a luxury property in Costa Rica. These include taxes, transfer fees, legal fees, property taxes, capital gains tax, and the luxury property tax.  Explore the video explanation and notes below on luxury home tax in Costa Rica as well as the costs associated with the purchase and sale of these homes.

There are legal fees and expenses associated to owning or buying property in Costa Rica. There’s a cost for buying property which will typically be between three and three point five percent over the transactional value. This entails taxes, transfer taxes and registry stamps and the percentage of legal fees which is around 1 and 1.25% according to the minimum decree for tariffs. There’s also a cost for owning property which is in the most ordinary way paying the property taxes before the local Authority or local government where the property is situated. Those taxes are built on a quarterly basis although you can make a full year payment with a discount. That’s payable, very important to bear in mind, before the municipality where the asset is located.
There are some costs or expenses for selling property, this change dramatically since 2019 because we didn’t used to have a chapter for capital gains or a capital gains regime which is so common in other countries; so anytime you’re going to sell a property you’re going to pay capital gains with the only exception of that property being your primary residence in which case you have the exemption for that tax.  There’s also a particular tax which is specifically designed for the owning of residency properties which has been denominated as ‘luxury homes tax’ or ‘luxury property tax’ which applies to all those assets or properties for residency which have a value Superior to approximately two hundred and twenty thousand dollars.
If you have a property in that value and it’s for residency in difference to the capital gains that I just mentioned you’re gonna have to pay the luxury tax at least once a year and you can update the value of the property every three years but it has to be done with a formal appraisal that is to be performed or submitted before the authorities to see if you can adjust, increase or decrease the tax imposition basis for that property.

The cost of buying a luxury property in Costa Rica typically amounts to a percentage of the transactional value. On average, this ranges between 3% and 3.5% over the transactional value, including taxes and registry stamps. Legal fees range between 1 and 1.25% according to established rates.

Property taxes and municipal payments:

Luxury homeowners in Costa Rica must account for ongoing expenses related to property ownership. These taxes are payable on a quarterly basis to the local authority or municipality in the area where the property is situated. Alternatively, owners can choose to make a full payment for the entire year, often enjoying discounts for such advanced payments.

Capital Gains and Luxury Property tax in Costa Rica

The costs and expenses associated with selling property in Costa Rica have undergone significant changes since 2019. Therefore, when selling property, capital gains tax must be paid, except when the property being sold is the owner’s primary residence. In such cases, there is an exemption for this tax.

Furthermore, there is a specific tax known as the luxury property tax, designed specifically for residential properties. This tax applies to properties with a value exceeding approximately $220,000. The actual amount is stated in colones which fluctuates in dollars due to exchange rates.  If your property falls within this value range and is used for residency purposes, you will be required to pay the luxury property tax at least once a year.

Every three years, you have the option to update the recorded value of the property through a formal appraisal. This process allows for adjustments to the tax imposition basis, considering any changes in the property’s value.

General content provided by Javier Sauma at Sauma Rossi law firm in Costa Rica.

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