Costa Rica Property Tax: How to Avoid Fines on Vacation Homes

Know Your Costa Rica Property Tax

Most homeowners in Costa Rica are already aware of the fact that the Costa Rican Property Tax, or Impuesto Sobre Bienes Inmuebles, is calculated as 0.25 percent of the registered value of the property. This value must be updated every five years.  The tax regulations are very confusing to say the least.  However, this article from Allan Garrow Law: How to be exempt from luxury home tax in Costa Rica sheds a little clarity on the situation.

However, you might not know that there are two different values the tax authority can use to calculate the amount you owe: the purchase price paid or the value they assign.

#1

What happens if the tax authority rejects the value of my home?

If you choose to go with the purchase price paid, it’s possible that the value you declare could be rejected. If this happens, the tax authority will give you an opportunity to rectify the value. Otherwise, they will conduct their own appraisal of the home.

#2

What can I do if I disagree with the municipality’s appraisal of my property?

If you are not satisfied with the assessed valued from the municipality, you have 15 days to contest it with the valuation office.  Only the owner can contest the valuation real estate property in Costa Rica.  Then if the valuation office maintains the appraisal, you can file an appeal with the municipality.  If that doesn’t get you relief, then you can challenge the municipality in Administrative Tax Court.

Pay Your Garbage Collection Fee On Time

The municipality where your vacation rental is located will also charge you a garbage collection fee.  The location of your property determines the amount of the fee.  Another factor that impacts the fee is the designation of your property – residential or commercial.

In most municipalities in Costa Rica, the property tax and the garbage collection fee appear on the same statement. However (there’s always a “however” in these situations), poor record-keeping and administrative errors at the municipality often lead to confusion for homeowners. 

For example, it is common for the municipality to fail to include the garbage fee or fail to notify homeowners when it is due. Nevertheless, as a homeowner you are responsible and can be fined.  It is in your best interest to know when these fees are due and to pay on time.

Use Local Property Management

The best way to avoid all the confusion and eliminate the risk of fines or interest charges is to hire someone with experience paying Costa Rican property taxes. In Costa Rica, this service is often provided by a full-service vacation rental management company.

Special Places of Costa Rica is a local vacation rental management company that serves local areas like Playa Flamingo, Playas del Coco, Potrero, Brasilito and Las Catalinas.

Special Places of Costa Rica handles property taxes and much more for homeowners for a very low fee. It’s much easier for us to handle because:

• We know our way around the municipality
• Being fluent in Spanish, we can communicate without any worry of misunderstanding
• Our team is always available in the local area to handle administrative tasks for the homes we manage

Owning a vacation rental should be a fun investment. Contact us today to find out how we can help make home ownership in Costa Rica a lot less stressful.