Many times, I get asked “how much is the property tax in Costa Rica?” The sweet and short answer is: it is very low.
Costa Rica property tax is based on the registered value of the property. The value is registered with the local municipality and the national registry. Say for example you purchase a great ocean view lot in the Playa del Coco area. The lot has views to die for and you getting ready to build your dream home. The lots cost you as an example, $100,000 US dollars.
The property tax will be only $250.00 per year, plus garbage and parks tax. Depending on the municipality it could be roughly another $100.00 per year. Still, that is incredibly low. But hold on, you want to build your dream home, right? Well, the property tax will go up. Let me explain.
Before you even start the construction you of course need building permits. It is a bit of a process, but a very good one. First your final design and blue prints need to be sent to the Colegio Federado de Ingenieros y Arquitectos de Costa Rica, this is the Federated College of Engineers and Architects. They will review your plans to ensure that the design of construction and plans meet Costa Rica building codes. By the way, the Costa Rica building codes are very strong, some of the best in the world actually, especially pertaining to earthquake resistance strength.
Once the College of Engineers and Architects grants approvals for the plan, they will place a value of the construction based on formulas they have created and adjust annually based on material costs. This dollar amount is always less than what you are paying a builder to construct your home – I know I have built 2 homes already in Costa Rica.
How does this relate to the property tax value? When it is time apply for the building permits with the local municipality, they will require the approved plans and construction value the College of Engineers and Architects, along with other items, but that’s another topic to cover.
The registered value of your lot, that was previously registered is now added together with construction value. Another example to get to the final number: the piece of land cost you $100,000 the construction value let’s say for fun is $200,000, Now the new registered value in the municipality for property tax purpose is $300,000. Your new property taxes would then be $ 750.00 per year. Now that is low!!
When purchasing a property that is already constructed, the formulation is different but the percentage of tax remains the same, .25% of the registered value. With property taxes this low, it is no wonder many people are buying property in Costa Rica and making Costa Rica their next adventure.
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