Real estate buyers owning moderately priced homes in Costa Rica are now subject to paying a Luxury Tax based on the property’s market value.
Solidarity Tax
Sometimes also called the Rich Gringo Tax, the official name is The Solidarity Tax for the Strengthening of Housing Program. As the name implies, the luxury home tax proceeds are used to finance low-income housing initiatives for native Costa Ricans.
While some foreigners may complain about having to pay this new tax on luxury real estate, but it’s only a fraction of a percent and helps Ticos strive toward a better standard of living.
Who it Applies To
The Luxury Home Tax is an additional levy is placed on homeowners with deeds to houses, villas, or condos in Costa Rica with an assessed market value of ¢133,000,000.
This converts to roughly $216,500 USD but if you purchased a property for this price, it does not necessarily mean you have to pay the tax. The levy is NOT applied to the sale price by the value declared on your luxury home tax evaluation.
Exemptions
The following four types of property are exempt from paying the Luxury Home Tax in Costa Rica.
- Properties destined for agricultural or commercial purposes
- Properties with a construction value of less than $ 216,500.00
- Properties owned by non-profit organizations, churches, or the government
- Raw land (no legal dwellings)
Declared Property Value
The market value found in your home evaluation must be reassessed every 3 years. It must be legally declared to the General Tax Department on or before January 15th in your assessment year.
The declared property value in your assessment (which includes the value of the land and everything on it) is what will determine if you have to pay luxury tax or not.
How the assessed value is calculated is not as straightforward as it sounds, and you can often find many higher-priced properties with a lower declared value than the Luxury Home Tax threshold. At times, it literally depends on who does the evaluation.
In regards to condos for sale in Playas del Coco, most of them will not require paying luxury, nor will many of the lower-priced homes.
Tax Rates
The luxury tax rate in Costa Rica ranges from 0.25%—0.55% of your home evaluation value, which is roughly $250—$500 per $100K of your declared property value.
Below you can see how Costa Rica’s Luxury Home Tax is divided into percentages based on the declared property value. We’ve also added columns to you can how much tax you’d have to pay if your property falls within a specific range.
| MIN VALUE | MAX VALUE | TAX % | MIN TAX | MAX TAX |
|---|---|---|---|---|
| ₡133,000,000 | ₡335,000,000 | 0.25% | ₡332,500 | ₡837,500 |
| ₡335,000,000 | ₡672,000,000 | 0.30% | ₡1,005,000 | ₡2,016,000 |
| ₡672,000,000 | ₡1,008,000,000 | 0.35% | ₡2,352,000 | ₡3,528,000 |
| ₡1,008,000,000 | ₡1,345,000,000 | 0.40% | ₡4,032,000 | ₡5,380,000 |
| ₡1,345,000,000 | ₡1,679,000,000 | 0.45% | ₡6,052,500 | ₡7,555,500 |
| ₡1,679,000,000 | ₡2,017,000,000 | 0.50% | ₡8,395,000 | ₡10,085,000 |
| ₡2,017,000,000 | and higher | 0.55% | ₡11,093,500 | ₡11,093,500 |
This is the same table as above but converted to US dollars. Do note that the numbers are generously rounded. This was done to ensure the table is easy to understand the property price ranges, what tax bracket they fall under, and how much tax needs to be paid annually.
| MIN VALUE | MAX VALUE | TAX % | MIN TAX | MAX TAX |
|---|---|---|---|---|
| $ 215,000 | $ 540,000 | 0.25% | $ 550 | $ 1,350 |
| $ 540,000 | $ 1,085,000 | 0.30% | $ 1,600 | $ 3,250 |
| $ 1,085,000 | $ 1,625,000 | 0.35% | $ 3,800 | $ 6,700 |
| $ 1,625,000 | $ 2,170,000 | 0.40% | $ 6,500 | $ 8,700 |
| $ 2,170,000 | $ 2,710,000 | 0.45% | $ 9,750 | $ 12,200 |
| $ 2,710,000 | $ 3,255,000 | 0.50% | $ 13,550 | $ 16,300 |
| $ 3,255,000 | 0.55% | $ 17,900 |
How to Calculate
The simplest way to calculate the annual luxury home tax for your property in Costa Rica is to find the percentage that matches your declared property value.
Once you know this, you can then multiply them together in a simple formula.
declared property value X tax rateYou can also generally assess what tax rates you might be in based on the type of property you own:
- 0% — Most standard studios or one-bedroom condos, almost all 2 or 3 bedroom condos without an ocean view. In Las Palmas, pretty much anything other than a few condos in Coco Sunset Hills and some houses in Valle del Sol would not be taxed.
- 0.25% — Middle-class homes and some ocean view condos with 3 bedrooms and an ocean view in a gated community like Pacifico.
- 0.30% — Higher-end smart homes and villas and the new luxury condos and ecological homes in Pacifico (Nimbu and Bosque)
- 0.35% — Million dollar homes and villas
- 0.40% — High-end, million-dollar homes and villas with exceptional ocean views
- 0.45% — A multi-million-dollar mansion with spectacular ocean views
- 0.50% — A multi-million dollar mansion with spectacular ocean views, along with second/third houses on the property
- 0.55% = The best real estate money can buy in Costa Rica