Did you know that every property owner in Costa Rica has to present a property value declaration every 5 years? Probably not eh…
In most countries around the world, property owners receive notice from the tax authorities that they have to pay their property taxes. Not in Costa Rica though! Like so many other things in this beautiful country, things function a bit different. I know, it’s a weird situation, but that’s what it is and you should know about it.
Since 1995, every Costa Rica property owner is obliged to present a property value declaration in the Municipality where this property is located. This declaration, called “declaracion de bienes inmuebles”, must be presented by the property owner in person, every 5 years.
The person who has full power of attorney of the owner if the property owner is not in Costa Rica, can do the property value declaration. In that case, a certification of the power of attorney, not older than one month, has to be presented.
If the owner has passed away, the executor of the estate or the legal inheritors has to declare.
Some municipalities will allow an original signature on the form. Also, the form can be FedExed to someone in Costa Rica who can present the declaration.
Check it out yourself
Can you can read Spanish or are able to use Google Translate? Then, you can check the Property Tax Law or “Reglamento a la Ley de Impuesto sobre Bienes Inmuebles”, DECRETOS Nº 27601-H which reads in Article 27:
Obligation of the declaration of real estate.
Taxable persons are obliged to submit, to the municipality where their real estate is located, a statement of the estimated value thereof, in accordance with the articles 6 and 16 of the Law, regardless of whether they are not subject to the tax. These declarations of real estate must be carried out by taxable persons at least every five years.
Find out the actual value
It is not so easy to figure out how to calculate the value of your property. You can ask the municipality first what your property is valued at right now, and if you want to change anything.
Then, you must present the property value declaration form to the municipality where the property is located.
The property tax is an annual 0.25% over the registered value. Property owners who pay ¢300,000 per year, have a registered value of the property at ¢120,000,000.
The property value declaration form
To get the property value declaration form you can either go to your municipality or try to find it online. You can ask a city engineer to assist you in filling out the form if you don’t know how to calculate the value of your land and the construction.
The Finance Ministry (Ministerio de Hacienda) regulates land prices to be used for the property value calculation. And to make it easy for you, they have organized these land values by Province:
When you try to fill out the construction cost of all the buildings on your property, you really get to the hard part. For 2017, you can download the program to calculate it yourself (this is a zip file).
You need to know which value to apply to the type of constructions there are on the property? Download this construction type value manual by the Finance Ministry. (download PDF)
Also, the simple and easy going way is to find out what it would cost to build the structures in today’s market and deduct 2% for each year of construction. That will take care of the depreciation of those structures.
The municipality has the obligation to accept your signed form with any calculation that you feel is correct. Hence, the engineering department of the municipality will get back to you in about 1 year and tell you if your presentation was acceptable or not.
If you don’t present
It is possible that if you don’t present the mandatory property value declaration, the municipality will do it for you. As a result, you will have to accept their results and discussion is not possible.
It is important that you present the property value declaration every 5 years. Therefore, the municipality obliges property owners to present the declaration when they want to sell the property. Late presentation means a fine of 100% of the amount that the municipality did not receive. Nonetheless, if you don’t the municipality might do it for you.
Therefore, if you have purchased a property from one of our affiliate partners in the past, you can request their assistance. To purchase a property from a well-informed real estate agent, contact us now. Feel free to leave your comments on this blog. If you like this article, please feel free to share it on your social media.
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