“Tax the Rich” can affect Costa Rica Real Estate Market

Costa Rica Map - Courtesy of the CIA WorldbookIt seems that the idea to tax the rich to pay for the country needs is not limited only to the U.S. and Europe, and it has been also implemented in Costa Rica. A recent decree by the Ministry of Hacienda has increased the tax burden for owners of “Luxury Residences” (those with a value higher than USD $234,000), by more than 87% for apartments, and 167% for single family homes. These new taxes revenues will be used to finance governmental project for low-income families, and it surprised many owners, who until recently were excluded from paying any local real estate taxes.

While these changes may be unwelcome to many property owners, we can put them in perspective when we consider the actual economic figures for the country. With over 2.1 million people on their workforce, almost 8% unemployment rate, and a $11,900 PPP, the country could be attempting to address some of the issues that have plagued some of their central america neighbors such as Honduras, Guatemala and El Salvador. Companies with operations in Costa Rica, or individuals planning to retire there; could consider the impact of the tax hikes on their plans, against the potential benefits that they may bring by helping reduce the conditions that can foster the development of a culture of gangs, and violence. It is also worth mention that the tax to be paid is equal to only 0.25% of the assessed value of the property, something that people like Floridians used to pay over 8 times more (2.1%) may even consider it very acceptable (not that we are arguing to raise the tax in Costa Rica, but to maybe lower it in Florida)

Taxes on “luxury” homes skyrocket up to 10x after readjustment of property values – Inside Costa Rica | Inside Costa Rica.