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Johnhw2

Luxury property tax

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lawsv    0

I recently heard, in a book I read, about a tax on higher value properties in Costa Rica. The book indicated there was an additional 1/4% per year property tax due on the improvements (property value less land value) if the improvement value exceeded roughly $200k (US$). This tax is to fund lower income housing and is in place for 10 years only per the book.

 

I have not seen this mentioned in the forum posts I searched. Is this tax in place? I saw a post about tax evasion but it didnt make wheether this tax is in place or not clear to me. Thanks in advance for the advice on this.

 

Here is the link to the luxury tax.

http://dgt.hacienda.go.cr/oficina/herramientas/Paginas/Programaparacalcularelimpuetosolidario.aspx

If you soend some time looking at it and filling in the required fields (if your spanish isn't good enough, translate it on bablefish) you will find that GENERALLY as a rule anything under 2,000.00 sq feet will not have to pay even at the highest level. My h8usband spent alot of time figuring this out and seems to be this works. If you have a house under 2,000.00 sq feet it won't even ask for the land value.

 

There is ALOT of misinformation out there, including an article in Utopia that says you have to declare even if you are under, if you read the actual law it states that you DO NOT have to declare if you are under...

Anyway hope this helps to some degree.

TicaNadian

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LWilson    0

"This new luxury property tax is unreasonable, ill thought, and its implementation very poorly planned. I agree that the economy in CR certainly can use some infusion of funds, but it appears that the infusion rests on the backs of those who made long term investments based on one set of rules and the rules are a moving target now."

 

I agree 100% and have been told to ignore this law since many believe it will be challenged as unconstitutional. As another writer puts it,

Open letter by: Bob Klenz, Dominical, Costa Rica.

vistadelcano@hotmail.com

 

I have lived for over 16 years full time in Costa Rica with 15 years of permanent residency. I understand how things work here and also how things don’t work here. Laws are written by politicians with good intent but with very little understanding of how difficult or impossible it is to comply with them.

 

Most laws passed in Costa Rica are eventually challenged in the Supreme Court and ruled unconstitutional. I would hope that this will happen in this case. The end result should be a better and fairer law and a means of helping the poor and the housing problems.

 

To start off with, I am not against the intent of this law, i.e. to help eliminate slums within Costa Rica. That being said, I am against a truly ridiculous method of trying to collect this tax using intimidation and threats against common everyday citizens and residents. I can’t believe that to date, nobody has challenged this questionable law and that there aren’t more people (especially Tico’s) in an uproar, screaming bloody murder over this misuse of power. We have large groups of friends in both Dominical and in San Jose. These friends are from all over the world and many are Ticos.

 

At every gathering the only topic of conversation is this problem tax and the inability of all of us to figure out how to comply with it. Many people are very upset with it and even though they may want to comply, do not know how or cannot do so legally. The high degree of frustration is evident with everyone we speak to about this tax. The Costa Rican Government should only know the amount of pain they have caused so many people who want to do their part but can’t. As to the problems of this tax.

 

Even a blind person can see the inequities that are so blaring in this law:

 

1) Pay on line via computer! Although in this day and age, many people are computer literate, I find it highly questionable as to the legality of requiring people to own or use a computer to file a hard to understand tax form. Is it part of the Costa Rica Constitution to own a computer?

 

2) As a foreign resident, WITH OR WITHOUT A RESIDENT CEDULA, you cannot access the DIRECT TRIBU NET site. The only access can be by a Costa Rican using their cedula and its expiration date. Try it and if you can get online, please correct me and explain how you did it. In my years of experience with laws in general, I find it quite difficult to believe that you can be found guilty of not filing when you cannot access the site to do so. The Ministry of Hacienda knows about this problem but refuses to rectify it.

 

3) The law requires a person to submit to Tributacion, a Costa Rica Bank Account number with which the Government can automatically withdraw this tax from. I don’t know how many of you out there trust the Costa Rica Government, or any Government, with the ability to freely withdraw funds from your bank account. If you do, you may want to seek some psychiatric help! It should be up to the

 

Government to give you their account to deposit funds to, not the way it is unconstitutionally proposed.

 

4) Many people are talking about hiring an Attorney, an Appraiser or a Title Company to assist them in this process. The law should not and does not require you to do this but suggests it and most people feel compelled to do so because they just don’t understand what to do. Most of the firms advertising their services do not understand the law and how to complete the forms. They are just looking for business, a business that will help them out for the next 10 years or more. I have seen several letters from various firms that show, by their own description of services, that they will most likely do a very poor job for you and should not be hired. When a law is so complicated that it almost forces people to spend between $400 and $1000 just to complete an appraisal and a form, this leads me to think the law is unconstitutional once again.

 

5) The initial tax and filing of forms is due on Dec. 31, 2009 with a 2nd tax due on January 15th. For those of you who live in Costa Rica, you understand what happens on holiday periods such as Christmas and Easter. In the case of Christmas this year, the Government offices will shut down on December 18th and reopen on January 4th 2010. When the Government shuts down, so do most Attorneys’, Accountant’s and Appraiser’s. So, in reality you don’t have until Dec. 31st to complete your filing, you have until Dec. 18th which by the way is a little over 1 week away. Also, once the Government offices reopen on the 4th, they will need at least one week to get up to speed and back to work again, especially on a reduced work force as usually is the case after long holiday periods. Once again, GOOD LUCK!!!!!

 

6) Are you an Appraiser? Have you gone through your years of schooling to be one? Do you understand how to measure your structures, the walls of your house, your outbuildings, fences, driveways and swimming pools? Can you determine the value of your land, determine slopes and grades? If you are very good at all of this you should have fewer problems than most people in completing this process. I have been involved in the real estate business for well over 30 years and I am having problems completing these forms. Once again, good luck to all of you that have the overwhelming experience you will need for this process.

 

7) Fines of 5 and 10 times the unpaid tax! How stupid is this! When penalties are usurious and unreasonable, they cannot be legal. Do you really believe they have the power to fine you 5 times the unpaid tax if you underestimate your property value by 10%? They can say this but enforcing it will be almost impossible. Again, are you an appraiser? Are you a computer expert? Can you comply with this law in the short time span given? The Government itself doesn’t even know how to collect taxes efficiently but they want to charge you a high penalty for you not being in compliance. How about the foreigner property owners who live out of the country and can’t

 

comply for many of the above reasons. Are you going to tell me that they must pay a penalty of 10 times the unpaid tax? This is so ridiculous it is hard to believe.

 

8) What does the Government think this type of law is going to do to foreign investment? How many foreigners are going to invest knowing that they will have at least 10 years of double taxation? How many hotel and cabina owners will not be able to pay these excessive taxes due to lack of business and tourism? With this type of law, it will be difficult to sell any upper end condos, apartments or homes. Is this really what the Government is looking for?

 

In closing, I would suggest that the Costa Rica Government revisit this law and make it something that can be used simply by all taxpayers and or homeowners. Perhaps a simple flat tax on all Corporations or some other method could be a friendlier way of implementing this. The end result and the amount of money obtained could be the same or possibly better. I know and truly believe the Costa Rican Government will wake up to the fact that they passed a bad law and in the end will revise it to make it legal, constitutional and in the best interests of the people.

 

Should we let our views be known to the lawmakers, ARCR and others who are confused and negatively affected by this law as written?

 

I read this article. It is well written but by an estranjero. So how do we get to the govertment bureaucracy to change the legislation?

The law is ridiculous as it is written with its deadlines. I do not have a poblem with paying a fair share. Are thwe ticso and tiocas also

bound to the same requirements?

I am trying to comply through the CR legal system and with a CR abogado - so far - 45 days and no headway.

So, am I going to be penalized because the CR legal system cannot handle its own laws???

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Yes, all Costa Ricans and anyone else who has property that meets these 'guidelines' are bound by this law!

We shall not know how many have not paid until after Jan 15th,and even then, it will be a guess as nobody seems to know what to do...

I suspect most will ignore it!

We are on a large property with a small house...

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Copied from another forum:

 

Great Update on Luxury Tax

Posted Wednesday, December 16, 2009 at 9:17 AM

 

After several days of emailing and keeping people informed on the numerous problems involving the new Luxury Tax Law, we finally received some good news (see below). Even Hacienda, who is totally confused about this law and how to implement it, is having a press conference this Thursday. Although I don't know what they will say, at least we know it is a step in the right direction. I have sent an email to Pres. Oscar Arias Sanchez in hopes of getting some real support and help with this problem. As of this date, I have not received a response. The Tico Times will be doing an in depth article this week and hopefully that will open some eyes on this subject. I hope the legal appeal will cover the many errors that were written into this law and eventually make it clear and simple as to how we, who have to, can comply with the law.

Bob Klenz

Dominical, Costa Rica

 

 

Lic. Gabriela Barrantes from Facio &Cañas advised us yesterday that

someone put a Recurso against the obligation to have an account

registered with Hacienda, as this is impossible for many foreigners who

own land in Costa Rica but don´t even live here and don´t have bank

accounts in Costa Rica or are not residents and so on ... A resolution

about this should come out before Christmas. She can be contacted at:

 

Gabriela Barrantes A

Abogada Asociada

( Tel.: +(506) 2256-5555 ext. 700

( Fax.:+(506) 2255-2510

* E-mail: gbarrantes@fayca.com

( Apdo. Postal 5173-1000

( San José, Costa Rica

: www.fayca.com

 

Kind regards,

Yalile Alpizar, Presidente

Costa Rica Leading Estates CLE S. A.

email: yalile@costaricaluxuryestates.com in Costa Rica dial 2-240 4884

Fax: 506 2-235 7767 From US and Canada: 011 506 2-2404884

Internationally: 00 506 2-240 48 84

www.costaricamilliondollarhomes.com

www.costaricaluxuryestates.com

www.costaricaluxuryvacationrentals.com

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LWilson    0

I just got a reply from my att5orney in Quepos who telle me this has to be filed on the internet, and the cost of calculation and fees is $500.00. So we have to pay to determine the calculation, and if we do not have to pay the tax, we have just paid an exhorbitant fee for nothing!

I also sent an email to the CR government last week, trying to reach President Arias or anyone who could shed some light on this issue. To date, I have not gotten even an aacknowledgement that anyone ever received it.

I am tempted to do the Pura Vida thing and just ignore the entire ridiculous requirement.

I hope we can get some good news before all the government offices close on Friday and we are allo stuck in the middle of nowhere.

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After reading what Bob Klenz wrote on the post below, I would hang off until Friday, if there is going to be a press conference tomorrow.

And the lawyer writes "...as this is impossible for many foreigners who own land in Costa Rica but don´t even live here and don´t have bank

accounts in Costa Rica or are not residents and so on" will Hacienda know if you are living in Costa Rica right now? There are going to be lots of people who cannot pay it, even if they wanted to.

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Just heard on the radio the Press conference is at 9am today and that there will be an article in tomorrows 'Tico Times' announcing that the deadline has been expended, due to many home owners not having access to pay these taxes.

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LWilson    0

Let's all keep our fingers crossed that: 1) The deadline is extended

2) There is some real and accessible format for determining the calculations for estranjeros and ticos alike

3) that filing is accessible for all and not just the CR legal community

4) Fees - not taxes to get assistance are more reasonable than $500, plus taxes.

Thank you for keeping us informed. I will look forward to a Tico Times article posting tomorrow.

Edited by LWilson

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Well, the Tico Time has post the announced delaying the payment until Jan 15th 2010, the Updated Tax Information on their website, and hopefully it can be accessed other than today. I have saved this article, in case it isn't available later.

Here too, is link to some of the documents for the Hacienda mentioned in the Tico Times article, that has been accumulated by Chris Cobb, also mentioned in the Tico Times article.

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Bob Klenz has added some more information:

 

"Now there is an unsubstantiated rumor that there may be a new law coming out. It was not stated in the Tico times article

http://www.ticotimes.net/topstory.htm but is being circulated as of this time via email(3PM). Although Hacienda may have made a few administrative changes in the law, I wouldn't be surprised if an additional court challenge is presented prior to the new Jan 15th deadline. The issues of the requirement to file on line, being your own appraiser and the legality of the excessive fines need to be resolved.

Bob"

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LWilson    0

The article in AM Costa Rica still indicates that "All homeowners" have to file, but the tax is to be paid by only those whose homes qualify.

The question still persists, How do we file? Where are the forms available and who actually can file them, whether we are eligible for tax or not?

Does anyone have a translated version of the form and instructions on making an actual filing?

All help welcome.

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LWilson    0

I will try to email Chris Cobb. He actually lives nearby me south of Pasito. When I checked out his website, he had some translations but not specifics on how to file, or of a form to be filed. I will be going to CR on 12/28, and will pursue this more in depth when I get there.

Appreciate all the assistance to date.

Merry Christmas and Happy New Year to all.

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lawsv    0

The article in AM Costa Rica still indicates that "All homeowners" have to file, but the tax is to be paid by only those whose homes qualify.

The question still persists, How do we file? Where are the forms available and who actually can file them, whether we are eligible for tax or not?

Does anyone have a translated version of the form and instructions on making an actual filing?

All help welcome.

 

Hi;

If you look at the law itself, it states that you DO NOT have to file if you don't qualify, also have an e-mail from a gov't worker stating the same thing.

AM Costa Rica doesn't alway get it right...

TicaNadian

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