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COSTA RICA |
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Luxury Home Tax Fine Can Be 10 Times The Tax
By Angela Jimenez Rocha*
Foreign nationals should be especially
careful about the new luxury home tax (casa
de lujo in Spanish) because Costa Rica (Tico)
attorneys and accountants have expressed
confusion about how this new law affects
owners.
The penalty for not filing is 10 times the
tax and five times the tax if the
declaration is not within 10 percent of what
the ministerio de Hacienda (Finance
ministry) determines.
The procedure for valuation of a condo is
much more complex than a single family
house.
There are three different steps to value a
condo, inside construction of each unit, the
common area improvements and the land.
In order to address the issue of condo
owners it is unclear in the law who is to
determine the value of the common area
improvements and the land which is separate
than the improvements. The safest way is for
the administrator to hire a certified
appraiser who has no vested interest as an
owner to make two separate appraisals, one
for the improvements like swimming pools,
streets, elevators, walls, etc. and another
for the land.
Any condo unit which meets or exceeds the
˘100 million colon threshold, which includes
each individual condos percentage of the
improvements, also must then must determine
the percentage of the land value as step
three.
We have had administrators of several high
profile condo associations asking my advice
on what they should do.
My opinion is there is a huge risk if the
administrator of each condo does not assume
responsibility to make this valuation so
each owner uses the same value for common
areas. The reason is if each individual
owner does this and there are many different
valuations, Hacienda may start an
investigation against any owner.
The next step is determining which type
valuation to use of the many listed by
Hacienda.
This is very complex for those who are not
versed in the technical language of
construction and architecture. There are
several different types for single-family
houses, several types for condos, hotels,
etc. There are various valuation directions
just for the different types of construction
of concrete blocks and beams, window types,
luxury bathrooms and similar.
In order to make the declaration, each owner
must file this digitally with the Hacienda
and list the number of the "plano catastrado"
, "escritura constitución" which list each
condo units percentage of the "finca madre"
or larger project, and be inscribed in "Tributacion
Directa" as an taxpayer. They also must list
from which bank the owner authorizes
Hacienda to deduct the tax.
The values for the land are listed for some
municipalities but not all of them so far as
can be determined now. For instance in
setting the Escazú land values, the agency
has the Multiplaza area listed as
approximately us$1,000 per square metre but
Cerro Alto as us$256 per square metre, which
may be considered low versus current values.
The typical charge required for an appraisal
by a licensed member of the Colegio de
Architects and Engineers for ˘100 million
colones is approximately us$1,028. This is
required every three years from reading the
Hacienda information, so owners should not
have to pay for a new appraisal every year.
One of the most important items is the
official depreciation chart which helps
owners pay less tax by lowering the
declaration required of the construction
value, and it is vital to understand how
this affects the values.
* Angela Jimenez Rocha is a licensed
architect and has worked as an appraiser for
banks and individuals for the last 23 years
and can be contacted by visiting
www.orbitcostarica.com/certifieda.htm.
The article was written this explanatory
article at the request of
Orbit Costa Rica. |
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