Libertarian lawmakers present bill to reform Costa Rica’s property tax

October 6^th, 2015 (ICR News) Libertarian Movement (ML) lawmakers in Costa Rica’s Legislative Assembly presented a bill last week that would reform the country’s property tax.

The reform aims to exclude the value of land from a home’s taxable value.

Currently, the taxable value of property is calculated by determining the construction value of a home, including all square meters of construction, fit and finish, as well as electrical and plumbing systems.  After the construction cost is calculated, the value of the land is added, and the tax is finally calculated at a rate of 0.25% to 0.55% of the total estimated value, based on a sliding scale.

The reform would do away with the final step – calculating and including the value of the property’s land – and would ultimately reduce the property tax paid by homeowners.

Rep. Otto Guevara explained that the reform is necessary because improvements in highways, roads, and other public works have increased land values over the years, and an increasing number of homeowners are struggling to pay the property tax on their increasingly valuable properties due to the resulting land appreciation, forcing some homeowners to either sell their homes or risk forfeiture by not paying their property tax.