Tax on “luxury” homes must be paid by January 15th: Does your property qualify?

December 22nd, 2015 (InsideCostaRica.com) The annual tax on “luxury” homes, known as the Solidarity Tax, must be paid by Friday, January 15th to avoid penalties and interest.

This year, the tax applies to homes with a construction value in excess of  ¢126 million (about US $235,500) for tax purposes, officials announced on Monday.  Last year’s threshold was ¢128 million.

In calculating the construction values, all construction, fit and finish, as well as electrical and plumbing systems are included.  If the construction value exceeds ¢126 million, the home is considered to be a ‘luxury home.’  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 Solidarity Tax came into effect in October 2009. The government uses the tax proceeds to build housing for those in extreme poverty.  Last year, the tax produced revenues of ¢3.8 billion, or about US $7.1 million at today’s exchange rate. Tax authorities said that 4,251 homeowners paid the tax last year.

The only way to register and pay the tax is with Form D-179. This form is available electronically on the Hacienda website and may be filed and paid electronically, or printed and taken along with payment to authorized collection agencies.  The luxury home tax must be paid by the 15^th of January to avoid penalties, which include a 1% per month penalty on the unpaid taxes due plus interest.