NO NEED TO FEAR NEW LUXURY HOME TAX!

Our phones ring daily with many concerned clients asking us how this new Costa Rica luxury home tax will affect them. First of all let me say that it is the best thing that could have ever happened for the impoverished.

The new luxury home tax is .25 of 1% which applies only to the improvements/construction on the land. This does NOT apply to the land itself and it only applies to homes of value starting at $184,000 and up. So what is .25 of 1% on $184,000? Well let’s do the math, $46.00 yes $46.00 is all you would have to pay on your luxury home.

We are asked why this tax was imposed in the first place and here is the reason. This tax is for public housing and is to assist impoverished families and get them into better living conditions. This tax is a small tax to pay to see improved living conditions for the less fortunate in a country as rich as Costa Rica.

One thing to keep in mind is that your land tax is also .25 of 1% so if your home is valued at $184,000 and your land is registered at $184,000 then all you would pay is $92.00 yearly! When I left the States 8 years ago I was paying over $3000 a year.

The concept is definitely a negative image but once you know the facts then it is understandably better for the country. Many of our Central American neighbors are using it to lure people to their countries and misguide them by saying, “Costa Rica has a luxury tax” but what they don’t tell you is how much the tax is and what it is being used for. Yes Costa Rica has a luxury tax and I am proud to pay it.

Many question, “Will it eradicate poor districts.” Well only time will tell it will sure make a difference if indeed the money earmarked for public housing actually reaches its destination.

Brad Butler
November 2008

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