Ley 8683, or commonly known as the Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, is now the law in Costa Rica.  What does all that mean?  It means that if you own a home with a value greater than around $175,000, you have a new tax to pay.  In English you would call it a tax on luxury homes.  In Spanish, impuesto a casas de lujo.  In the aforementioned case of a home “valued” at $175,000, the tax would be .0025%.  That is the case up to around $440,000, using current exchange rates to convert colones, the local currency, to dollars.  The scale is graduated and tops out at .0055% for homes valued over $1,500,000 (again, using today’s exchange rate).  The rub comes in calculating value.  Up until now home owners could pretty much declare any darn value they wanted to.  Not any more.  The Ministro de Hacienda is getting downright scientific about all this, even to the point of developing a computer program that owners can use to calculate the value of the home.  The report of value must be filed within three months of the law going into effect, which was October 1, 2009.  The tax must be paid within the first 15 days of January, 2010.  The calculation of value is very complicated and goes strictly by the guidelines of value for various types of structures (and that includes the home and other improvements such as pools, jacuzzis, garages, etc.).  All of it is laid out in a manual, or you can just download the computer program, which happens to be in Spanish of course.  I downloaded it today and began to play around with it.  Just do not change the suggested “directory” when going through the download instructions, or it won’t work.  Couple of things to note here.  First, this tax is in addition to the normal quaterly property tax, up until now which was based on the declared value.  Not any more, because in the future even that old tax will be based on what you report under the guidelines of the new “additional luxury tax.”  So if you report a $200,000 value under the new tax, you could end up paying $500 for the old tax (previously based on the “declared value” of probably close to nothing), plus another $500 for the new luxury tax, for a total of $1,000 annually.  You have to reevaluate every three years, or in any year when an improvement was made to the property.  The money collected from this new tax is supposed to be exclusively earmarked to eliminate “tugurios,” or shacks, and provide adequate housing for the folks that live in them.  That is a good thing.  My only fear is what the implementation of this tax might mean for the Costa Rica real estate market.  It is one thing to help the poor, but if in so doing you greatly discourage foreign investment, are you not cutting off your nose to spite your face?  Only time will tell.

You Can Download the Tax Evaluator Here (zip file)