Property transfer scam needs a little presidential attention

President Laura Chinchilla told Guanacaste residents Monday to take their demands to legislators because opposition lawmakers now control the Asamblea Legislativa.

The president showed some frustration during her speech at the annual Anexión del Partido de Nicoya celebration, in part because she was met by about 400 protesters with various complaints. In addition to a stalled proposal for a national park, the president cited the tax reform plan that is being considered in the legislature. The plan would generate about $1 billion in new income for the government.

But there is one action the president could take right now to raise funds.

The president’s plan would increase the property transfer tax from 1.5 percent to 3 percent, but the government has been ineffective in collecting the current levy.

There exists a tradition among lawyers and and property purchasers to establish a sales price for fiscal purposes. This
amount is much lower than the actual sales price. This really amount to false statements to tax authorities. The transfer tax is paid on the lower amount even though the seller gets the real purchase price.

This is tax evasion of the most bold sort because a little investigation can usually determine the real sales price. After all, a lot of the properties have been advertised and the amount clearly stated.

In some cases this fiscal price is a really total effort at evasion. The stated price may be just 10 percent of the actual sale. So on a $200,000 sales, the government collects $300 instead of $3,000. The lawyers, however, collect their fee on the actual sales price. Some of them produce two invoices for their clients, one with the fake price and the second with their full fee based on the actual price.

This clearly is fraud. And it would not take a lot of effort to review all the property transactions for the last five years.

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