Like others, Canadian grapples with soaring taxes

Canadian Greg Allen has a perfect vacation home in Playa Matapalo.

Cows wander in the nearby surf. Monkeys stare from the trees, and an occasional sloth drops by to keep en eye on things.

Palm trees shade the home and sometimes frame the spectacular sunsets.

But there is a problem. The municipal tax collector wants $4,300 for the annual rent on Allen’s home and maritime concession. That’s more than a 515 percent increase from the previous year’s payment of $700. He says he wouldn’t have minded a reasonable increase.

The Yukon resident is not alone. The soaring taxes and maritime rents appear to be a general problem among expats in Costa Rica. On his street there is a modest bed and breakfast where the annual tax is $7,800.

Allen is unusual in that he complains. He said Wednesday that workers in the Municipalidad de Aguirre know who he is and that he has appealed the new rental amount and the accompanying assessment. Six months ago he received the decree denying his appeal and upholding the municipality’s appraisal process. Although Allen is hoping to rent the structure himself for short periods to offset the high taxes, he is not considered to be in business. He is just a tourist.

The 51-year-old man said he was lucky to find the land in 1991 and eventually obtained a legal maritime concession and built the home in 2002.

He said he put about $60,000 into the structure, and the current assessment appears to be about right at $100,000. What troubles the Canadian aircraft mechanic is that the municipality is collecting a 4 percent annual rent (known as the canon) based on the value of the home. He said he believes that this percentage is too high.

By contrast, for his principal residence in Whitehorse, Yukon, he pays about $1,200.00 a year for a two-story, 2,400-square foot log home on 18 acres of land, he said.

Allen refers to the Matapalo home as a castle because it has a tower-like set of rooms which probably impressed tax assessors.

Allen said that his neighbors also have similar complaints and some even have suggested that they might have to sell.

Allen said he wanted to eventually leave the Matapalo home to his children, but now he wonders if he would be doing them a favor.

The Dirección General de Tributación just came out with a new property assessment manual that appears to boost the value of homes up to 40 percent even though the real estate market is fairly static now. That will affect expats who own their own land as well as maritime concession holders and particularly those with larger homes who must pay the annual luxury tax.

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