Expat homeowners face big jump in property taxes

Many expat homeowners are in for a jolt when the municipal tax bill arrives.

Local governments have tapped into the Ministerio de Hacienda computers and now have access to updated values on property. In addition, individual properties now show up on canton maps, thanks to a long-running effort to create such a system. So the municipal tax collector can get a square meter price on land.

In some cases, expats are seeing a 10-fold increase in municipal taxes. One expat saw his annual taxes go from $220 to $2,200.

The Ministerio de Hacienda, the finance ministry, is using 2010 values for property, but in recognition that prices have declined, only 63 percent of the value is  being applies. There also is a extensive listing of land values, similar to the system the Municipalidad de San José put into practice five years ago.

For example, depending on the location in the Canton de Mora, which includes Ciudad Colón, square meter land values range from 100,000 colons to 20,000 colons. Municipal tax is based on the land value and the value of  any structure.

An additional fear by some expats is that the new valuations established by the municipality might put the dwelling in the luxury tax category.

This tax, the impuesto solidario in Spanish, is a special levy approved in 2009 on more expensive homes in an effort to raise funds for housing for the poor. It is law No. 8583;

According to the Ministerio de Hacienda, homeowners must next file values related to the luxury home tax by Jan. 15, 2016. But the fear is that the ministry will apply the same values as the municipality for  next year.

This year the lowest category is for homes that are estimated to be worth from 121 million to 301 million colons. That is about  $222,000 to $552,000. The tax at this level is 0.25 percent. The tax increases in steps to the top percentage of 0.55 percent for properties valued in excess of 1.8 billion colons.

A decree is expected that will establish the ranges for tax payments by Jan. 15, 2015.

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