Expats have a chance to duck higher property taxes

Expat homeowners can save significant amounts of money on municipal taxes if they file an assessment of value before Dec. 1.

Although current values still are in force, some municipalities are accepting the new valuations early, according to the Ministerio de Hacienda.

The valuations are good for five years, and by filing early, homeowners can duck new calculations that threaten to increase the municipal tax up to 50 percent.

The 2009 tables that provide indexes to value still are valid until Dec. 1. The 2015 values contain what the ministry calls a considerable increase.

A square meter of land assessed now at 1 million colons might be assessed under the new table at 1.5 million. The property taxes are calculated based on the valuations as is the impuesto solidario, the luxury home tax, the ministry noted.

Because the valuations endure for five years, the homeowner will save money on municipal taxes and the luxury home tax, if applicable, for that period.

This method to reduce the valuation and then the tax also is possible for new construction, the ministry noted. That is if the relevant municipality accepts the early filing.

Homeowners and other property owners are required to state the value of their real estate once every five years.

Ministry workers have been holding discussions with municipal officials on how to apply the new tables after Dec. 1

The luxury home tax is assessed on any dwelling and immediate property that is worth this year more than 122 million colons, about $226,000.

The tax to be paid is equal to 0.25 percent of the property’s total value to a maximum tax rate of 0.55 percent since it is a progressive tax.

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