Taxes

* Property Tax - This tax is regulated by Article 766. The maximum annual percentage of assessment is 2.10% over the value of the land (land value under US$20,000.00 is exempt). The property tax is also levied on the declared value of improvements built on the land. The owners must pay according to the official assessment value (which is usually the declared - commercial - value on the last purchase Deed).

* Transfer Tax on Real Property - All sellers are obligated to pay, at the moment of a transfer of a real property, the transfer tax. The seller has 2 options:

1) Pay 2% of the declared commercial sale price, which is understood as an advance payment on the capital gain.

2) 5% tax of the assessed value, which is established by adding a 10% increase per annum, on the purchase value, starting the year that the seller purchased the real estate (this alternative includes payment of the capital gain tax explained below).

* Capital Gain Tax - This tax is applicable if the alternative of 2% for Transfer Tax is used for the transfer of real property and if there is a capital gain. This tax is also regulated by Article 699 and for corporations acting as sellers, a 30% flat tax payment on the profit will be applicable, notwithstanding, if shareholders are foreigners. Another percentage will be applicable if the seller is a physical person. If there is no capital gain on the transfer of a property, the 2% transfer tax, paid in advance for the sale and understood as a credit for the seller, will be lost.

* Inheritance Tax - This tax was abolished in 1985.

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Information courtesy of American-European Real Estate Costa Rica and Rhino Real Estate, Panama. Visit their websites to find prices and photos for 400+ properties in the most popular areas of Costa Rica and Panama.

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