This short summary provides an accurate overview of Costa Rica's tax legislation for landlords in 2025. Understanding these rules can help landlords optimize their investments, stay compliant, and avoid legal and financial woes. Please find the summary of the key information below:
Key Points
Luxury Tax: Applies to properties valued over $233,900, with rates ranging from 0.25% to 0.55%.
Property Tax: Annual rates range from 0.25% to 0.55% based on property value. Payments can be made quarterly or annually.
Corporation Fees: Companies pay annual fees ranging from $120 to $380, depending on activity level.
Rental Income Tax: Landlords pay 15% on 85% of their rental income under the 15/15 tax system.
Capital Gains and VAT: New regulations apply, affecting certain transactions and services.
Taxes
General Property Tax:
0.25% of the property’s assessed value or purchase price.
Property reassessments are required every five years.
Taxes are due annually by January 15th.
Solidarity (Luxury) Tax:
Targets high-value properties exceeding $233,900.
Rates vary from 0.25% to 0.55%, supporting social housing programs.
Annual Corporation Fees:
Active Companies: Fees are based on earnings and range between 15% and 50% of a government employee’s salary.
Inactive Companies: Pay a fixed fee regardless of earnings.
Taxes Rental Income
Rental income is taxed at a flat 15% rate on 85% of earnings.
Deductions: Expenses like maintenance, repairs, and mortgage interest are deductible. Improvements and renovations are not.
Landlords must issue electronic invoices and report income monthly.
Compliance Requirements
Monthly Filing:
Includes rental income and applicable sales tax (13% VAT for vacation rentals).
Annual Deadlines: Property and luxury taxes are due by January 15th.
Failure to comply could lead to penalties up to 10x the tax owed.
Corporate Tax Considerations
Active Companies: Tax rates vary with income.
Inactive Companies (Holding Companies with no economic activity): Pay a roughly $140.00 but must file annual declarations.
Allowable Deductions
Common deductions for landlords include:
Mortgage interest (up to $750,000).
Property repairs and maintenance.
Depreciation over 27.5 years.
Travel expenses for property management.
Home office expenses, if applicable.
Tax Credits:
Energy Efficiency Credits: For eco-friendly property improvements.
Low-Income Housing Tax Credits (LIHTC): Incentives for affordable housing investments.
By staying informed and planning strategically, landlords can navigate Costa Rica’s tax landscape effectively, ensuring profitability and compliance. For personalized advice, consulting a tax professional familiar with Costa Rican regulations is recommended.
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