Categories: Blog
This week’s article is dedicated to the tax that applies to direct and indirect transfers of real estate properties, and the way it is calculated, among other important issues. According to Article 2 of the Real Estate Transfer Tax Law, a transfer is any legal business that transfers, directly or indirectly, a property, based on the legal nature of the respective business and not on the denomination given to them by the parties. An indirect transfer is any legal business that involves the transfer shares over a legal person holding the property.
That means, that the tax applies for the purchase or sale of any kind of real estate properties (house, apartment, lots, etc.) from the original registered owner; or in those cases where a transfer of shares or quotas takes place, from the corporation that owns real estate to a new partner.
How is the calculated?
The tax to collect will be 1.5% of the fiscal value or the value indicated in the conveyance deed of the property, whichever is higher.
As is said by the Ministerio de Hacienda… the seller and the buyer are responsible for the tax, in equal shares, which for this purpose will be jointly responsible for the total tax.
Here is an example of a transfer, included in the website of the Ministerio de Hacienda (Ministry of Finance) (http://dgt.hacienda.go.cr/tiposimpuestos/Paginas/default.aspx):
- A citizen * purchase a land that has a tax value of ¢3.000.000; the price agreed between the buyer and the seller is of ¢3.500.000 (taxable base or real value of the transaction), sum for which the notary proceeds to the deed.
| Calculation of the property transfer tax: |
| Between the fiscal value and the deed value, should be selected the highest, that equals to ¢3.500.000. |
| Taxable base ¢3.500.000 |
| Tax percent x 1.5% |
| Tax to pay ¢52.500 |
* It is important to point out that those who purchases real estate properties have the duty to declare the value of the transaction to the municipality where the property is located, for purposes of updating the declared value.
Regulations for the cancellation of the real estate tax
In order to comply with the law, it will be necessary to complete the Form D-120 Liquidación y Pago del Traspaso Directo de Bienes Inmuebles, the same that is available on the website of the Ministerio de Hacienda.
The declaration must be presented and the Real Estate Transfer Tax paid within the next 15 working days following the date when the deed, in which the transfer of the property is based, was granted.
Violating the stipulations will mean penalties and monetary surcharges, which are established in the Tax Code:
| Penalized conduct | Fine |
| Failure to submit the form within the time limit | 50% of a basic salary |
| Late payment of the tax | 1% of the tax to pay, for each month or fraction of it, to a maximum of 20% if the payment is made after the deadline |
| Interest surcharge | The payment made after the deadline implies an interest along with the tax owed. Consult the interest rates here. |
* Source:
dgt.hacienda.go.cr/tiposimpuestos/Paginas/Impuestosobrelostraspasodebienesinmuebles.aspx
