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The Solidarity Tax for the Strengthening of Housing Programs (ISO), or “tax on luxury properties or luxury house tax”, as it is popularly known, has been collected since January 1st and the deadline to declare and pay ended last January 15th. It must be paid by the owners of all properties with values higher than ¢133,000,000.00 (one hundred and thirty-three million colones) and it falls on the value of real estate for residential use, used on a regular, occasional or recreational basis, including fixed and permanent installations.
By way of executive decree No. 40786-H, published in the official newspaper La Gaceta, on December 22nd, 2017, the Ministry of Finance updated and established the sections for determining the tax created, which have been in force since January 1st of 2018, the same that at the time of publication of this article would be those in force for 2019, in accordance with the provisions of article 10 of the Solidarity Tax Law for the Strengthening of Housing (Tax on luxury properties)Programs No. 8683, which indicates: “(…) The Tax Administration shall publish the valuation parameters established in this Law, in the media, written or electronic, that it deems appropriate, forty-five (45) days before the beginning of each fiscal period. In case of not publishing them, the valuation parameters used in the previous period will be applied”; however, any notification made by said Entity in this regard must be considered.
Based on the above, the sections for the application of the tax are detailed as follows:
| RANGE | RATE TO APPLY |
|---|---|
| Up to ¢334,000,000.00 | 0,25% |
| On the excess of ¢334,000,000.00 and up to ¢670,000,000.00 | 0,30% |
| On the excess of ¢670,000,000.00 and up to ¢1,004,000,000.00 | 0,35% |
| On the excess of ¢1,004,000,000.00 and up to ¢1,340,000,000.00 | 0,40% |
| On the excess of ¢1,340,000,000.00 and up to ¢1,673,000,000.00 | 0,45% |
| On the excess of ¢1,673,000,000.00 and up to ¢2,010,000,000.00 | 0,50% |
| On the excess of ¢2,010,000,000.00 | 0,55% |
Every 3 years an affidavit must be presented that updates the tax value of the real estate and the tax is paid annually. If it is higher than the value registered by the administration, the new declared value automatically modifies the applicable tax base for the fiscal period in which it is declared.
When the property that must pay this tax belongs to several co-owners, they must declare it jointly.
In case of transfer of ownership of the real estate, the new owner will be jointly and severally liable for the payment of the tax for the fiscal period in force on the date of acquisition, as well as the corresponding interest.
The omission in the presentation of the declaration will have a fine equivalent to fifty percent (50%) of the base salary (¢ 450,200.00); likewise, non-compliance in the cancellation or late payment of the tax is sanctioned with one percent per month (or fraction of the month) on the amount not paid, in addition to an interest rate of 12.56 percent on the same amount. There are other assumptions that establish different percentages, depending on whether or not there is an action by the Tax Administration in the late collection of the tax payment.
For more information or advice, ERP Lawyers & Associates puts at your service its team in charge of the Real Estate or Real Estate Law area. Contact us, we will gladly assist you.
