The Solidarity Tax for the Strengthening of Housing Programs (ISO), or “tax on luxury homes”, as it is popularly known, has been ready to be paid since January 1 and the deadline to declare and pay ends January 15th. It must be paid by the owners of all the properties with values higher than ¢129,000,000.00 (one hundred and twenty-nine million colones) and is based on the value of the real estate for residential use, used on a regular, occasional or recreational basis, including fixed and permanent installations.

Through Executive Decree No. 40786-H, published in the official gazette La Gaceta, on December 22, 2017, the Ministry of Finance updated and established the sections for the determination of the tax created, which have been in force since January 1. of 2018, which at the time of publication of this article would be those that are in force by 2019, in accordance with the provisions of Article 10 of the Solidarity Tax Law for the Strengthening of Housing Programs No. 8683, which states: “(…) The Tax Administration must publish the valuation parameters established in this Law, in the media, be it written or electronic, as it deems appropriate, forty-five (45) days before the start 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 luxury tax are detailed as follows:

Rate to Apply

Up to ¢ 323,000,000.00 0.25%
On the excess of ¢ 323,000,000.00 and up to ¢ 647,000,000.00 0.30%
On the excess of ¢ 647,000,000.00 and up to ¢ 970,000,000.00 0.35%
On the excess of ¢ 970,000,000.00 and up to ¢ 1,295,000,000.00 0.40%
On the excess of ¢ 1,295,000,000.00 and up to ¢ 1,617,000,000.00 0.45%
On the excess of ¢ 1,617,000,000.00 and up to ¢ 1,943,000,000.00 50%
On the excess of ¢ 1,943,000,000.00 0.55%

An affidavit must be presented every three years to update the fiscal value of the real estate and the luxury tax is annually charged. If it exceeds the value recorded by the administration, the new declared value automatically modifies the applicable tax base for the fiscal period in which it is declared.

When the immovable property object of 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 of the fiscal period in force at 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 (¢ 223,100.00), likewise, the non-compliance in the cancellation or late payment of that tax is sanctioned with a one percent monthly fine (or fraction of a month) on the amount left to cancel, in addition, of an interest rate of 12.56 percent on that same amount.

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