New Luxury Home Tax

[rita]

How are you all handling this? Our house is slightly over the $170,000. figure, although not according to the municipality, but I hear we need an appraisal and then what? Thanks in advance, Rita

[MountainMan]

My house is well under the $170,000 cut off line so as far as i understand the new law I do not have to do anything regarding the new Luxury Home Tax in Costa Rica. However, I am going to the muni this week to see if they want to re-evaluate my current home valuation on their books for the next five years of Tributacion National, the annual property tax assessment. I can not remember what my home is valued at - but i am sure they will want to double the value on the books — that's what they have tried to do to me every five years for the past 15 years that i have lived on Lake Arenal in Costa Rica, which is my home, and where would I go if the tax's become as high here as California ?

Which brings up the question of who : Who really benefits from high taxes?

[rita]

Mountainman:
I'm really glad you don't have to worry about the new tax and your question about who really benefits from taxes is a valid one, but I really need guidance. I hear that the municipal valuation will not be sufficient for use in determining this new tax and if that is true, John's and my home would be assessed for more than $170,000.00. I've also heard that there are huge penalties for those who try to doctor the assessment. Again, has anyone had to deal with this on their home?
Have a great day in paradise,
Rita

[MountainMan]

I will be heading in to Tilaran this week to meet with the Muni's property tax assessor as I understand that all homes in the area are up for re-evaluation and this should be done before the year is out so they do NOT send out an inspector. As I have been advised, the central gov of Costa Rica is using a Cost less depreciation model for homes to arrive to an evaluation. In that case i have little to worry about unless they use the cost based on having a contractor, permits, architects and all that other horse shit that goes along with bloated governments ... i remodeled my home myself - i don't need any paper pushers telling me how many electrical outlets to install or how far apart i can place ceiling joists !

One of my friends living here with about 10 acres and a big old unfinished concrete house said they raised his tax base by a factor of 10 a month ago and he is still fighting with them over this. True, he was only paying less then $40/year for property taxes and now they want nearly $400 ... it's not as if they want $4000 ... but is that day so far off ?

As you know the purpose of government is to reduce all citizens except the elite to the same miserable level of poverty. This is now a world wide phenomena - and now we are starting to get our pants ripped out of our butts even here in peaceful old Costa Rica.

[admin]

I was in Tilaran yesterday and met with Rosemary, the Engineer that is responsible to oversee the new property evaluations for setting the tax base for your home ownership. She is a lovely girl, very friendly and smart and easy to work with. My property value was raised based upon a more complex set of criteria, including if you can, what type of floor material is in the house (mine is okre) which is probably the cheapest ! The question and answer session took less then 30 minutes and was punctuated by laughter. In the end I accepted her declaration without argument as I believe it to be quite fair and reasonable.

However I should warn all of you who own property in the area that you should go to the Muni in Tilaran and speak with Rosemary before the year is out, that means before December 15, as apparently any properties that are not set to the new values by the first of the year will receive a personal visit from the muni to give a full review and value. Save yourself time trouble and money and take care of this easy matter now!

[rita]

Thanks so much for the detailed and useful information. John and I will head to the muni early next week. The last thing we want is for them to show up at the house. It's only about a year old.
Thanks again

[admin]

excellent do let us know how it goes!

[rita]

What follows is exactly why this new tax is so frustrating. We went to the muni on Monday Am and met with the people in the 1st office to the right. The 1st frustration is that we've only been in the country permanently since the end of September so we still must rely on our caretaker/general contractor/right hand person/friend to interpret for us. Because everything is always "no problem and under control" with Ticos we left with municipal certification (written statement with the muni seal and all) that our assessment was correct (because our house is less than 3 years old) and all of our taxes are up to date. Of course, our official property value is 61,590,000 colones so it is assessed below the luxury tax limit. We asked specifically if this valuation was applicable to the new luxury home tax and that's when they gave us the stamped certificate along with their assurance that we were in good shape and didn't have to worry about the tax.
Tuesday AM, our friend got a call on his cellphone (he's pretty well connected, obviously) from the people at the muni. They told him that we needed to go to a specific place in Liberia to complete the process for the new luxury home tax. They also said that everyone with an assessment of 50,000,000 colones must register their property.
This morning, I read the editorial in AM Costa Rica about all the reasons why people could not comply with this tax. A few included the fact of a detailed assessment of everything that no one is really qualified to complete, payment can only be arranged online with a citizen's cedula number and expiration date (good luck to residents) and provision for the government to access your bank account number and deduct the amount of the tax. And those are only the reasons that most seriously frustrated me, there were others. Please refer to the newspaper.
Bottom line is, we still do have to go to Liberia by the 15th and see what they have to say there. I can't even imagine how many people will be in line from all over Guanacaste if this is accurate information. Then there's the problem of actually paying the tax if it's needed.
Well, that's my story and I'm stickin' to it! If anybody has actually been assessed as qualifying for the tax and paying it, I'd love to hear about your experience but this is ours so far. I'll keep you posted. Also, if anyone knows that this information is inaccurate, please let me know. We're all in this together. Thanks for listening.
Rita

[admin]

Rita,

Wow - that's a hell of a tale of insanity and insult to those of us with a brain. Let's see if i have this right: we open up our bank accounts to the government whom we trust completely to take out whatever they feel is fair based upon their interpretation of our filling in their impossilbe to understand forms and if we don't do everything right (impossible again) they will fine us and presumabley take that fine at the same time or anytime they choose ... nobody is going to sign up to this madness and it's going to turn flat on it's face and make the government look like the idiots they really are ... and now you tell us that if the muni evaluates our house at at least 50 million colones that we must register with the central gov for the luxury tax - but what does the muni know ? just hersay anyway ... and this guy interpreting for you what's his brain level how well does he understand what he's being told and then can he really tell you what he heard? If your translater is not a native english speaker how do you know he's telling you the truth? It might be just his own misunderstandings confusing the issues - !

I was in playas del coco recently and spoke with an owner of a million dollar home who was in liberia last week to register for the luxury tax and this is what he said ... "I went to the office of the hacienda to file my papers and nobody knew where to go or what to do ... it was a complete joke and a waste of time ... and now i do not know what to do!"

[rita]

Thanks for saving us a long and further frustrating trip to Liberia.
The saddest part of this is that the deadline is the 15th and no one has filed a constitutional challenge to this law.
NOW WHAT?

[CityGirl]

I think taxes are great! They take from those that have and give to those that have nothing. Or do they take from those that have and give it to those that have more ? I can't ever get it straight. But whatever since I have nothing to give maybe if I am lucky the rich will give me a handmedown. Then I can eat once again. Why is it that whenever the economy is shit, the rich get richer and the poor die off?

[MountainMan]

has anyone filled in and paid this new luxury tax in Costa Rica yet? my house does not qualify as i am just a working stiff with nothing but my back to keep the wolves away. God only knows how i will eat when i am old and decrepit. Perhaps my kids will help me out if they have anything left over after the tax man is done with them.

[rita]

As it turns out, we were in Liberia so we went to the province office on the 3rd floor of the shopping plaza to see what they had to say. You recall that the Tilaran muni told us to go there to register. Well, we should all be reassessed if we want to cover our back sides. We were told that our assessment should be valid because it is less than 3 years old, however, we suspect it's a little low but it's more than 50.000.000 colones. There is a website where the brave (who can also read Spanish fluently) can complete their own reevaluation at www.hacienda.go.cr.

There are also nice people in the Liberia office who will get onto the website with you and walk you through the process.
A couple of days ago, I heard from a friend who is using an engineer from Arenal to complete the reassessment for a quiet reasonable fee. From what I understand, this person will not file the assessment but make it ready for an accountant to file.
We've decided to sit down at the computer with a bilingual Tico and see if the website is doable. If not, we'll call the engineer. The name I was given was Alvaro Jose Murillo Alvarez at 2694-4925 or 8850-3870 or 8378-9046.
That's where we are at the moment. Hope it helps others.