Luxury Home Tax in Costa Rica: What You Need to Know
If you already own a home in Costa Rica or are thinking about buying a residential or vacation property, it is essential to understand how the so-called luxury home tax works. Its official name is Solidarity Tax for the Strengthening of Housing Programs, and it is an annual levy on high-value residential properties.
At KMR Legal we believe that legal security is an essential part of investment. Our vision is to accompany individuals and families —local and foreign— so they can protect their estate and avoid surprises with the Tax Administration.
What is the luxury home tax?
This tax applies to residential use dwellings that exceed the value threshold set each year by the Ministry of Finance.
It covers:
• Permanent dwelling houses
• Second residences or vacation homes
• Recreational properties, villas, and luxury residences
The calculation is made on the fiscal value of the property as of January 1st, which normally includes the construction, fixed installations, and the land.
Each year, the Ministry of Finance updates the exempt amount and the progressive rate table, so it is necessary to review the current information before filing.
In simple terms:
If the value of your home exceeds the threshold established for that year, the property becomes subject to the solidarity tax.
Who must pay it?
The tax is not limited to houses in the name of individuals. Among those obligated are:
• Owners of permanent or vacation homes, even if they are used only part of the year
• Properties used as vacation rentals (Airbnb, VRBO, etc.), provided their use is residential
• Units in horizontal or vertical condominiums, including the proportional part of common areas
• Properties under concessions or State land, for example in the maritime-terrestrial zone
• Owning companies (S.A., S.R.L., etc.). The fact that the property is in the name of a company does not exclude it from the tax
The determining factors are the value and use of the property, not the legal form or the owner's country of origin.
How is it determined if my property is subject?
To know if a property falls under the tax, the following must be verified:
Value of the construction and its improvements
A methodology defined by the Tax Administration is applied, which considers factors such as:
• Type of construction
• Quality of materials
• Finishes
• Age
• Condition of the building
Exempt threshold for the corresponding year
Each year, the Ministry of Finance publishes the minimum amount from which the tax applies.
• If your construction is below that amount, no obligation is generated.
• If it exceeds it, the tax must be calculated according to the progressive table.
Special cases: condominiums and common areas
In condominiums, in addition to the value of the unit (filial), the proportional part of common areas is added.
In apartment towers, each housing unit is analyzed individually.
Although there is a specific form and technical parameters, in practice many owners resort to experts, engineers, architects, or accountants for the initial calculation of the fiscal value.
Declaration and payment: practical aspects
In summary:
• The tax declaration is made using the form indicated by the Ministry of Finance
• It is usually filed every three years, or earlier if there are significant changes (extensions, major renovations, new constructions, etc.)
• Tax payment is annual
• The deadline to declare and pay generally expires on January 15th of each year
Payment can be made:
• Online
• Through online banking of authorized entities
• Directly at collecting banks, indicating the identification number
For many foreign owners, the challenge is not just paying, but understanding the procedure, deadlines, and responsibilities when the property is in a corporation or a more complex patrimonial structure.
Exempt amount and tax brackets for the 2025 period
For the 2025 fiscal period, the Solidarity Tax (luxury home tax) applies only to residential properties that exceed a certain minimum value.
• Properties whose fiscal value of the construction, including fixed and permanent installations, is equal to or less than ¢145,000,000.00 are exempt from the tax.
• If the value of the construction exceeds that amount, the property becomes subject to the tax, and the progressive scale is applied to the total fiscal value of the property (construction + land + common areas, when applicable), without subtracting the exempt amount again.
For the year 2025, the scale of brackets and rates established in article 5 of Law 8683, updated by Executive Decree N.° 44834-H, is as follows:
• On the excess of ¢145,000,000.00 up to ¢364,000,000.00
• Rate: 0.25%
• On the excess of ¢364,000,000.00 up to ¢730,000,000.00
• Rate: 0.30%
• On the excess of ¢730,000,000.00 up to ¢1,095,000,000.00
• Rate: 0.35%
• On the excess of ¢1,095,000,000.00 up to ¢1,462,000,000.00
• Rate: 0.40%
• On the excess of ¢1,462,000,000.00 up to ¢1,824,000,000.00
• Rate: 0.45%
• On the excess of ¢1,824,000,000.00 up to ¢2,191,000,000.00
• Rate: 0.50%
• On the excess of ¢2,191,000,000.00
• Rate: 0.55%
In practice, this means that the tax is calculated by brackets, applying the corresponding rate to each value range, cumulatively, until reaching the total fiscal value of the property.
What happens if it is not declared or paid on time?
Non-compliance can generate:
• Interest and monthly surcharges on the amount owed
• Fines for late filing of the declaration, which can be significant in relation to the base salary
• Accumulation of tax debt and, in more severe cases, administrative or judicial collection processes
In high-value properties, these costs can grow rapidly and affect both liquidity and the possibility of selling or transferring the property without contingencies.
How KMR Legal can assist you
At KMR Legal our mission is for you to understand the legal and tax impact of your real estate investments and to be able to make informed decisions, especially if you are an expat, international investor, or new resident in Costa Rica.
We can help you:
• Correctly interpret these brackets
• Understand if your property falls under the tax or not
• Guide you on how and with whom to manage the declaration and payment
All this to minimize the risk of surcharges and penalties in the future.
Do you have doubts about whether your house falls into this category or what steps to follow?
At KMR Legal it will be a pleasure to hear your case and guide you on the right path.
