If you already own a home in Costa Rica or are thinking about purchasing a residential or vacation property, it is essential to understand how the so-called “luxury home tax” works. Its official name is Impuesto Solidario para el Fortalecimiento de Programas de Vivienda (Solidarity Tax for the Strengthening of Housing Programs), and it is an annual tax levied on high-value residential properties.
At KMR Legal, we believe legal certainty is a key part of any investment. Our vision is to accompany individuals and families — both local and foreign — to protect their assets and avoid surprises with the Costa Rican Tax Administration.
What Is the Luxury Home Tax?
This tax applies to residential-use homes that exceed the value threshold set each year by the Ministerio de Hacienda (Ministry of Finance). It covers, among others:
• Primary residences.
• Second homes or vacation properties.
• Recreational properties, villas, and luxury residences.
The calculation is based on the fiscal value of the property as of January 1, which normally includes the construction, fixed installations, and the land. Each year, the Ministry of Finance updates the exempt amount and the progressive tax brackets, so it is necessary to review the rules in force before filing the tax return.
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 Has to Pay It?
The tax is not limited to homes owned by individuals. The following, among others, may be required to pay:
• Owners of primary residences or vacation homes, even if they are only used part of the year.
• Properties used as vacation rentals (Airbnb, VRBO, etc.), provided that their use is residential.
• Units in horizontal or vertical condominiums, including the proportional share of common areas.
• Properties on concessions or on State-owned land, for example in the maritime–terrestrial zone.
• Corporate owners (S.A., S.R.L., etc.): the fact that the property is held in the name of a company does not exclude it from the tax.
What is decisive is the value and use of the property, not the legal form or the country of origin of the owner.
How Do I Determine Whether My Property Is Subject to the Tax?
To determine whether a property falls within the scope of the tax, you must review the following:
Value of the construction and improvements
A methodology defined by the Tax Administration is applied, which takes into account factors such as the type of construction, quality of materials, finishes, age, and condition of the building.
Exempt threshold for the relevant year
Each year, the Ministry of Finance publishes the minimum amount from which the tax applies. If the value of your construction is below that amount, no tax obligation arises; 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, the proportional share of the common areas is added. In apartment towers, each residential unit is analyzed individually.
Although there are a specific form and technical parameters, in practice many owners rely on experts such as appraisers, engineers, architects, or accountants to perform the initial calculation of the fiscal value.
Filing and Payment: Practical Aspects
In summary:
• The tax return is filed using the form indicated by the Ministerio de Hacienda (Ministry of Finance).
• It is usually filed every three years, or earlier if there are significant changes (additions, major remodels, new constructions, etc.).
• The tax is paid annually. The deadline to file and pay generally expires on January 15 of each year.
Payment can be made:
• Online.
• Through online banking with authorized financial institutions.
• Directly at collecting banks, providing the identification number.
For many foreign owners, the challenge is not only making the payment, but also understanding the procedure, the deadlines, and the responsibilities when the property is held by a company or forms part of a more complex asset-holding structure.
Exempt Amount and Tax Brackets for the 2025 Period
For the 2025 fiscal period, the Impuesto Solidario (luxury home tax) applies only to residential properties that exceed a certain minimum value. All amounts below are expressed in Costa Rican colones (CRC).
• Properties whose fiscal value of the construction, including fixed and permanent installations, is equal to or less than CRC 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 applies to the total fiscal value of the property (construction + land + common areas, where applicable), without subtracting the exempt amount again.
For 2025, the brackets and rates established in Article 5 of Law No. 8683, as updated by Executive Decree No. 44834-H, are as follows:
• On the excess of CRC 145,000,000.00 and up to CRC 364,000,000.00
o Rate: 0.25%
• On the excess of CRC 364,000,000.00 and up to CRC 730,000,000.00
o Rate: 0.30%
• On the excess of CRC 730,000,000.00 and up to CRC 1,095,000,000.00
o Rate: 0.35%
• On the excess of CRC 1,095,000,000.00 and up to CRC 1,462,000,000.00
o Rate: 0.40%
• On the excess of CRC 1,462,000,000.00 and up to CRC 1,824,000,000.00
o Rate: 0.45%
• On the excess of CRC 1,824,000,000.00 and up to CRC 2,191,000,000.00
o Rate: 0.50%
• On the excess of CRC 2,191,000,000.00
o Rate: 0.55%
In practice, this means that the tax is calculated by brackets, applying the corresponding rate to each value range, on a cumulative basis, until reaching the total fiscal value of the property.
What Happens If You Do Not File or Pay on Time?
Non-compliance may result in:
• Monthly interest and surcharges on the amount owed.
• Fines for late filing of the tax return, which may be significant relative to the base salary used as a reference in Costa Rica.
• Accumulation of tax debt and, in more serious cases, administrative or judicial collection proceedings.
For high-value properties, these costs can grow quickly and affect both liquidity and the possibility of selling or transferring the property without tax contingencies.
How KMR Legal Can Assist You
At KMR Legal, our mission is to help you understand the legal and tax impact of your real estate investments, so you can 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, determine whether your property is or is not subject to the tax, and guide you on how and with whom to handle the filing and payment process, in order to minimize the risk of future surcharges and penalties.
Do you have questions about whether your home falls into this category or what steps to take?
At KMR Legal we will be pleased to hear about your situation and guide you in the right direction.
