Luxury Home Tax Deadline Extended

December 18, 2009

The Ministerio de Hacienda said on Thursday it is extending the deadline for the payment of the luxury home tax. Owners of luxury homes will have until January 15, 2010 to pay the tax and not December 31, 2009.
The announcement was made by Jenny Phillips, the ministra de Hacienda.
Phillips said that only 600 of the estimated 10.000 owners of luxury homes have already paid.
The minister added that the fact that many offices are closed for the year end holidays andthe complexities experienced by the tax department has complicated matters for many, both the taxpayers and the tax collector,  the other reason for the extension.

On October 1, lawmakers passed a law that imposes a special tax homes valued at more than ¢100 million colones.
The tax is expected to raise some ¢10 billion colones for government coffers, money that would be used to eradicate slums.
The law requires that every owner of a luxury home ( any home valued at ¢100 million colones or more, be it free standing or part of a condominium) must pay the tax or face sanctions that include fines and possible confiscation of the home.
Minister Phillips said that home owners who don’t pay up by the deadline face a fine of up to 10 times the original tax, plus interest.
The tax is for a 10 year period, begging this year.
One of the main problems is that the tax law was passed in haste, leaving the tax department to sort out the details and start charging the tax immediately.
In addition, this is the first time that the tax department has attempted to collect a property tax in one lump sum.
Francisco Gamboa, director general de Tributación, said that this has been a learning experience both for the taxpayer as the tax collector.
Some of the complaints filed with the tax department so far is the complications of the form and the manner of payment. In some cases taxpayers have reported difficulties in paying the tax, no matter how hard they tried.
Tax experts recommend the hiring of professionals to complete the forms and service of calculation and payment of tax.
The price for the professional services vary. The service can cost between us$200 and us$2.000 or more. Some firms offer certificates of evaluation to assure the taxpayer that the evaluation and contribution is not unfounded.
Some owners of the luxury home tax are totally confused as if they should pay or not. Adding to the confusion it the possibility of a Constitutional Court challenge to the tax law, which could stall the payment or collection of the tax until the courts resolve the issue. However, no such appeal has been filed as yet.

To see if you should pay, we offer the following advice:

1. Determine the type of housing based on Manual de Valores Base Unitarios por Tipología Constructiva, which is available on the Ministerio de Hacienda website (https://www.hacienda.go.cr).

2. Obtain the m2 (per square metre) value of the home.

3. Calculate the depreciation that corresponds to your home depending on the type of housing that it corresponds.

4. If the value of the home is more than ¢100 million colones, the property is subject to the tax.

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