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taxes on rentals

Starting in July, 2019 (approval of law 9635) there is a major change on how tax is applied to the income generated from leases:


Sales Tax (taxes charged on all goods and some services) will become the VAT (Value Added Tax). This change means VAT replaces the “Sales Tax”.
The Tax Office made all taxpayers of Income Tax automatically registered as taxpayers of the VAT. Effective July 1st, 2019.

The VAT will now be applied to all goods and services (except some exemptions) and it will be 13%. The first filing of the VAT form will be August 2019. The Income Tax will remain yearly.

In 2021 the fiscal year will be from January to December , calendar year, rather than October to September as used to be.

More important details
Under the previous Sales Tax law, only short term rentals (1 month or less) were taxed with the Sales Tax. Long-term rentals (1 month or more) were not required to pay Sales Tax. Long-term rentals were only required to pay Income Tax on the rental income annually.

With the new law, residential long-term rentals will be taxed with VAT if the rent amount exceeds 1.5 the average Costa Rica base salary income. Currently this is CRC ¢650,000 (USD $1085). If the monthly rent is equal to, or less than, 1.5 of the Costa Rican base salary, the residential lease will be exempt from VAT (Value Added Tax). If it is more, it will be taxable and must be withheld and paid monthly to the Tax Office. Keep in mind that any commercial leases are subject to the VAT regardless the amount of the monthly rent.

Additionally, like most taxes, there are tax deduction implications as well which you will want to discuss with your attorney and/or accountant.

What does this mean if I am a landlord?
If you are a landlord, beginning in July 2019, any residential long-term lease (over 1 month) where the lease exceeds the exempt amount noted above, the VAT tax will be 13% monthly. Therefore, the VAT must be added and collected and it must be paid monthly to the Government. Short-term leases (less than 1 month) VAT tax will remain at 13%.
It is advisable to consult with your local attorney if you have questions on this how this new law will affect your specific situation.

What does this mean if I am a tenant?
If you are a tenant and your residential lease is short term (less than 1 month) the tax on your rent payment will remain at 13%. If you are long-term (1 month or more) and your lease exceeds the indicated exempt amount noted above, the rent payment will be increased due to the increase in VAT tax. Each case will be determined based on the specific circumstances of the lease. It’s easy to foresee there will be different outcomes for current tenants.

Whether owner or tenant, this is a major change in the law which will cause change in just a few months. If you would like to schedule an appointment with us to discuss questions, or for more information on the new law, please email us at We are at your service.

Credit to GM Attorneys who provided this helpful article

Parque eólico Santa Barbara, Santa Cruz

Costa Rica made an international commitment since 2009, acquired during the United Nations Summit on Climate Change, of becoming a carbon neutral nation by 2021. Time flies and the deadline is around the corner. It is uncertain if the goal will be attained but government´s and individual efforts aiming to that goal are evident.

Every time there are more Costa Rican companies that have achieved carbon neutrality individually. Renewable energy sources are used more and more, reducing the already minimal use of fossil fuels to generate electricity. As an example, local electric company Coopeguanacaste opened a windmill field here in Santa Cruz this year providing 60.11 Gigawatts per year of clean energy to the grid.

Specific legislation has also been created around this goal. By decree, government entities are obliged to replace existent vehicle fleets with new electric cars. Electric cars have also been exempted of certain taxes and special credit lines to purchase them have been placed so that the population starts to find it attractive to replace fossil fueled cars by this zero-emission alternative. Other projects include public transportation in urban areas like the urban train system that has been modernized and identified as a basic item in the reorganization of the crowed central valley.

Global recognition over these efforts was given this year as the United Nations granted Costa Rica the 2019 ¨Champions of the Earth Award¨. This award was a highlight for our country in the Climate Action Summit, held in New York last September. The UN commended Costa Rica for generating 98% of its energy from renewable sources and for its ongoing reforestation efforts.

Environmental matters always generate controversy. There are dozens of vantage points on whether enough is done to offset the damages made by humanity. What is real is that the Costa Rican idiosyncrasy includes respect and protection to the environment along other desirable values like appreciation to peace, and political and social stability in contrast with many Latin American nations that are currently sadly struggling with all sorts of problems related to the lack of these. This is part of what makes this glorious nation a great place to live in.

September Blog 2018


Friends and colleagues, this is to inform you that Mark Venegas decided to retire from selling Real Estate. After working with the ABC Team for 11 years he is ready to pursue a new project in his life. We are very sorry to see him leave and are grateful for being able to call him part of our company over such a long time. His trustworthiness and reliability was valued by customers and coworkers alike. He was not only appreciated as an agent but also as a friend that he became over time. We will definitely miss him at ABC but what will stay are the memories of good times over all those years. We wish him all the best for his new stage in life.

Mark: “After contemplating this decision for a while, I have decided to retire from selling Real Estate. It is time to move on to something new. It has been an interesting, and I believe, productive 11 years working in Real Estate. With all of the ups and downs that come with any job, the most satisfying aspect I will take with me is having met so many great people and making new friends. I am eternally grateful to Jogi and Verena for giving me this opportunity to work with ABC Real Estate. They have always maintained high ethical standards and I am privileged to have met them.”


Taking it as their own personal project, the owners have been involved along all its construction process, fine tuning and providing dedicated maintenance to it, making sure all details are taken care of. This is a completely functional flawless beach home ready to move into. more info