Property-Related Taxes in Costa Rica

Non-resident individuals are taxed in Costa Rica only on income derived from Costa Rican sources. Married couples are taxed separately.

Rental income earned by non-residents is taxed at a flat rate of 15%. Capital gains are generally exempt unless the transaction is considered habitual, in which case gains are taxed at 15%. Corporate income is taxed at 30%, with reduced progressive rates available for small businesses. Property transaction costs are moderate, with roundtrip costs typically ranging from 7% to 9%. An annual municipal property tax applies at a flat rate of 0.25%.

Annual Property Tax

Real Estate / Habitation Tax (Impuesto sobre bienes inmuebles)

Property tax in Costa Rica is levied annually by municipalities on the cadastral value of real estate. The applicable rate is a flat 0.25%.

The tax is calculated on a calendar-year basis and may be payable annually, semi-annually, or quarterly, depending on the municipality.

Income and Rental Income Tax

Income earned by non-residents is generally subject to withholding taxes. To rent out residential property in Costa Rica, a Permanent Establishment (PE) is required, meaning rental income must be reported in an annual tax return.

Rental income qualifies as real estate capital income and is taxed at a flat rate of 15%. A standard deduction of 15% of annual gross rental income is allowed, resulting in taxation on 85% of gross rental receipts.

Capital Gains Tax

Capital gains are generally not taxed in Costa Rica. However, gains derived from habitual transactions, meaning repeated or business-like property sales, are subject to capital gains tax at a flat rate of 15%.

Corporate Taxation in Costa Rica

The standard corporate income tax rate in Costa Rica is 30%. Expenses incurred in the production of taxable income are generally deductible.

Small and medium-sized businesses with annual gross income below CRC 119,629,000 may qualify for a reduced, progressive corporate income tax regime. Under this scheme, net taxable income is taxed as follows:

• 5% on the first CRC 5,642,000.

• 10% on the portion exceeding CRC 5,642,000 up to CRC 8,465,000.

• 15% on the portion exceeding CRC 8,465,000 up to CRC 11,286,000.

• 20% on any amount above CRC 11,286,000.

Property Buying and Selling Costs in Costa Rica