How to Calculate and Pay Capital Gains Tax When Selling a Property in Costa Rica
What is the Capital Gains Tax?
In Costa Rica, capital gains refer to the profit an individual or legal entity obtains by selling an asset, such as a property, for a price higher than the purchase price. Since the enactment of the Law for Strengthening Public Finances (2019), this tax must be declared and paid.
Who must pay it?
Any individual or legal entity who obtains a profit from the sale of real estate must pay this tax, unless the transaction is exempt (for example, if it is their primary residence).
How is the Tax Calculated?
There are two calculation methods, depending on when the property was acquired:
For properties acquired after July 1, 2019:
Rate: 15% on the net gain.
Formula: Net Gain = Sale Price – Adjusted Acquisition Cost (plus improvements).
Tax Payable = Net Gain × 15%.
You may deduct registered improvements, notary fees, and brokerage commissions.
For properties acquired before July 1, 2019:
You may opt to pay a flat tax of 2.25% on the total sale price.
Example: If you sell a property for $300,000, the tax will be $6,750.
How to Pay the Tax?
- Declaration: Complete Form D-162 through the Virtual Tax Administration system (ATV).
- Payment: Make the payment through online banking at the time of closing.
- Required Documents: Sales contract, public deed, invoices for improvements, and notary expenses.
Common Mistakes to Avoid
Not properly documenting property improvements.
Not paying the tax on time.
Failing to seek advice from a specialized accountant or attorney.
Conclusion
Calculating and paying the capital gains tax correctly is essential to ensure an orderly and legal property sale in Costa Rica. Having the support of specialized professionals will allow you to optimize your taxes and avoid unnecessary risks.
