The new "solidarity tax" presented by the Executive Power of Costa Rica before the Legislatiove Assembly the last Monday pretends to change the tax rules for the homeowners, commercial and house rents and for tenants.

Our current Costa Rica Real Estate taxes are paid by anyone who is receiving a rental income, from that income you can substract deductible expenses, including payment for taxes, depreciation and maintenance among other.

The average rate of income tax is of 30%, so small and medium companies it's between the 10% and the 20% and for individuals with gainful activities from 10% to 25% while tenats don't pay taxes.

Some of the changes that the law project states are:

• Taxpayers that receive a revenue coming from the real estate can choose between to taxing options:

  1The first option is to pay 15% of tax by the income of a rent, this income is just of the rent and has a max of the 15% of deductible expenses that doesn't require documentation.

  2The traditional way of tax payment which are all the income with the deductible expenses substracted and the corresponding rates are applied.

  This second way of paying this tax it's recommended for people who adquired a loan for constructing the locals, the reason of why it is recommended, it's that the interest rates that you're paying can be a deductible term that can be more than the 15%.

• The commercial tenants will pay an added value tax (currently the sales tax)of the 14% of the rent but that only if the lessor is paying the income tax.
• A former Director of Taxation said that all the benefits that are obtained of the lucrative activities must pay taxes by the traditional way.

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