Tax Plan Would Change Rules For Landlords, Renters

March 17, 2006

If the tax reform bill approved last month in first debate by the Legislative Assembly clears the remaining hurdles, landlords will face new tax requirements: namely, a 13% value-added tax on all rent income. However, many renters will receive an income-tax break.

The tax plan, or Permanent Fiscal Reform Package, would convert the existing 13% sales tax on a limited number of goods and services to a value-added tax on a much broader range of the items, including rent, according to the daily La Nación Under the plan, a property owner who rents a house at ¢100,000 per month would pay ¢13,000 in taxes.

If the plan is approved, the value added tax would take effect two months after the law’s publication in the official government daily La Gaceta. Provisions dealing with income tax would not take effect until Jan. 1, 2007.

Those income-tax provisions hold a pleasant surprise for renters, who would be able to take a deduction of 15% of their total rent expenditures on their tax returns – not to exceed one month’s base salary, now at ¢200,200 (approximately $398).

Property-owners can also include certain expenses, such as those associated with the depreciation of the home or interests on a loan taken out to buy the property, as deductions in their declarations, the daily reported.

The tax plan is now under review by the Constitutional Chamber of the Supreme Court (Sala IV), which has until early April to determine whether the bill contains any unconstitutional provisions. The plan will then return to the assembly for a vote in second debate.

 

Facebook Comments

You may be interested

A pilgrimage for a saint: El Salvador mourns
Central America
580 views
Central America
580 views

A pilgrimage for a saint: El Salvador mourns

AFP - March 25, 2019

Hundreds of Salvadorans paid tribute this weekend to their first saint, San Salvador Archbishop Oscar Arnulfo Romero, murdered 39 years…

News
383 views

The Tico Times Weekly Digest: March 25, 2019

Alexander Villegas - March 25, 2019

An indigenous land rights leader was murdered in his home, four cases of measles detected in Costa Rica and La…

Costa Rica Treatment Center tackles addiction differently
Costa Rica
786 views
Costa Rica
786 views

Costa Rica Treatment Center tackles addiction differently

The Tico Times - March 25, 2019

Costa Rica Treatment Center tackles addiction differently. While most drug and alcohol rehab centers shelter their clients from external stimuli,…