Start Date

25-11-1988 9:30 AM

End Date

25-11-1988 12:00 PM

Description

Costa Rica has had a cadastral system for several decades but even now the system does not cover the entire country. Private cadastral surveyors make small maps that must accompany each deed of sale. Without these maps, there is no registration in the public register, and without public registration of the deed, there is no legal ownership record. The public register for real property is about 50% computerized, with the system based upon a so-called Finca-number. Finca is the Spanish word for farm, but it also can be regarded as a collection of land parcels. An increasing number of deeds offered for registration are being returned because the real estate transfer tax has not been paid. The tax department of the Ministry of Finance levies and collects the property tax. The annual yield of the property tax is about US$10 million. Assessments run about 70% of the real market value. Properties are reassessed whenever they are sold, and as a result, recently sold properties have a much higher assessed value than properties that have been held in the same ownership for a long time. There is little litigation in property tax matters since the court does not apply the equity principle. There is no provision for informing assessors about building permits, and as a result, there are many newly constructed office blocks and hotels which are substantially underassessed. Taxpayers must be notified about their assessments, and they do have some rights of appeal. However, the assessor does not have a good, current address file, and as a result, there are many delays in notification of assessed values. The taxpayer is not billed directly for his property tax but must go to his (government) bank. The tax administration sends the bank the actual tax bill and the taxpayer makes his payment through the bank. The bank received 10% of the taxes collected for the work it does. Some of the problems currently afflicting the property tax in Costa Rica could be solved by improving the relationship between the cadastral system and the public register for real property. Also, there is a need for new legislation on registration of real property and tax collection procedures. Costa Rica has about 3 million inhabitants and about 1.3 million properties. The original property tax program called for assessing the whole country over a ten-year time period, with projected five-year assessment cycles after the original task was completed. The revaluation would be done through the use of trend factors for the properties not reassessed in a certain year. The current efforts in Costa Rica are to increase the yield of the property tax and introduce a greater degree of equity among property owners. The estimated assessed value of taxable property in Costa Rica is about US$7.5 billion. A conservative estimate shows that tax collections could be raised from US$10 million to at least US$35 million annually.

Publication Date

November 1988

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Nov 25th, 9:30 AM Nov 25th, 12:00 PM

Property tax in Costa Rica

Costa Rica has had a cadastral system for several decades but even now the system does not cover the entire country. Private cadastral surveyors make small maps that must accompany each deed of sale. Without these maps, there is no registration in the public register, and without public registration of the deed, there is no legal ownership record. The public register for real property is about 50% computerized, with the system based upon a so-called Finca-number. Finca is the Spanish word for farm, but it also can be regarded as a collection of land parcels. An increasing number of deeds offered for registration are being returned because the real estate transfer tax has not been paid. The tax department of the Ministry of Finance levies and collects the property tax. The annual yield of the property tax is about US$10 million. Assessments run about 70% of the real market value. Properties are reassessed whenever they are sold, and as a result, recently sold properties have a much higher assessed value than properties that have been held in the same ownership for a long time. There is little litigation in property tax matters since the court does not apply the equity principle. There is no provision for informing assessors about building permits, and as a result, there are many newly constructed office blocks and hotels which are substantially underassessed. Taxpayers must be notified about their assessments, and they do have some rights of appeal. However, the assessor does not have a good, current address file, and as a result, there are many delays in notification of assessed values. The taxpayer is not billed directly for his property tax but must go to his (government) bank. The tax administration sends the bank the actual tax bill and the taxpayer makes his payment through the bank. The bank received 10% of the taxes collected for the work it does. Some of the problems currently afflicting the property tax in Costa Rica could be solved by improving the relationship between the cadastral system and the public register for real property. Also, there is a need for new legislation on registration of real property and tax collection procedures. Costa Rica has about 3 million inhabitants and about 1.3 million properties. The original property tax program called for assessing the whole country over a ten-year time period, with projected five-year assessment cycles after the original task was completed. The revaluation would be done through the use of trend factors for the properties not reassessed in a certain year. The current efforts in Costa Rica are to increase the yield of the property tax and introduce a greater degree of equity among property owners. The estimated assessed value of taxable property in Costa Rica is about US$7.5 billion. A conservative estimate shows that tax collections could be raised from US$10 million to at least US$35 million annually.