RENTAL TAX GUIDELINES
If you have a House and/or Condominium for rent in Costa Rica, it is
important to take into consideration the new regulations. We have prepared the following explanation
with assistance of our CPA; However, we recommend that you hire an accountant
to assist you with the tax obligations, if these apply to you. According to the
new Law 9635 as of this July 2019, the activity of renting houses is
automatically taxed, as Returns on Real Estate “Rentas de Capital
inmobiliario”, therefore a new type of
form has to be filed.
There are two ways to pay the tax:
Capital Gain on the
real estate income (rent): Of the total rental
income, you can automatically deduct 15% of expenses and on the remaining 85%,
pay 15% tax. This is the same as 12.75%
of the effective rate on the total of the incomes received. (Form D-125)
Regular Income Tax
filed once a year: In order to keep
regular income tax filing and avoid the previous one, the law has established a
requirement to have at list one employee registered in the CCSS (Caja
Costarricense de Seguro Social) which is the socialized medical bureau with
all worker benefits (Christmas bonus, vacation pay, notice, etc), To apply for
this, the Tax payer must file a formal
request to the Tax Administration of Costa Rica and wait for them to approve
Please consider the followings steps:
D140 Form: The
corporation must file this form to register the company with the Tax
1.1 If you are in Costa Rica it can be done at tax
administration office, in person.
1.2 If you are not in Costa Rica, you must grant a Special
Power of attorney to someone to file on your behalf.
Billing System: Once
the company is active, a billing system must be in place to create electronic
invoices for every rental received.
D104-2 Sales tax Form
(Due on the 15th of each month)
Every invoice for the rental will collect 13% Sales tax on
the rental and must be filed monthly to the Tax Administration. The amount to
be paid is the difference between the tax collected and the tax paid each
D125 Form Capital Gain on Real estate rentals (Due on the 15th
of each month):
If you do not qualify for regular income tax, then this
D125 form D125 must be filed and paid. D101Form, Regular income tax (Due every year. 2019 is now already and next fiscal
period will be due on December 2020).
For regular Income tax, the taxpayer can write off all expenses related
with the business activity and depreciation.
It is important to
consider that once the shareholders agree to pay dividends out of the profits,
they will have to pay Dividend Tax (15%) unless the shareholder is another
company that is also commercially active and registered in Costa Rica for
another business activity.
In August 2019, a new law was approved, and new requirement
will apply for rental activity which is the registration with ICT (Costa Rican
Tourisms Institute). However, as of
today the regulations for this requirement are not available.
Most of the requirements will
be already complied with Tax registration, billing electronically, collecting,
and paying sales tax. However, few more related with Law 7600 to grant access
to wheelchairs, security and good conditions for renters will also be part of
the law regulations.
***Please note that these are
the regulations for Costa Rica. Depending on your nationality and/or residence,
you may have to file additional forms. We urge you to contact your CPA and/or
Tax attorney abroad to ensure you are complying with all of the forms and tax
payments there as well. ***