Richard, this is the first time that I've seen the phenomenon of replacement cost being higher than purchase price here on a house in Costa Rica. We just had a price reduction on a house that is the first I've seen of its kind in the zone: http://tinyurl.com/ybuqzsk

Hey CJ, thanks for the comment. Rod & I are getting together today to shoot our first video talk show, you know, the kind where we sit there with the camera on us and talk like a couple of anchormen. Should be a hoot, at the very least.
Ben

Hey Glenn,

Thanks for the bump.

Things are finally moving again here in The Zone.  I don't know if we've dodged the bullet, but things are active at the moment.

For anyone wondering where this motivated seller's property can be viewed, click here.  This is a brand new, small business property that consists of a space for a restaurant and some rental cabins, right in the heart of Uvita. Great for re-locators that are looking for an income generating property.  

Ben

Maybe it's like when Jerry Seinfeld said the the words "head" and "cheese" should never be seen in the same sentence.

Actually, Rod & I feel that if we're going to discuss such stimulating things as taxes, we'd best do a little jig at the same time or no one will ever read, listen, and then post comments.

I'm a little new to the whole Facebook thing, but let's try this.

http://www.facebook.com/topic.php?uid=26241655564...

I've started a "Discussion" on our page there. I'll put up the pending questions, and will post answers as I find them. I will appreciate any help with this. The various Costa Rica real estate blogs are all lit up with this. We wouldn't be having nearly as much fun if they had written the law clearly.

Hi Cassidy,
1) This is the big question. Apparently some law maker slipped the "includes the land" feature into the law late in the game, actually doing so unbeknown to some of the other law authors. However, in delving into it some more here is how I currently understand it. (Disclaimer: I reserve the right to make an about face reversal on this understanding). We pay tax on our property now at some assessed value that includes the value of the house if their is one. Now, add to that the material construction value of the house and pay a second tax if that evaluation exceeds 100,000,000 colones (roughly $175,000 USD at this moment). So I'm not sure how this new law includes the land as they say it does but I 'spect that clairification will come along at some point - or not.
2) There is a schedule of evaluation that I am deciphering now. It reads something like this: Tile Floor - X amount per meter. Tile Roof - X amount per meter etc... There is an annual depreciation there as well.
3) I don't know how they are going to enforce it, but there reportedly are some stiff fines for not filing. I think that you are spot on with your description of the method behind this law passing. There is some question about the constitutionality (Costa Rican) of taxing twice on the same property, so we may yet see some changes.

Actually, I appreciate your question. I 'spect you were not alone and this helps to clarify things. :o)

Hi Debbie,
Put a dot in front of that 25% so that it reads .25% and now you've got a tax bill of $435.00 for a $174,000 house. The little dot makes a huge difference. Thanks for posting.

Ben

Hello RCH99 - I was kinda hoping you wouldn't ask that question :o)

For us expats and migrators to Costa Rica, this law is just starting to cause some disturbances in our otherwise undisturbed lives here (smile).

Here's the guts of the law in question:
"Every U.S. person must furnish information annually with respect to any foreign corporation which that person controls. Additionally, every U.S. citizen or resident must file an information return if he or she becomes a 10 percent shareholder in a foreign corporation during the year, and/or if he or she becomes an officer or director of a foreign corporation in which a U.S. person is a 10 percent shareholder. The form the IRS has prescribed for such returns is Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign "

I think that many have decided that the law is just too unruly to pay any attention to. I suspect that this isn't the best conclusion, but we're in the process of looking into it. The fact is that the law could very likely impact every expat living in Costa Rica. I'd venture to say that nearly all expats living here in Costa Rica have at least one corporation or S. A. which is the acronym for Sociedad Anonima. If this law is taken at face value, there needs to be a form 5471 filled out for each corporation owned. Many expats that I know own several S. A.s.

There is good reason to take this question seriously as there appear to be some rather dire penalties:
"Every U.S. person must furnish information annually with respect to any foreign corporation which that person controls. Additionally, every U.S. citizen or resident must file an information return if he or she becomes a 10 percent shareholder in a foreign corporation during the year, and/or if he or she becomes an officer or director of a foreign corporation in which a U.S. person is a 10 percent shareholder. The form the IRS has prescribed for such returns is Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign "

We are working on getting a good understanding of this RCH99. I'll post what I find here. Please let me know what you find as well.

Pretty interesting stuff about Panama. I think that we may need to find a new planet.

Daniel, thanks for your insight. I’ve heard good things about GAR, but it is sobering to hear that you’re no nearer the goal (an MLS) than when you started, and in fact, perhaps further. I’d like to hear more about that.

We are currently romanced by the possibilities of an organized, professional real estate force here in the zone. We believe that the ultimate solution is an official MLS, but that is currently beyond our grasp. The increased cooperation that has resulted from our efforts so far has been a definite improvement in the quality of service that our buyers and sellers are receiving.

You bring up an interesting point - that of “whats the point?” if there isn’t a licensing authority in Costa Rica. Is GAR working towards making this happen? Maybe GAR & SPAR should get together and discuss how we might work together to address this fundamental necessity for Costa Rica real estate.

I've advised my SPAR associates to see this thread. We’ll see what other ideas come up.