Navigating Costa Rica’s Registry Systems: What every property owner needs to know.
“What we got here is a failure to communicate…”
That famous line from “Cool Hand Luke” (you can see it here: https://www.youtube.com/watch?v=lj60OAh7O5U ) applies to three interactions that you may have with the National Registry. The first two are related to the transfer of title of real property. The third is related to the transfer of title of a motor vehicle. In the first instance, the National Registry will not inform the local municipality when title to a property is transferred. That is left up to the new landowner and can only be done once the transfer of title is complete in the National Registry (generally 7 to 14 days after closing). To update the property information in the local municipality, the new owner must file a property declaration (declaración de propiedad) declaring the value of the property and present proof that they are the new owner. Once registered in the municipality, owners are obligated to present a new declaration every five years or face a fine. In addition, if an owner fails to present a declaration of property in the five-year window, a municipal assessor may assign a new, often higher, value to the property. An owner may present the declaration without the assistance of an attorney. The form is a single page and only available in Spanish. Here is a link to the form: https://drive.google.com/file/d/1zmRfSC2zRKriCVL7yfqZnFaWqXORUZC4/view. If you would like assistance presenting your property declaration, please do not hesitate to contact us.
The second instance of failure to communicate after a property transfer is that the National Registry does not inform the Hacienda for purposes of paying the luxury tax on real property. The Impuesto Solidario (Luxury Tax) Ley 8683 is due each January and an owner subject to the tax (properties who construction value exceeds ¢148.000.000) must have their property appraised every three years and pay the tax annually based on that appraisal. When a property subject to the tax is sold, the owner should solicit the de-inscription of the property in the Hacienda following the procedures set forth in artículo 102 del Código de Normas y Procedimientos Tributarios. If the selling party de-inscribes the property, the new owner can link the property through the Hacienda’s ATV digital portal under the link: Bienes Inmuebles-Registro de fincas (your accountant will know what to do). However, problems arise if the previous owner does not deregister the property. In this case, the new owner must proceed with the corresponding update process before the Ministerio of Hacienda, in order to link the property to their name, since it will still be linked to the previous owner, who will not be in charge of any additional management to carry out the above. The new owner can still pay the tax, but only under the name and appraisal of the previous owner. In order to update the name of the new owner in the Hacienda for Luxury Tax purposes, the new owner must contact the departamento de valoración de la Dirección General de Tributación, located in Sabana, San José and provide documentation proving the change of ownership in order to update the registered owner for luxury tax purposes.
The third instance where the National Registry fails to communicate is when title to a vehicle is transferred in the National Registry. No notice of transfer is sent to INS (the National Insurance Company). When the new owner attempts to pay their Marchamo (obligatory insurance and registration tax) in December, the vehicle will still be recorded under the previous owners name. Previously the new owner had to go to an INS office with proof of title in order to change the owner information with INS. INS now allows owners to update the information by clicking a box while paying their Marchamo online that allows INS to communicate with the National Registry and update the information to what is recorded in the National Registry.
In all three instances, the new owner is the registered owner and has title to their property. However the new owner must take the initiative to update other government agencies in regard to the change of ownership. If you would like the information updated in all agencies, you now know what to do. If you need assistance with any of the processes, please do not hesitate to contact us at info@ghp.cr