Capital Gains Exemption in Costa Rica: Who Is It Really For?

Special Edition

I normally publish on Sundays. Today's article is a special publication because confusion continues to circulate about Costa Rica’s capital gains exemption.

Since 2019, I have heard every variation:

“It’s my house, so I’m exempt.”
“The notary can fix it with a sworn statement.”
“I’m not domiciled here, so I don’t pay.”

Let’s slow this down and look at what the law actually says.

The Basic Rule: 15% Capital Gains

Under Ley del Impuesto sobre la Renta (Law 7092), real estate sales are generally subject to:

15% tax on the net capital gain.

This has applied since July 1, 2019.

There is, however, a specific exemption.

The Primary Residence Exemption

Article 28 bis, inciso 7 provides that:

The transfer of the taxpayer’s habitual residence (vivienda habitual) is exempt.

This exemption was designed to protect someone selling their true primary home—not someone selling an investment property.

But the article continues with an important clarification.

When the Property Is Owned by a Corporation

The same article states that if the home belongs to a legal entity, the exemption may apply only if it is demonstrated “de manera indubitable” that the property constitutes the habitual residence of the shareholders.

That phrase—“de “manera indubitable”—matters”.

It means clearly. Convincingly. Without a doubt.

The law does not say a notary may grant the exemption by affidavit.
The law does not eliminate the distinction between a person and a corporation.

It creates an evidentiary requirement.

Where the Declaración Jurada Comes From

Because the statute requires indubitable proof, some closings include a sworn statement (declaración jurada) in which the shareholder declares that:

• The corporation owns the property.
• The shareholder resides there.
• It is their habitual residence.

A notary may formalize that declaration in the public deed.

But it is important to understand:

A sworn statement is evidence.
It is not automatic qualification.
It does not change legal ownership.

If Hacienda later audits and determines the exemption was improperly applied:

• Capital gains tax may be reassessed.
• Interest may accrue.
• Penalties may apply.

The seller bears primary responsibility.

And while the tax liability belongs to the seller, unresolved issues in the transfer history can create complications in future transactions—including additional scrutiny, documentation requests, or delays for the next owner.

Clean compliance protects the property record itself.

Pre–July 1, 2019 Properties

If the property was acquired before July 1, 2019, the law provides an alternative calculation.

The seller may choose between:

• 15% on the net gain, or
• 2.25% on the gross sales price

If the property truly qualifies as a primary residence, the exemption may still apply.

Pre-2019 owners often compare:

• 0% (if exempt)
• 2.25% of gross
• 15% of net gain

This should be evaluated carefully before closing.

Domiciliado vs. No Domiciliado

Another point that causes confusion is whether the seller is domiciled (domiciliado) or non-domiciled (no domiciliado) in Costa Rica.

Capital gains tax on Costa Rican real estate is based on the source of the income—the property is located here.

Being non-domiciled does not automatically eliminate tax.

It may affect how the tax is withheld and reported, but it does not erase the underlying obligation.

We covered this issue in detail in our original article on the 2.5% rule and non-domiciled sellers:

If you are uncertain whether your residency status impacts your transaction, review that article carefully before listing your property.

A Traditional Approach Still Works

If you want the primary residence exemption:

• Structure ownership correctly from the beginning.
• Ensure the home genuinely functions as your habitual residence.
• Keep records consistent.
• Avoid last-minute solutions at closing.

Costa Rica’s system is deliberate. It rewards clarity and planning.

Final Thought

This is not about avoiding taxes.

It is about understanding the law as written, respecting the system, and protecting both yourself and future buyers from unnecessary complications.

When these matters are handled conservatively and transparently, transactions remain smooth and property records remain clean.

That is the goal.