Equity and Guarantee Trust funds are the most popular of these types of instruments in Costa Rica, where more and more companies and individuals are choosing to manage their properties using this alternative.
Between 2000 and 2011 property management trusts increased from 67 to 6930, reflecting increased knowledge about the characteristics and advantages of this instrument for managing property.
Using a guarantee trust, the customer transfers personal goods or property to a third party, as a backup for fulfilling obligations for which they are responsible.
In the case of equitable property, one of the most used in the country, the individual can transfer property and other assets within their lifetime to a trust, so that on their death the trust fund manager complies with the instructions given to them by the client in favor of the beneficiaries previously named in the contract.
An article in Nación.com's adds: "Regarding taxes for the trusts, Mauricio Zamora, director of the National Bank’s Trust Department, explained that duties and taxes are not paid to the Public Registry when properties are transferred to a trustee, and likewise when it is returned to the original owner.
If the property is returned to a person other than the constituent, said Jorge Porras, manager AldesaTrusts, they are required to pay transfer taxes in accordance with the value of that property at that time. "
Changes have been proposed to the tax code to stimulate the housing market through mutual funds.
From a report by the Cabinet of the Presidency of Panama:
The Cabinet has given the green light to a Bill amending Paragraph 2 of Article 706 of the Tax Code, which establishes a tax incentive for real estate investment companies and authorizes the Minister of Economy and Finance, through a Cabinet Resolution to submit the rule to the National Assembly, which aims to modify the special tax treatment of real estate investment companies, specified in the said Paragraph of the article in question, as added by section 18 of Act 8 2010.
The new law eliminates the minimum legal reserve amount required by the Central Bank of Costa Rica (15%) for funds destined for home loans.
The application of the new law for middle class housing signed yesterday by the Costa Rican government is in the hands of financial institutions who provide loans for house purchases, which still must consider what returns they will obtain.
Costa Rica has repealed the tax exemption on the transfer of ownership of the assets of a trust.
The instrument was used especially in the purchase of real estate, to avoid paying taxes to which a regular transfer is subject.
Nacion.com reports that "As of 28 September 2012, with the LFGT, article 662 of the Commercial Code has been amended, and along with it the removal of the tax exemption which used to exist for registering goods given in trust. In addition the the Personal Property Section of the National Registry has issued the circular DRBM-CIR-004-2012 which reports these changes. "
Receive more news about Banking
Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.