Due Diligence: Verification that Taxes are Up to Date
A fundamental step in due diligence is to verify that the property is up-to-date with the Municipality Taxes (known as property taxes). This information will assure the future owner of the property that the property
A fundamental step in due diligence is to verify that the property is up-to-date with the Municipality Taxes (known as property taxes). This information will assure the future owner of the property that the property does not have any overdue taxes with the Municipality.
Part of the many faculties that the municipalities have, is perceived and administrate as a tax administration the taxes related to this public institution. One of these taxes is the property tax, which the owner of the properties located under the jurisdiction of the municipality must pay.
This obligation is paid quarterly, four times per year. The amount of the taxes that the owner has to pay is calculated based on the value of the property, the value of the property is determined based on the property declaration that the owner of the property must complete every five years.
The process of verifying a property is up-to-date with the municipality taxes may differ depending on which municipality you need to consult. There are many municipalities, like the Municipalidad de Carillo or Municipalidad de Osa, allow the verification of this information to be completed on the official website of the municipality, and to download the statement of the taxes owed and for which period.
Unfortunately, this is not the case of the majority of municipalities, many municipalities do not have this ability. Often, one must call the municipality and ask for this information from the property department, using the registration number of the property or with the ID number of the owner (or legal ID number if the property is owned by a corporation). The official will provide the amount due as well as the complete statement as to which quarters are due.
In due diligence, as I mentioned at the beginning, it is fundamental that the municipality taxes are up-to-date, otherwise the future owner would incur unexpected expenses. In this way the future owner can avoid default interest on the property.
The payment of the municipality taxes and requesting the record that the property is up-to-date with this obligation can be overwhelming due to all the bureaucracy and antiquated systems at many municipalities. This is one of the reasons why you should have an experienced party assist you with the due diligence process.