Pallister still waiting on whether Costa Rican vacation home subject to luxury tax

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This article was published 28/05/2018 (2418 days ago), so information in it may no longer be current.

NEARLY two months after he promised to determine if his vacation home in Costa Rica is subject to the Central American country’s luxury tax, Premier Brian Pallister says he still doesn’t have a definitive answer.

“I can tell you that it takes time to go through their process,” Pallister said to reporters at the Manitoba legislature Tuesday.

He said “legal people” are working with Costa Rican officials on the issue. “They tell me that they’re doing due diligence, and they’ll get back to me when they have answers.”

Pallister, meanwhile, disputed portions of a Free Press report that gave rise to questions about his property tax status.

He denied his vacation home is 7,700 square feet in size — a description also contained in other previous media reports — saying it is actually 3,200 sq. ft. Pallister also said a true assessment of the value of the property could not be had based on photographs.

“Photographs might be, to some degree, useful, but normally an assessment would require more than a photograph,” the premier said. He did not indicate whether he has had a recent appraisal done of the property.

In early April, the Free Press reported Pallister’s holding company had been flagged for non-payment of Costa Rica’s luxury home tax, which is also known as the Solidarity Tax for Strengthening of Housing Programs. The tax was instituted in 2009, two years after Pallister and his wife, Esther, purchased their property through a holding company, Finca Deneter Doce S.A.

Pallister’s home sits on seven acres of land outside Tamarindo, near Costa Rica’s Pacific Coast. Tamarindo real estate agents, based on information provided on the residence’s size, amenities and location, pegged its value at anywhere from US$550,000 to more than US$1 million.

The threshold for determining whether a homeowner is obliged to pay the luxury tax is based on the construction value of the home itself. If that threshold is met, the value of the surrounding land is also factored into calculating the tax payable.

According to information supplied by Pallister’s company to Costa Rican authorities — and obtained by the Free Press — the premier took out a building permit with the municipality of Santa Cruz in 2008, to construct a one-floor residence. The builder was Jimaco Construction and the permit declared the value of construction at 105 million colones (roughly US$186,000, as of earlier this year). In 2009, a second permit was taken out for an addition to the home, with a declared construction value of 24.7 million colones (US$44,000).

When the luxury tax came into being, homes were exempt if they were valued at less than 100 million colones. According to information supplied by Pallister’s holding company, the construction value of his home was worth almost 130 million colones at the time.

Pallister has said he “probably should have dug deeper” into whether his holding company owes the luxury tax.

At the same time, he is threatening to sue the Free Press for its coverage of the story.

Pallister’s lawyer, Robert Tapper, has put the Free Press on notice of a possible defamation suit. In order to avoid any legal action, Tapper made a number of demands of the Free Press, including a front-page apology and a requirement the newspaper reveal its source for the story.

larry.kusch@freepress.mb.ca