What is the legal system like in Costa Rica?
The legal system in Costa Rica differs from the legal system of the United States. The Costa Rican law is based in the civil law system with its roots in the Napoleonic Code and is derived through the Spanish Civil Code. The legal system in the United States is the common law system or Anglo-American legal system. As a result, it is very important to obtain the advice and services of an honest, qualified Costa Rica lawyer and notary for all real estate transactions.
It will be the job of your Costa Rican lawyer to research the title to establish the actual legal owner of the property and to assure that it is free from any liens or encumbrances and that the title is clear. We at Costa Rica MLS Network can provide our clients with good, competent, honest lawyers who will work with you every step of the way in completing your transaction.
Fortunately all property in Costa Rica that is titled is registered and centralized in the Costa Rica National Registry located in the office of the Public Registry in San Jose. Most of the titled properties are registered in the computer system called the "folio real". Each property has a separate folio real number and this number is required in order to research the property. Any property that does not appear in the National Registry is not registered and therefore is an untitled property and should not be considered for purchase under normal circumstances. If a property has any legal liens and encumbrances, it will be reflected in the National Registry.
Your lawyer will research all of the issues in the National Registry and present you with his findings. He will then take the necessary steps, if possible, to clear up any problems with this property prior to closing. If this is not possible, you can back out of the transaction.
In order to transfer a property, both the buyer and the seller must sign the deed in the presence of a Costa Rican notary public (different from notary in the USA). The deed is then registered in the Public Registry and formalized.
The laws are very clear regarding real estate transactions for titled land in Costa Rica and with the proper attorney, this process can be a trouble free experience.
In addition to titled property there are also some properties that are "concession land". Many of the concession properties are located along the beaches and are subject to the Maritime Zone Law. Basically, you cannot own these properties, but are granted a concession (similar to a lease) by the government for a specific period of time. These properties can be a problem and present many challenges. In most cases, concession properties should be avoided especially if there is a similar property that is titled. Your lawyer can advise you on all of the difficulties associated with concession land.
The legal system in Costa Rica differs from the legal system of the United States. The Costa Rican law is based in the civil law system with its roots in the Napoleonic Code and is derived through the Spanish Civil Code. The legal system in the United States is the common law system or Anglo-American legal system. As a result, it is very important to obtain the advice and services of an honest, qualified Costa Rica lawyer and notary for all real estate transactions.
It will be the job of your Costa Rican lawyer to research the title to establish the actual legal owner of the property and to assure that it is free from any liens or encumbrances and that the title is clear. We at Costa Rica MLS Network can provide our clients with good, competent, honest lawyers who will work with you every step of the way in completing your transaction.
Fortunately all property in Costa Rica that is titled is registered and centralized in the Costa Rica National Registry located in the office of the Public Registry in San Jose. Most of the titled properties are registered in the computer system called the "folio real". Each property has a separate folio real number and this number is required in order to research the property. Any property that does not appear in the National Registry is not registered and therefore is an untitled property and should not be considered for purchase under normal circumstances. If a property has any legal liens and encumbrances, it will be reflected in the National Registry.
Your lawyer will research all of the issues in the National Registry and present you with his findings. He will then take the necessary steps, if possible, to clear up any problems with this property prior to closing. If this is not possible, you can back out of the transaction.
In order to transfer a property, both the buyer and the seller must sign the deed in the presence of a Costa Rican notary public (different from notary in the USA). The deed is then registered in the Public Registry and formalized.
The laws are very clear regarding real estate transactions for titled land in Costa Rica and with the proper attorney, this process can be a trouble free experience.
In addition to titled property there are also some properties that are "concession land". Many of the concession properties are located along the beaches and are subject to the Maritime Zone Law. Basically, you cannot own these properties, but are granted a concession (similar to a lease) by the government for a specific period of time. These properties can be a problem and present many challenges. In most cases, concession properties should be avoided especially if there is a similar property that is titled. Your lawyer can advise you on all of the difficulties associated with concession land.
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Stewart Title Costa Rica has been helping buyers, lenders and sellers close their Costa Rican real estate transactions with speed and confidence for over 8 years. Offering a wide range of products including title guarantees, escrow services, closing services and an attorney referral program, our dedicated professionals are committed to providing our customers with cutting edge real estate services and an efficient and secure real estate transaction experience.
For more information contact out Stewart Title Agent in Costa Rica:
Phone: (011) (506) 258-5600
Title Insurance
There are several title insurance companies operating in Costa Rica including Stewart Title.
Stewart Title Costa Rica has been helping buyers, lenders and sellers close their Costa Rican real estate transactions with speed and confidence for over 8 years. Offering a wide range of products including title guarantees, escrow services, closing services and an attorney referral program, our dedicated professionals are committed to providing our customers with cutting edge real estate services and an efficient and secure real estate transaction experience.
For more information contact out Stewart Title Agent in Costa Rica:
Phone: (011) (506) 258-5600
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Taxes in Costa Rica
by Lic. Romulo Pacheco for the ARCR
Taxation in Costa Rica is much more simplified than that of many other countries. There are different limits of taxation depending on your income: the more you earn, the more you pay; if you earn less than the minimum amount established by Costa Rican law, you pay no taxes. The following basic information discusses some of the tax system, but you should always check current figures with your accountant.
Municipal Taxes
The local community government charges municipal taxes to clean the streets, for public lighting and to finance the local bureaucracy. The amount charged is based on the number of meters of street frontage of your property its location, and on your Municipal Government. The amounts vary, but they are never over US$10 per month per residence.
Municipal Government Property Tax was recently moved from the central government to the Municipality, to which you pay directly 0.25% of the price of your property per year. If your house is rated at less than the ¢6,000,000.00 (six million colones) you are exempt from that tax. If you think this exemption applies to your property, your Municipality will tell you the procedure for applying.
Sales Tax
Sales tax is 13% on the amount paid for goods and for some services. The services of Lawyers, Doctors, Dentists and other independent professionals are exempt from sales tax; anything else you buy, from a candy bar to a computer or furniture is taxed. (Houses and cars require payment of a 'transfer tax', and that is covered elsewhere.) In some cases the sale is subject to the Simplified Regimen, used for very small businesses like your local 'Pulperia' or 'Soda'. (corner store)
Transfer Taxes
You do not pay sales taxes, as such, for your house or car. Because they have to be inscribed in the National Registry, you pay a Transfer tax. In the case of real estate there is a 1.5% tax over the price registered in Hacienda (the Treasury Department) or in the National Registry. Cars are taxed at 2.5% over the retail price that is established by the Ministry of Treasury in an annual publication for that purpose.
Income Tax
All individuals who work - and any Corporations that are involved in commerce in Costa Rica - have to pay Income Tax. There is a tax scale and an amount due from the amount you earn from your employment, your professional services, and from whatever activity your Corporation performs. (There are individual exceptions depending on circumstances.)
In Costa Rica the fiscal year runs from October 1st to September 30th of each year, and each worker is required to at least file his/her tax declaration: if no income or business occurred, they have to declare that.
There is an exempt amount for the regular worker who earns less than or the exact amount that is established by law. For this year, the amounts are as follows.
Individuals
a. Income up to ¢215,600.00 per month is exempt.
b. 10% tax is due on income in excess of ¢215,600.00 up to ¢324,100.00.
c. 15% tax is due on incomes in excess of ¢324,100.00.
Corporations
There is no exempt amount for corporations, but they may deduct some expenses from their earnings. The tax percentage is taken from gross earnings, but that percentage is applied to net earnings. They are regulated the following way:
Corporations pay 30% tax over the annual earnings for 1 October to 30 September.
Small enterprises are Corporations whose gross earnings are under ¢28,860,000.00 (US$93,090.00) per year.
If you are self-employed because you have a professional degree, like a Doctor or a Lawyer, you will be subject to the following taxation:
Taxation in Costa Rica is much more simplified than that of many other countries. There are different limits of taxation depending on your income: the more you earn, the more you pay; if you earn less than the minimum amount established by Costa Rican law, you pay no taxes. The following basic information discusses some of the tax system, but you should always check current figures with your accountant.
Municipal Taxes
The local community government charges municipal taxes to clean the streets, for public lighting and to finance the local bureaucracy. The amount charged is based on the number of meters of street frontage of your property its location, and on your Municipal Government. The amounts vary, but they are never over US$10 per month per residence.
Municipal Government Property Tax was recently moved from the central government to the Municipality, to which you pay directly 0.25% of the price of your property per year. If your house is rated at less than the ¢6,000,000.00 (six million colones) you are exempt from that tax. If you think this exemption applies to your property, your Municipality will tell you the procedure for applying.
Sales Tax
Sales tax is 13% on the amount paid for goods and for some services. The services of Lawyers, Doctors, Dentists and other independent professionals are exempt from sales tax; anything else you buy, from a candy bar to a computer or furniture is taxed. (Houses and cars require payment of a 'transfer tax', and that is covered elsewhere.) In some cases the sale is subject to the Simplified Regimen, used for very small businesses like your local 'Pulperia' or 'Soda'. (corner store)
Transfer Taxes
You do not pay sales taxes, as such, for your house or car. Because they have to be inscribed in the National Registry, you pay a Transfer tax. In the case of real estate there is a 1.5% tax over the price registered in Hacienda (the Treasury Department) or in the National Registry. Cars are taxed at 2.5% over the retail price that is established by the Ministry of Treasury in an annual publication for that purpose.
Income Tax
All individuals who work - and any Corporations that are involved in commerce in Costa Rica - have to pay Income Tax. There is a tax scale and an amount due from the amount you earn from your employment, your professional services, and from whatever activity your Corporation performs. (There are individual exceptions depending on circumstances.)
In Costa Rica the fiscal year runs from October 1st to September 30th of each year, and each worker is required to at least file his/her tax declaration: if no income or business occurred, they have to declare that.
There is an exempt amount for the regular worker who earns less than or the exact amount that is established by law. For this year, the amounts are as follows.
Individuals
a. Income up to ¢215,600.00 per month is exempt.
b. 10% tax is due on income in excess of ¢215,600.00 up to ¢324,100.00.
c. 15% tax is due on incomes in excess of ¢324,100.00.
Corporations
There is no exempt amount for corporations, but they may deduct some expenses from their earnings. The tax percentage is taken from gross earnings, but that percentage is applied to net earnings. They are regulated the following way:
Corporations pay 30% tax over the annual earnings for 1 October to 30 September.
Small enterprises are Corporations whose gross earnings are under ¢28,860,000.00 (US$93,090.00) per year.
- 10% tax on amounts up to ¢13,200,000.00 (US$42,580.00) in gross income.
- 20% tax on amounts above ¢13,200,000.00 up to ¢28,860,000.00 (US$93,090.00) in gross income.
If you are self-employed because you have a professional degree, like a Doctor or a Lawyer, you will be subject to the following taxation:
- Incomes up to ¢958,000.00 are exempt from tax.
- 10% tax on incomes over ¢958,000.00 up to ¢1,431,000.00
- 15% tax on incomes over ¢1,431,000.00 up to ¢2,388,000.00
- tax on incomes over ¢2,388,000.00 up to ¢4,785,000.00
- 25% tax on all amounts above ¢4,785,00000.
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Q: Can a foreign person or company own and operate a business corporation in Costa Rica?
A: Although the CR Code of Commerce restricts the carrying out of business by foreign persons to those with at least ten years of legal residency, there is no restriction to a foreign person or company either forming or acquiring a business corporation. A locally formed business corporation is by definition Costa Rican and enjoys all legal rights on par with Costa Rican nationals operating a business, with very few exceptions that are usually accommodated through association with CR citizens.
Q: What kinds of Costa Rican business corporations are available?
A: The CR Code of Commerce provides for five types of business corporations. Of these, only two are generally used. These two most common types of corporations used by businesses here are the "Sociedad Anonima" abbreviated "S.A.," (translatable as "Stock-held Company"). Despite the different legal names used, these two types of business corporations are actually both "stock-held" and "limited liability companies."
Q: What are the most important differences between these two types of business corporations?
A: An important difference between the two is that the "S.A." must be represented by a board of directors with a minimum of three members and have a statutory examiner, whereas the "Ltda." need only be represented by a sole or several manager(s) at the choosing of the shareholders; another difference is that stock transfers in a "Ltda." have a legal "first right of refusal" in favor of current shareholders, whereas in an "S.A." a "first right of refusal" on stock transfers must be specifically included in the corporate bylaws if desired. A consideration for some U.S. companies is that the "Ltda." has reportedly been understood by the IRS to be a "partnership" and thus have a different tax situation when considering a consolidated or global U.S. taxable income.
Q: What is the purpose of the two different types of management structures?
A: The law intended the "S.A." to be used by larger groups of investors needing to be represented by a board of directors for the purpose of supervising day-to-day operations, while the "Ltda." was intended for smaller groups of owners more directly involved in the business management. However, there is no restriction in this regard and both types of business corporations can and are used by both large and small groups of investors in Costa Rica.
Q: Are there limitations as to the persons designated as directors or managers in these business corporations?
A: In a "S.A." or "Ltda.," board members and managers may be shareholders or outsiders, foreigners or nationals. The only restriction in connection with these posts is that of the statutory examiner in the "S.A." who may not also act as a director or manager nor be a close relative of these.
Q: How many persons are required to form a Costa Rica business corporation?
A: The CR Code of Commerce stipulates that a corporation must be formed by at least two initial shareholders. It also allows, however, the acquisition of the totality of the capital stock by a single shareholder immediately after formation, thus essentially permitting the formation and control of business corporations by a single interested person or company with the help of a nominal and temporary shareholder.
Q: What are the minimum capital requirements for forming a Costa Rican business corporation?
A: Business corporations in Costa Rica generally do not have a minimum capital requirement for purposes of formation. The most notable exception are those business corporations intended for operations in the financial and banking sectors where mandatory and significant levels of initial capitalization do apply. Of course, specific needs such as participation in public bids and concessions, obtaining of financing, etc. can dictate a need for real levels of registered capitalization. Registered capital stock may be denominated in local or foreign currency.
Q: Is the assignment or transfer of stock in Costa Rican business corporations a complicated matter?
A: The assignment or transfer of stock in a Costa Rican business corporation should not be a complicated matter, however local custom in this area has evolved several variations in procedure, some of which - when combined with less-than-perfect corporate stock record bookkeeping - can make a stock acquisition more complicated than normally necessary.
Q: How should a stock assignment or transfer of Costa Rica business corporation be legally carried out?
A: According to the CR Code of Commerce, the following aspects must be taken into account:
A: A Costa Rica business corporation can only recognize a shareholder as such if he/she is registered in the Stock Record book. No act or operation with reference to stock certificates will prejudice either the corporation or third parties if it is not recorded in the Stock Record book.
Q: Can a Costa Rican business corporation have a foreign language Company name?
A: Yes, a recent Constitutional Court ruling has struck down certain legal provisions that previously restricted registered company names to the Spanish language, Greek and Latin or aboriginal tongues. The registered foreign language name must have a registered Spanish translation and is subject to normal restrictions relative to similarity, generality, and common use terms. Reservation of a company name prior to formation is also possible.
Q: May a Costa Rican business corporation hold Board and Stockholders Meetings outside of the country?
A: Yes, if the articles of incorporation and bylaws specify that possibility and name the place(s) where such meetings can be held.
Q: Can foreign companies carry out business through a locally registered branch?
A: Yes, however the rules for registering a local branch of a foreign company are far more complicated than forming a wholly owned local subsidiary, whether an "S.A." or a "Ltda.," resulting in that most foreign companies choose the latter option. Foreign companies having a limited operative need locally can also choose to register a local representative with sufficient powers of attorney as may be necessary for that purpose.
Q: Is a resident agent required in a Costa Rican business corporation?
A: Only in the case where the registered company directors or managers are all foreign domiciled. In this case, the resident agent must be a local attorney in private practice. The resident agent's duties and powers are limited to receiving official administrative or judicial notices and transmitting them to the company representatives.
Q: Are "shelf companies" frequently used in Costa Rica?
A: Though not uncommon, "shelf companies," whether "S.A." or "Ltda." are not used as frequently by foreigners or nationals in Costa Rica, as say in Panama or in other typical "offshore" corporate domiciles. Possibly the major reason is that "bearer" shares are not allowed in CR legislation making it more difficult to maintain the anonymity normally associated with these companies.
Q: Why would a person or company consider using a "shelf company?"
A: Unless a person or company desires to leave the legal representation of the "shelf company" in the hands of the nominee directors or managers designated by the law firm offering it, one should replace and record new representatives in the National Registry, review and possibly change the structure of powers of attorney, voting percentages in stockholders' meetings, financial and reporting bylaws, among others. In practice this can amount to more work and expense than having an altogether new business corporation formed to suit the purpose of the investment.
Q: What yearly official fees are applicable to Costa Rican business corporations?
A: Other than low initial recording fees there are no official yearly fees required to maintain a Costa Rica business corporation in good standing in the National Registry.
Q: What kind of expenses and time frame can I expect in the formation of a Costa Rica business corporation?
A: Expenses in terms of attorney/notary fees vary greatly depending on the particular qualifications of the responsible attorney/notary, the complexity of the formation, and the importance of the investment. Recording fees are negligible. The time frame of the formation depends mainly on the complexity of the articles of incorporation and bylaws and the degree of cooperation between attorney and client. Once formed, a corporation can usually be fully registered within a month's time depending on the current workload at the National Registry.
Forming a Costa Rican Business Corporation
by Thomas A. Burke, Attorney and Amcham-CR memberQ: Can a foreign person or company own and operate a business corporation in Costa Rica?
A: Although the CR Code of Commerce restricts the carrying out of business by foreign persons to those with at least ten years of legal residency, there is no restriction to a foreign person or company either forming or acquiring a business corporation. A locally formed business corporation is by definition Costa Rican and enjoys all legal rights on par with Costa Rican nationals operating a business, with very few exceptions that are usually accommodated through association with CR citizens.
Q: What kinds of Costa Rican business corporations are available?
A: The CR Code of Commerce provides for five types of business corporations. Of these, only two are generally used. These two most common types of corporations used by businesses here are the "Sociedad Anonima" abbreviated "S.A.," (translatable as "Stock-held Company"). Despite the different legal names used, these two types of business corporations are actually both "stock-held" and "limited liability companies."
Q: What are the most important differences between these two types of business corporations?
A: An important difference between the two is that the "S.A." must be represented by a board of directors with a minimum of three members and have a statutory examiner, whereas the "Ltda." need only be represented by a sole or several manager(s) at the choosing of the shareholders; another difference is that stock transfers in a "Ltda." have a legal "first right of refusal" in favor of current shareholders, whereas in an "S.A." a "first right of refusal" on stock transfers must be specifically included in the corporate bylaws if desired. A consideration for some U.S. companies is that the "Ltda." has reportedly been understood by the IRS to be a "partnership" and thus have a different tax situation when considering a consolidated or global U.S. taxable income.
Q: What is the purpose of the two different types of management structures?
A: The law intended the "S.A." to be used by larger groups of investors needing to be represented by a board of directors for the purpose of supervising day-to-day operations, while the "Ltda." was intended for smaller groups of owners more directly involved in the business management. However, there is no restriction in this regard and both types of business corporations can and are used by both large and small groups of investors in Costa Rica.
Q: Are there limitations as to the persons designated as directors or managers in these business corporations?
A: In a "S.A." or "Ltda.," board members and managers may be shareholders or outsiders, foreigners or nationals. The only restriction in connection with these posts is that of the statutory examiner in the "S.A." who may not also act as a director or manager nor be a close relative of these.
Q: How many persons are required to form a Costa Rica business corporation?
A: The CR Code of Commerce stipulates that a corporation must be formed by at least two initial shareholders. It also allows, however, the acquisition of the totality of the capital stock by a single shareholder immediately after formation, thus essentially permitting the formation and control of business corporations by a single interested person or company with the help of a nominal and temporary shareholder.
Q: What are the minimum capital requirements for forming a Costa Rican business corporation?
A: Business corporations in Costa Rica generally do not have a minimum capital requirement for purposes of formation. The most notable exception are those business corporations intended for operations in the financial and banking sectors where mandatory and significant levels of initial capitalization do apply. Of course, specific needs such as participation in public bids and concessions, obtaining of financing, etc. can dictate a need for real levels of registered capitalization. Registered capital stock may be denominated in local or foreign currency.
Q: Is the assignment or transfer of stock in Costa Rican business corporations a complicated matter?
A: The assignment or transfer of stock in a Costa Rican business corporation should not be a complicated matter, however local custom in this area has evolved several variations in procedure, some of which - when combined with less-than-perfect corporate stock record bookkeeping - can make a stock acquisition more complicated than normally necessary.
Q: How should a stock assignment or transfer of Costa Rica business corporation be legally carried out?
A: According to the CR Code of Commerce, the following aspects must be taken into account:
- A corporation must have an officially sealed Stock Record book and record stock issues and certificates.
- Stock certificates must bear the name of the original or current owner and the ownership must be registered in the Stock Record.
- Stock certificates must be assigned by a nominative assignment contract. A corporation must record all assignments of shares in the Stock Record book.
A: A Costa Rica business corporation can only recognize a shareholder as such if he/she is registered in the Stock Record book. No act or operation with reference to stock certificates will prejudice either the corporation or third parties if it is not recorded in the Stock Record book.
Q: Can a Costa Rican business corporation have a foreign language Company name?
A: Yes, a recent Constitutional Court ruling has struck down certain legal provisions that previously restricted registered company names to the Spanish language, Greek and Latin or aboriginal tongues. The registered foreign language name must have a registered Spanish translation and is subject to normal restrictions relative to similarity, generality, and common use terms. Reservation of a company name prior to formation is also possible.
Q: May a Costa Rican business corporation hold Board and Stockholders Meetings outside of the country?
A: Yes, if the articles of incorporation and bylaws specify that possibility and name the place(s) where such meetings can be held.
Q: Can foreign companies carry out business through a locally registered branch?
A: Yes, however the rules for registering a local branch of a foreign company are far more complicated than forming a wholly owned local subsidiary, whether an "S.A." or a "Ltda.," resulting in that most foreign companies choose the latter option. Foreign companies having a limited operative need locally can also choose to register a local representative with sufficient powers of attorney as may be necessary for that purpose.
Q: Is a resident agent required in a Costa Rican business corporation?
A: Only in the case where the registered company directors or managers are all foreign domiciled. In this case, the resident agent must be a local attorney in private practice. The resident agent's duties and powers are limited to receiving official administrative or judicial notices and transmitting them to the company representatives.
Q: Are "shelf companies" frequently used in Costa Rica?
A: Though not uncommon, "shelf companies," whether "S.A." or "Ltda." are not used as frequently by foreigners or nationals in Costa Rica, as say in Panama or in other typical "offshore" corporate domiciles. Possibly the major reason is that "bearer" shares are not allowed in CR legislation making it more difficult to maintain the anonymity normally associated with these companies.
Q: Why would a person or company consider using a "shelf company?"
A: Unless a person or company desires to leave the legal representation of the "shelf company" in the hands of the nominee directors or managers designated by the law firm offering it, one should replace and record new representatives in the National Registry, review and possibly change the structure of powers of attorney, voting percentages in stockholders' meetings, financial and reporting bylaws, among others. In practice this can amount to more work and expense than having an altogether new business corporation formed to suit the purpose of the investment.
Q: What yearly official fees are applicable to Costa Rican business corporations?
A: Other than low initial recording fees there are no official yearly fees required to maintain a Costa Rica business corporation in good standing in the National Registry.
Q: What kind of expenses and time frame can I expect in the formation of a Costa Rica business corporation?
A: Expenses in terms of attorney/notary fees vary greatly depending on the particular qualifications of the responsible attorney/notary, the complexity of the formation, and the importance of the investment. Recording fees are negligible. The time frame of the formation depends mainly on the complexity of the articles of incorporation and bylaws and the degree of cooperation between attorney and client. Once formed, a corporation can usually be fully registered within a month's time depending on the current workload at the National Registry.
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Real Estate Financing in Costa Rica
Obtaining real estate financing in Costa Rica is becoming easier. If you have excellent credit, loans can be obtained through Costa Rica and International banks at 3% to 4% over US prime. Thirty-year mortgages are available. Banks will typically finance up to 70% of the appraised value of the property.
Another option is to obtain a home equity loan on your USA property and make a cash offer on the Costa Rican property. This will put you in a strong position for negotiation and allow you to close quickly. You then have the option to obtain a mortgage with a Costa Rican bank after the purchase and repay the home equity loan.
It is also possible to arrange for the seller to take back a mortgage on the property. This would typically be a 5 to 10 year loan with a substantial down payment. Your lawyer can be an asset in negotiating terms with the seller.
And yet another method of financing is to make use of your IRA funds to purchase property in Costa Rica.
Obtaining real estate financing in Costa Rica is becoming easier. If you have excellent credit, loans can be obtained through Costa Rica and International banks at 3% to 4% over US prime. Thirty-year mortgages are available. Banks will typically finance up to 70% of the appraised value of the property.
Another option is to obtain a home equity loan on your USA property and make a cash offer on the Costa Rican property. This will put you in a strong position for negotiation and allow you to close quickly. You then have the option to obtain a mortgage with a Costa Rican bank after the purchase and repay the home equity loan.
It is also possible to arrange for the seller to take back a mortgage on the property. This would typically be a 5 to 10 year loan with a substantial down payment. Your lawyer can be an asset in negotiating terms with the seller.
And yet another method of financing is to make use of your IRA funds to purchase property in Costa Rica.
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Why live in Costa Rica?
A few months ago I led a group of prospective residents on a trip around Costa Rica. After a week of traveling and attending a series of informative seminars, the majority had decided they would like to be here for at least part of the year.
Why do so many people want to live here?
The most obvious reason is the climate. People are tired of freezing winters, scorching summers and the high utility bills that go with them. In Costa Rica, they can enjoy one of the best year-round climates in the world. We have only two seasons here, dry and rainy, both with an abundance of sunshine. We rarely need air conditioning and never need heat. Costa Rica has more winter sunshine than Hawaii or Florida and fewer people.
Costa Rica is called by many "the Switzerland of Central America" due to its neutral status and spectacular mountains. From the huge, curling waves of the Pacific coast, to the sight of molten rock tumbling down the sides of a volcano, Costa Rica's natural beauty has something for everyone.
This unique little country offers a true paradise for nature lovers, the fishing enthusiast and water sport fanatic as well as the retiree. Many come here for the lifestyle. Costa Rica fits the bill for everyone tired of the hustle and bustle, seeking a more laid- back way of life. One of the tour participants remarked, "Costa Rica reminds me of the U.S. about 40 years ago when everything was unspoiled, unhurried, and uncrowded." This beautiful country is so appealing because it has the warmth and flavor of Mexico, the physical beauty of Guatemala without a large military presence, and the sophistication of Brazil without the poverty or serious violent crime."
But isn't it expensive?
Although much has been written about the high cost of living here, what you spend depends on your lifestyle. If you must have a luxurious home, drive a late model car and buy imported goods, you will spend as much or more than you would in the States. But if you live more like locals and watch your spending, you will spend considerably less.
Many Americans living below the poverty line in the U.S. can live in moderate luxury on a modest retirement or investment income in Costa Rica. The favorable exchange rate and low rate of inflation lets you stretch your dollar here. The cost of food, utilities and entertainment are all substantially lower than in the U.S., Canada and Europe. Costa Rica's affordable medical care is among the best anywhere. The quality of health care is comparable to North America but the prices are one-half or less. Considered by many to be the healthiest country south of Canada, Costa Rica has a higher life-expectancy rate than the United States.
Housing is a fraction of what you are accustomed to paying. Besides our home we have a car and a full-time maid. Household help makes life easier. You can hire a full-time maid for as little as $200 per month. My son goes to private school in the country. We eat out a few times a week and enjoy various types of entertainment, and take a vacation every Christmas to the United States. Our monthly expenses are about $1500.
The country's inexpensive medical care, affordable housing, excellent transportation and communication networks, every imaginable activity to stay busy and happy, a government which goes to great lengths to make retirement and living as easy as possible, all contribute to Costa Rica's appeal and make it tops on the list of retirement havens. According to a survey of potential foreign retirement areas in the Robb Report, Costa Rica surpasses all countries including Mexico, Puerto Rico, Spain, Portugal, Australia, the Caribbean Islands and Greece.
What sets Costa Rica apart from its neighbors?
Countries such as Nicaragua, Belize, Honduras and Guatemala have lower living costs, but I believe you get what you pay for. The quality of life and lack of infrastructure in these countries leave a lot to be desired. Safety is a concern, especially where paramilitary police have power or where police are corrupt. Costa Rica is politically stable and is unique in having no army.
A Place to Invest
Costa Rica has a myriad of business opportunities awaiting creative hard- working individuals. You can run a global business from here by using Internet access, fax machines and cell phones. It is also relatively easy to start a small business on a shoestring. Furthermore, tax incentives and a government that encourages investments and affords investors the same rights as citizens contribute to a propitious business climate.
Many countries do not permit non-citizens to own property or place restrictions on foreign-owned real estate, but this is not the case in Costa Rica. Anyone may buy real estate with all the legal rights of citizens. Passive investors will find CD's, second mortgages or other investments that pay 25% to 30% in dollars annually. With the new millennium here, a shrinking world due to better communication, a burgeoning global economy, possibilities are unlimited in Costa Rica. Trade pacts between Central America and the rest of the world are now becoming a reality.
The Adventure of Branching Out
You will never be bored here unless you choose to be. Costa Rica has something for everyone. In addition to the many outdoor activities, The Ticos Times, the weekly English language newspaper, lists hundreds of appealing activities; movies in English, interest groups, computer and bridge clubs. You name it, Costa Rica has it.
Costa Rica has come a long way in the last decade. Satellite and Direct TV, private mail service and Internet make it easier to stay in touch with family and friends back home and keep up with what is going on around the world. A friend of ours, a 20-year resident of Costa Rica said, "My days are so filled with exciting adventures and interesting experiences that each day seems like a whole lifetime. I really feel that I have discovered the fountain of youth."
Living in Costa Rica can open the door to a new and exciting life. Who knows? You may never want to return home.
An Interview With: The Golden Door to Retirement and Living in Costa Rica
By Christopher Howard, Costa Rica Travel ExpertWhy live in Costa Rica?
A few months ago I led a group of prospective residents on a trip around Costa Rica. After a week of traveling and attending a series of informative seminars, the majority had decided they would like to be here for at least part of the year.
Why do so many people want to live here?
The most obvious reason is the climate. People are tired of freezing winters, scorching summers and the high utility bills that go with them. In Costa Rica, they can enjoy one of the best year-round climates in the world. We have only two seasons here, dry and rainy, both with an abundance of sunshine. We rarely need air conditioning and never need heat. Costa Rica has more winter sunshine than Hawaii or Florida and fewer people.
Costa Rica is called by many "the Switzerland of Central America" due to its neutral status and spectacular mountains. From the huge, curling waves of the Pacific coast, to the sight of molten rock tumbling down the sides of a volcano, Costa Rica's natural beauty has something for everyone.
This unique little country offers a true paradise for nature lovers, the fishing enthusiast and water sport fanatic as well as the retiree. Many come here for the lifestyle. Costa Rica fits the bill for everyone tired of the hustle and bustle, seeking a more laid- back way of life. One of the tour participants remarked, "Costa Rica reminds me of the U.S. about 40 years ago when everything was unspoiled, unhurried, and uncrowded." This beautiful country is so appealing because it has the warmth and flavor of Mexico, the physical beauty of Guatemala without a large military presence, and the sophistication of Brazil without the poverty or serious violent crime."
But isn't it expensive?
Although much has been written about the high cost of living here, what you spend depends on your lifestyle. If you must have a luxurious home, drive a late model car and buy imported goods, you will spend as much or more than you would in the States. But if you live more like locals and watch your spending, you will spend considerably less.
Many Americans living below the poverty line in the U.S. can live in moderate luxury on a modest retirement or investment income in Costa Rica. The favorable exchange rate and low rate of inflation lets you stretch your dollar here. The cost of food, utilities and entertainment are all substantially lower than in the U.S., Canada and Europe. Costa Rica's affordable medical care is among the best anywhere. The quality of health care is comparable to North America but the prices are one-half or less. Considered by many to be the healthiest country south of Canada, Costa Rica has a higher life-expectancy rate than the United States.
Housing is a fraction of what you are accustomed to paying. Besides our home we have a car and a full-time maid. Household help makes life easier. You can hire a full-time maid for as little as $200 per month. My son goes to private school in the country. We eat out a few times a week and enjoy various types of entertainment, and take a vacation every Christmas to the United States. Our monthly expenses are about $1500.
The country's inexpensive medical care, affordable housing, excellent transportation and communication networks, every imaginable activity to stay busy and happy, a government which goes to great lengths to make retirement and living as easy as possible, all contribute to Costa Rica's appeal and make it tops on the list of retirement havens. According to a survey of potential foreign retirement areas in the Robb Report, Costa Rica surpasses all countries including Mexico, Puerto Rico, Spain, Portugal, Australia, the Caribbean Islands and Greece.
What sets Costa Rica apart from its neighbors?
Countries such as Nicaragua, Belize, Honduras and Guatemala have lower living costs, but I believe you get what you pay for. The quality of life and lack of infrastructure in these countries leave a lot to be desired. Safety is a concern, especially where paramilitary police have power or where police are corrupt. Costa Rica is politically stable and is unique in having no army.
A Place to Invest
Costa Rica has a myriad of business opportunities awaiting creative hard- working individuals. You can run a global business from here by using Internet access, fax machines and cell phones. It is also relatively easy to start a small business on a shoestring. Furthermore, tax incentives and a government that encourages investments and affords investors the same rights as citizens contribute to a propitious business climate.
Many countries do not permit non-citizens to own property or place restrictions on foreign-owned real estate, but this is not the case in Costa Rica. Anyone may buy real estate with all the legal rights of citizens. Passive investors will find CD's, second mortgages or other investments that pay 25% to 30% in dollars annually. With the new millennium here, a shrinking world due to better communication, a burgeoning global economy, possibilities are unlimited in Costa Rica. Trade pacts between Central America and the rest of the world are now becoming a reality.
The Adventure of Branching Out
You will never be bored here unless you choose to be. Costa Rica has something for everyone. In addition to the many outdoor activities, The Ticos Times, the weekly English language newspaper, lists hundreds of appealing activities; movies in English, interest groups, computer and bridge clubs. You name it, Costa Rica has it.
Costa Rica has come a long way in the last decade. Satellite and Direct TV, private mail service and Internet make it easier to stay in touch with family and friends back home and keep up with what is going on around the world. A friend of ours, a 20-year resident of Costa Rica said, "My days are so filled with exciting adventures and interesting experiences that each day seems like a whole lifetime. I really feel that I have discovered the fountain of youth."
Living in Costa Rica can open the door to a new and exciting life. Who knows? You may never want to return home.