Costa Rica has recently caught
many eyes as a hot tourist spot but also as a great place
to purchase real estate. With so much public attention and
a vast number of tourists visiting Costa Rica every year,
the country offers a great investment environment for real
estate. Below are seven great reasons to invest in Costa
Rica Real Estate.
1. Stable Government:
Costa Rica is a democratic republic with three branches of
government and has enjoyed one of the most democratic
governments in Latin America. As of 1948, Costa Rica
abolished it’s army and since 1949 has enjoyed its
peaceful democratic existence, often being referred to as
the “Switzerland of Central
America”. The government is one of the people and one that
very much sees the value of tourism. Over the past few
years the government has incentives foreigners to come and
retire in Costa Rica. Stable government ensures that the
money you put into your property is safe. Political
turmoil will never be a reason for illiquidity in your
Costa Rican investment and also provides reason why Costa
Rica is a great place to buy. There are many other
locations around the world that investors think of to go
and buy, but stability is very important and should play a
huge factor in anyone’s investment decisions.
2. Stable Currency:
Investors want to know if their money is safe in Costa
Stability of the government has helped to maintain a solid
and stable currency.
The Costa Rican colon, also denoted as CRC is the official
currency of Costa Rica. Colones come in notes of 1,000 up
US Dollars are also accepted as legal tender in Costa
Rica. Both are widely accepted and exchanged throughout
the country with approximately 90% of the places of
business in the country accepting the US Dollar.
3. Tax Incentives:
This seems to be the one everyone loves! As mentioned
earlier the Costa Rican government has created one of the
most attractive investment environments in Latin America.
Capital Gains Tax= 0% in Costa Rica. The capital gains
taxes are exempt for a business, if the money is derived
from an activity that is not the normal course of business
for the company (This exemption is established through the
use of SA, or Sociedad Anonima). Property Taxes in Costa
Rica = 0.25% for the properties with declared value of up
to US$200,000. This rate is significantly lower than most
places in the world. As a result people are buying in
Costa Rica which increases demand and ultimately increases
value. There are not many places where you can buy a piece
of property that has incredible appreciation potential
with such low holding costs.
Corporate Tax: The
Sociedad Anonima (S.A.)
These forms of corporate structures allow owners of
property to keep their names away from the corporations
they own (literally translates as “anonymous society”).
Ninety percent of all property in Costa Rica is purchased
through these S.A.’s. When a property owner purchases
property through these S.A.’s they use a shareholder’s
loan to fund the purchase. Rental income generated is
taken out of the corporation as dividend income and
deducted against the initial investment and thus no taxes
Income Tax: Only income generated in Costa Rica is subject
to income tax. Costa Rica offers large amounts of income
to be deductible and free from any tax
**all tax information should be verified by independent
4. Proximity to Major N. America
When investigating vacation destinations and environments
for second homes or investment property, it is important
to factor travel times to the destination. Costa Rica’s
proximity to major N. America Cities gives even more
reason why investors are buying property in Costa Rica.
Great tourist destinations need to be close and easily
Major US and Canadian Carriers offer direct flights to and
from Costa Rica from the following international airports
(3-5 hour flight times)
5. Healthy Local Economy:
For baby boomers and entrepreneurs, spiralling costs of
living abroad, oppressive taxes and government regulation
in the US have placed Costa Rica high atop the list of
places to retire without sacrificing standard of living.
This is what savvy investors are looking for!
6. No Ownership Restrictions:
Foreign Ownership is promoted in the country of Costa
Rica. In many foreign countries fee simple title is only
available to locals and without titled ownership your
investments can be at great risk. All foreigners enjoy the
same rights as Costa Ricans when it comes to real estate
ownership. Titled, fee simple properties are all
registered in the National Registry of Costa Rica properly
protecting your ownership rights.
7. Excellent Lending market:
Prior to 2006, there was no market for lending in Costa
Rica and investors bought and sold property on a cash
basis. With the recent surge by worldwide and US lenders
as well as the strengthening of the Costa Rican market,
financing at reasonable rates is now an available option.
This addition to the real estate industry has made it
possible for many more investors to buy property in Costa
Rica and will only increase the demand over time.
As you can see there are many great reasons to invest in
Costa Rica. Many people believe that it is too late to
make any money. This is not the case! The time is now to
invest in this beautiful country and
incredible vacation spot.
Comparatively low violent crime rate