Why invest in Costa Rica?
When considering what to do with your investment money, real estate was probably one of the first things to come to mind. And rightly so, because real estate investment in a stable economy is a great idea. Costa Rica is the most stable economy in Central America and investing your money in real estate is one of the safest choices you could make.
Many others have recognized this fact and the percent of foreigners moving to Costa Rica for business or pleasure has increased dramatically in the past 10 years. We now have many of the US-style amenities that make life more comfortable here for foreigners. There are shopping malls, US-style supermarkets, and affordable health care just to name a few. Plus, the cost of living in Costa Rica is much lower than in North America.
As an added bonus, even non-citizens enjoy property rights in Costa Rica. Real estate ownership isn’t biased towards citizens. Costa Rica is very welcoming to foreign investors and has some systems in place to make the process easier. For example, there is a national registry of all titles properties which makes it much easier to search titles for encumbrances or liens. Most Central American countries do not have this. As an example of how important this is, if there were no database, then after you purchased a property, someone else could try and claim they held an older title. This is just another part of what makes investing in Costa Rica a good idea.
Another reason to invest in Costa Rica is the lack of capital gains taxes when selling real estate. Unlike the US, which wants as much as 22% of your real estate profits, the Costa Rican government lets you keep 100% of your profits.
The tax benefits do not end their either. Currently, the annual taxes on property are a small 0.25%. compare this to some cities in the US that tax property at 2-4% and you can see there is a lot of money to be saved when you invest in Costa Rican real estate. When you factor in increasing property this small 0.25% tax really is an advantage.
A final reason to invest in real estate property in Costa Rica is that you do not have to own the property in your own name. If you create a corporation that then holds the title to the property (“Sociedad Anónima” registered title) a shareholder’s loan is used to pay for the property. If this is an income producing rental property, that income is disbursed as dividend income and counted against the initial investment, meaning no taxes are paid on the income.
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