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The CIA world factbook clearly states that in its opinion Costa Rica is a ‘Central American success story’, and the government of Costa Rica is keen to expand on the country’s success and have announced the implementation of a seven year plan for the economic expansion of the country.
To this end they are actively encouraging international real estate investors and those looking for a retirement or second home overseas to come to Costa Rica and explore its exciting and affordable property market.
The Costa Rican real estate market is one of the most exciting in Central and South America right now as a direct result of the Costa Rican government’s commitment to promoting the property sector. With the implementation of a series of tax breaks and investment incentives available to overseas real estate buyers the success of the Costa Rican property market is practically guaranteed.
For those looking purely for real estate investment opportunity, Costa Rica offers two main angles for property investors to explore: –
Firstly as the natural beauty of Costa Rica proves an irresistible draw for more and more travelers and those in search of the perfect getaway, so the demand for rental and hotel accommodation in Costa Rica is on the increase. The supply of quality accommodation in Costa Rica cannot meet current demand and this situation is likely to deteriorate as the popularity of the country increases. The government is well aware of this fact and is keen to attract those wishing to develop specifically for the tourism market.
Secondly Costa Rica is becoming increasingly popular with retiring US baby boomers who are actively seeking an affordable and attractive location in which to retire. Because Costa Rica enjoys relatively low crime, is neutral, has a relatively high standard and low cost of living it is gaining a reputation among pre-retirees as a must-consider destination. There is therefore room for the development of real estate to suit this particular market or for the purchase and long term lease of real estate to this market. This particular group of people also represents a strong resale demand for those who buy now, improve property and intend to resell in the medium term to release gains accrued.
Unlike some of the other countries, foreigners have the same rights when purchasing land in Costa Rica as locals do. You can own property outright in your own name or in the name of your corporation. You do not need a local partner, except in cases of beachfront concession property, where special rules apply. There is absolutely nothing to prevent you from purchasing Costa Rica property in your own name, but the majority of buyers form a corporation with the help of a reputable lawyer and then purchase property through that corporation. The reason for this is threefold. One – it may be more beneficial to have your income (from rentals) or capital gain (from sale of the property) taxed within a Costa Rican company rather than having it taxed as personal income. Of course, this depends on the tax laws of the country from which you originate. Two – it allows for simplified estate planning, whereby you can give or will shares of the corporation that owns the property to members of your family. Three – if you ever decide to sell your property, you can avoid paying property transfer taxes a second time by simply transferring the shares of the corporation to the new owner.
One option, the most popular option in fact, for investment in Costa Rica is real estate. Hotels, AirBNB and vacation rentals are easy to pursue and are thriving because Costa Rica is one of Central America’s leading vacation destinations. With the amount of tourists coming through, the expat community is only growing. The coast towns are mainly owned by foreigners as an investment abroad.
Property taxes sit at a low rate of 0.25% of the registered property’s value. The savings from taxes and the low cost of living make for the perfect storm for expat retirees looking to stay in paradise.
Costa Rica was ranked in the top 10 of fastest growing tourism markets. Because of the high numbers of tourists, a real estate investment is pretty safe.
Costa Rica is not only a great investment option, it is a great retirement destination as well every source seems to note the political stability of the country. There is no unrest, riots, or protests like in many Central American countries. This not only makes the Costa Rica a good place to invest, but a good place to seek residency as well.
As Costa Rica’s main trading partner, the United States makes up about 40% of the country’s total imports. The country has strong exports and the high tourism numbers are only rising.
The country is quite profitable as well, with a 15-20 percent return on investment recorded from 2000 to 2008.
An investment in Costa Rican real estate will generate income all year long. The country is a vacation destination that sees visitors in every month, in any season, unlike some other places around the world. In certain areas of the country, the rainy season is not as bad and you can expect income flow for about 10 months out of the year.
Like many countries, Costa Rica offers residency after a certain amount of investment. After an investment of $200,000 or more, you can earn temporary residency. After three years, this can lead to permanent residency and even citizenship, if you choose to do so.
Citizenship would grant you Costa Rican nationality and a passport through nationalization. Some countries allow you to keep your original citizenship while also holding a Costa Rican passport. Some do not allow you to do so, so many recommend sticking with permanent residency so you don’t have to give up your home
It is one of the few countries in the world with a tropical climate yet no hurricane or tropical storm season. When compared side by side with other Latin American or Caribbean nations, Costa Rica is the clear front-runner for real estate investment.
The real estate investment climate in Costa Rica is hot right now with the government working flat out to attract sustainable foreign direct investment – those interested in making a move should consider committing to the market sooner rather than later while it remains a buyer’s market and before opportunities for the strongest investment gains are eroded by increased levels of investor awareness and interest.
Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter, and podcast for seniors and retirees, that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti for 11 years as missionaries serving orphaned, abandoned and at-risk children.
