Climate

Nature's Lover's Paradise

Health Care

Adventure

Social Community

Safety

Costa of Living

The People

Staying Connected

The Magic

Tax Havens

Buying Property in Costa Rica

Immigrating to Costa Rica

Retire in Latin America    By Rosemary Rein

That was this week's headline on AOL New that caught our attention with this description of Costa Rica"

"It's got the good weather of Florida, but a much cheaper cost of living. And it's a lot more adventurous than Daytona. Politically stable, Costa Rica has a thriving industry of recruiting American retirees. Thousands of Americans are spread throughout Mexico, Panama and the rest of the region."

As residents of Costa Rica for 10 years, we are often asked the reason why we moved here in the first place .. so here's our Top 10 list for those of you contemplating your own adventure , living, working and or retiring in paradise.

10), Climate, Climate, Climate.. You can almost pick your preferred temperature in Costa Rica and we selected 72 degrees year round at our home in the Central Valley Mountains. But what about the Rainy/Green Season? Sure, we have about 2 hours of rain during our "winter" months each day, but most mornings are beautiful and sunny. That sure beats Fargo in Winter and Phoenix in Summer! We also happen to delight in that expected afternoon rain in green season for a few hours. In fact if you haven't experienced the sound of rain falling on a tin roof, with a good book, frankly, you haven't lived.

9) Nature Lover's Paradise: From rain forest to crisp mountains to experiencing the "Gifts from the Sea', Costa Rica is a Nature Lover's Paradise. Each morning Barry and I hike out our front door to the countryside where following a cow on the road is as common and much more delightful than interstate traffic.

8) Health Care: As Business Owners in the United States faced with staggering insurance costs, we sought out a location for retirement that would provide, quality, affordable health care. Costa Rica has U.S. Trained Dr's with state of the Art Hospitals and Medical Facilities. It also has a thriving medical tourism industry. When we first moved to Costa Rica, private insurance cost $1400 annually for the two of us covering most of our medical costs and prescriptions. What this meant was state of the art care when hospitalized. Third World? I don't know about that. In my private hospital room, I had a flat screen t.v. dining menu options and a companion bed for my husband to stay with me. While our insurance has increased slightly as we have aged, I believe the care in Costa Rica unbeatable.

7) Adventure: We probably saw too many Raiders of the Lost Ark movies, but we wanted the next chapter in our life after the rat race to be a "True Learning Adventure!" Flying through the Forest Canopy, White Water Rafting are just two examples and we have a long list of adventures still on the list. Every day, daily living in Costa Rica is an adventure from exploring exotic fruits to rescuing a sloth. I have to say it beats going to Wal-Mart.

6) Social Community: We could keep ourselves entertained 7 days and nights a week with Costa Rica's busy and diverse ex pat community. There's a club for every interest (Birding, Hiking, Bridge, Gourmet Food and Wine, Volunteer Opportunities) just name it and it's here. Foreign residents find each other at social centers and hubs and groups like the Newcomers Organization that help with the transition of moving to a foreign country.

5) Safety: While we now look back to the good old days when there was virtually little crime when we came to Costa Rica. Sadly we are not immune to the increasing crime rates that you find almost everywhere in the world, much linked to the growing drug problem. Still crime tends to be more property related than violent and so we have added precautions like a home security system. What should be noted is there is more violent crime in most major U.S. Cities in one day, yet the media will spotlight any violent crime against U.S Citizens that occurs outside of her borders. Costa Rica ,it should be noted , is also a peace-loving and stable country with no Army, often referred to as the Switzerland of the Americas.

4) Cost of Living: Indeed there are financial benefits of being a U.S. citizen living in Costa Rica. One of the attractions for us in selecting and moving to Costa Rica was the (tax-free foreign earned income benefit --currently $82,400 for each person) Another? property taxes on our new contemporary home in Escazu, Costa Rica were a whopping $100.00 a year. That sure beat $6,000 a year property taxes in New Jersey and Pennsylvania. We indeed would pay more for better infrastructure and suppport to the people of our host country. There was also no heating or air-conditioning expenses to contend with and the real kicker indulgence for me was massages were $10.00 an hour. I remember saying "I'm so there" There is no doubt, that we could not afford our current lifestyle in the United States and while Costa Rica is unfortunately being increasingly discovered and developed, there are still affordable options for creating a quality lifestyle at a fraction of U.S. prices.

3) Warm and Hospitable Costa Rican People. Pura Vida! "That's a Costa Rican expression that means "pure life". Sunday morning is our favorite day for walking in the barrio...Mothers and Fathers walking hand in hand with their children to church reminding us of our own childhood. "It's like the United States in the 1950's" . There is tranquility and a commitment to family.

2) Connected: Today's Ability to Work and Live Anywhere. Yes, we have wireless Internet and low-cost phone service in Costa Rica that enables us to work from home on the deck with parrots flying overhead. It's not everywhere in the country and certainly not deep in the rain forest, but technology has enabled us to work and stay connected with our offices and families and friends. Just 2.5 hour flight from Miami and 3 .5 hour flight from Houston, we are closer to many relatives and clients than they are with others living within U.S. borders

1) The Mangos, The Monkeys, The Magic: I love to watch visitors in our learning retreats discover their own magic here while staying amidst the jewels of the Costa Rican rain forest. Forever changed from their journey to paradise, their discovery is almost child-like. I developed the brand for my speaking and retreat business from the voices of those who have discovered their own passion here. On seeing lava flow from an active volcano, a child-like WOW would be uttered competing only slightly with the volcanic rumble.

So why visit/live in Costa Rica?

"You Can Go Wild! Go GREAT! and Embark on your own personal journey from Now to WOW! tm"

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Rosemary Rein is the author of "Go Wild! Survival Skills for Business and Life" and a new book to be published in January 08 with Dr. Stephen Covey and Ken Blanchard entitled "The Blueprint for Success and Survival".
Rosemary speaks internationally on Leadership, Customer Service and Creativity and sponsors personal growth and discovery retreats of Costa Rica.
For additional information write Rosemary at rosemary@gowildgogreat.com

 

Legal Issues By Carlos D. Angulo Ruiz The Beach Times Friday, April 04, 2008
	Carlos D. Angulo Ruiz is an attorney with Arias & Muñoz, a firm with offices in San José, Liberia and Tamarindo. He holds a Master's degree in International Economic Law from the University of Geneva. He can be reached at cangulo@ariaslaw.co.cr.

Tax Havens

Land taxes, transfer taxes, stamp taxes, income tax…and still, Costa Rica is considered a tax haven.

Well, if compared to other countries, Costa Rica does enjoy a relatively low taxation regime, and this is particularly true if we look into what a real estate transaction represents in terms of fiscal obligations.

It is usual for real estate professionals, including attorneys, to advise a foreigner wishing to invest in Costa Rica to do so through a corporation, meaning that you should first incorporate a Costa Rican company (whether an S.A. corporation or a S.R.L. Limited Liability Partnership) and then purchase the property in the name of such company. It is true corporations in Costa Rica are easy to create and usually provide a safety net, a “screen” or a protection to your investment abroad.

The tax implications are very low. Costa Rican corporations, both active and inactive, must pay the Annual Stamp for Education and Culture every year. This stamp benefits vovernment institutions such as the University of Costa Rica, the University for Distance Education, the National Museum and the Costa Rican Publishing House.

The annual tax amount to pay depends on the net capital that the company reported when filing last year’s tax return, but this is usually as low as $2 dollars. It is worth reminding that inactive companies do not, however, file tax returns.

The Costa Rican tax system is based on legal principles, as in other jurisdictions, one of which is that it is the business activity which generates the obligation to pay taxes for companies. This has promoted and favored the real estate business and the use of local corporations as the legal protection offered to foreign individual investors to buy and own land.

Indeed, tax issues arise when the company conducts any kind of business in Costa Rica. However, if the company only has a property but remains otherwise inactive or dormant, then it will not be conducting any business activity and thus, it will not have to pay income taxes.

The question, however, is whether this company will have to pay taxes on the selling real estate property owned by it, and thus generating income to the company.

In Costa Rica, where the territoriality principle prevails regarding most real estate legalities, income from Costa Rican source consists of income derived from services rendered, capital used and properties located in Costa Rica, during a given tax period (which in Costa Rica goes from October 1st to September 31st).

In general, therefore, a company selling and making a profit from its sold real estate will be taxable on such income. But there is a major exception: there is no taxation on Capital Gains. Capital Gains are defined as income derived from the transfer of moveable goods or real property assets, as long as these sales are not the taxpayer’s normal business activity. This means that, a one-time sale by a company of its real estate asset, is considered a non taxable capital gain. However, the consistent selling of properties by a company (such as the developer of a real estate project) is considered a normal business of that company by tax authorities and subject to income tax.

Now, the selling of property is per se a taxable event. Perhaps the most well known and often avoided is the transfer tax. When a property is conveyed from an owner (seller) to a new and distinct person or entity (buyer), a transfer tax must be paid which is equivalent to 2.3 per cent of the value of the property.

If it is not the real estate asset held by the company which is sold, but rather the company itself (the stock) which is bought, then no transfer tax applies. With one big exception: if this scheme is only used as a tax eluding strategy, while the real and actual object sought to be transferred is the real estate interest, then transfer tax must be paid, even if the registered owner, the company, remains the same. If not paid, this generates a tax contingency. This is so because tax law rests on the principle of “substance over form”, otherwise known as economic reality principle. This principle allows tax authorities to separate out the parties’ real business intention from the apparent one. The question they would ask is: what is the real intention, the final objective of the transferring of the shares of this company? If the answer is the selling of a property, then transfer tax is due.

Finally, annual land or property taxes apply to every property owned, at a very low 0.25 per cent of the reported value of the property. This tax is paid quarterly to the local Municipality. However, it must be highlighted that it is the buyers’ burden to declare the property and the price paid for it to the Municipality, which is often “forgotten” by the parties to a real estate transaction.

Buying Property in Costa Rica
(under construction)
Immigrating to Costa Rica
(under construction) 
  

Tourism and Investment Growing Rapidly in Costa Rica

The local tourism market is growing at a 7.1% annual growth rate. More than
1.5 million tourists visit Costa Rica each year. In all, 48% of all tourists
come from the USA, 16% from Europe and 36% from other countries. This
increase has spurred a tourist real estate development boom, including golf
course communities, luxury oceanview condos with marinas, high-end spa
resorts and more. Large luxury hotel chains, such as the Four Seasons, have
opted to build in Costa Rica due to it's popularity as a leading eco-tourism
destination and it's obvious steady growth as a luxury tourism destination.
Many have compared Costa Rica to a young Hawaii.

Major reasons behind the growth of both tourism and vacation real estate
developments include:

• Almost ideal weather conditions - average temperature range in San Jose
goes from 14 to 24 degrees Centigrade (57 to 75 Fahrenheit) in December, and
17 to 27 degrees (63 to 81 Fahrenheit) in May. The Caribbean coast averages
21°C (70°F) at night, and over 30°C (86°F) during the day. The Pacific coast
is hotter than the Caribbean, but is less humid.

• A combination of relaxation destinations and adventure activities (golf,
fishing, surfing, rafting, canopy, etc).

• Excellent education system

• Top quality health care

• Good communication infrastructure

• Costa Rica occupies first place in ecological tourism in the world.
 
 

WATER FILTRATION SYSTEMS: Spanish only, Monica 301-7378, www.carico.com

We like referrals!

Type 1:  Any non-realtor who walks in, calls or emails a referral to our sales office and that person purchases a property will receive:

  A referral payment of 10% will be paid upon receipt of any or all of that particular commission by CR Beach. Referral payment will also be paid on any and all purchases made by that client with CR Beach Investment Real Estate up to one year from the date of introduction.  We always prefer to receive a factura timbrada for you to receive your part of the commission, however we can work this out.

Type 2:  A currently licensed realtor  living outside of Costa Rica:

  A referral payment of 25% of the total commission received by CR Beach will be paid for notification that a specific client will walk in, call or email our office and subsequently that client purchases from CR Beach.  40-50% commission will be paid on our total received commission to the realtor who physically walks the purchaser into our sales office and will assist in communicating with the purchaser throughout the entire purchase process.  50% also to any realtor who procures the sale on their own and requests that CR Beach creates the purchase agreement for the buyer and assists in every possible way.   We need to receive a factura timbrada from the referring agent for their commission. Due to the new tax laws some Costa Rican realty agencies are deducting 13% off the paid referral commission if the other Agency does not have factura timbradas.    If their client purchases more properties within a one year period, and the referring Agency remains in the U.S., a referral payment of 25% of the total commission will be paid to that Agency.

Type 3:  Referral by another Real Estate Agency inside Costa Rica:

 Co-broke: 40-50% commission will be paid on the total received commission to the realtor who physically walks the purchaser into our sales office and assists in communicating with the purchaser throughout the entire purchase process.

25% referral fee of the total received commission will be paid to a Realtor who sends clients to CR Beach by phone or email, with the same 13% caveat.

A Realtor and/or Broker operating in Costa Rica must be able to provide one or more of the following for proof of real estate status:

* Business Cards stating that you work in real estate.

* Factura timbradas and/or current certification through the CCCBR/ CRGAR.

* Physical real estate office in Costa Rica.

* Website intended for Costa Rican real estate sales

* Display ads and/or professionally made exterior signage.

The co-broke and referral commission payments are made upon receipt of the commission by CR Beach.  CR Beach prefers that the contract will specify that a separate check or deposit be made to the other Agency receiving the commission, because of the new law regarding possible 13% taxes, for “professional services.”

WE PROMISE TO PAY ALL COMMISSIONS WITHIN 72 HOURS!

  In the event of disputes, we will use the bylaws of the CCCBR or AMCHAM in a friendly setting to sort this out.  Possibly a third party independent arbitrator may be sought out in certain cases.   According to CCCBR Moral & Professional Ethical Code, article 29: “When a real estate agent shows a property or presents a buyer to another agent, that other agent must respect the rights of the first agent for one year from the date they have last contact with said buyer/agent.  This refers to any and all business that originates from this initial introduction. This rule of one year from the last contact, also applies to any property shown by one agent to another.