Costa Rica: “An Excellent Investment Opportunity in Today's Global Market”
Officially “The Republic of Costa Rica” is located in Central America, with a size 19,700 square miles (51,100 sq. km.) The currency is the Colon. Rate of exchange is ₡610.00 =US$1 and ₡744.07= €1 on April 29, 2021. Costa Rica has 7 provinces: San José, (country capital), Heredia, Alajuela, Cartago, Guanacaste, Puntarenas and Limón.
Costa Rica is famous for its unique tropical environment, the beauty of its flora and fauna. Ideal microclimates all year round with only two seasons: green, when showers keep everything lush and blooming, and dry, when skies are sunny and blue every day. There are no major fluctuations in temperature in both seasons and the country is blessed by mountains, rivers, the Pacific and Atlantic oceans.
Visitors will find all the technical and modern conveniences (internet of high speed, fiber optics etc.), surrounded by nature with excellent residential and commercial areas.
Costa Rica is known for its progressive environmental policies and is a “green” country that cares for its environment and is a world leader in preserving and contributing to the ecology of our planet and rank first in the sustainable tourism. 27% of the country is parks and protected areas. Costa Rica is the first country in the Americas to ban recreational hunting. Our goal is to be carbon neutral by 2025. 93 percent of the country's electricity comes from renewable sources.
LOCATION, LOCATION, LOCATION…
Costa Rica is beautifully located in the middle of Central America, giving easy access to the North and South of the Americas by air, land, and sea. Costa Rica's location provides access to American markets as it has the same time zone as the central part of the United States and direct ocean access to Europe and Asia.
There are two international Airports: The first one in Alajuela: Juan Santa Maria International Airport being a convenient travel base to all national destinations and the other: Daniel Oduber International Airport In Liberia, Guanacaste being the gateway to beautiful beaches that line the cost where surfing and sport fishing, shopping and dining options are superb and plentiful.
THE 7 PROVINCES OF COSTA RICA:
San José: Capital of Costa Rica is a vibrant and cultured area with excellent restaurants, shopping centers and entertainment venues with excellent hospitals. Here visitors will find all modern and technical comforts, surrounded by lush nature, mountains and valleys with beautiful residential and commercial areas.
Guanacaste: the Pacific Northwest region of Costa Rica, Liberia being the capital of the Province that has the second International Airport; and it is the gateway to beautiful sunny beaches where there are many options for shops and restaurants, as well as surfing and sport fishing and its unforgettable sunsets.
Puntarenas: Puntarenas begins with the Osa Peninsula, one of the most biodiverse regions in the world where whales and dolphins from both hemispheres come to breed and raise their young. To the north, Manuel Antonio, one of the most visited national parks. In north-central Puntarenas, surfing paradise can be found at Playas Jacó and Hermosa and at its northernmost tip, Puntarenas boasts the popular Nicoya Peninsula.
Limón: our Caribbean coast is appreciated for being unique for the beauty of the flora and fauna throughout the year embraced by its own folklore and Caribbean culture. It is the main port of entry for cargo ships.
Heredia: Known for its coffee production and stunning landscapes, it is located just six miles north of San José. The beautiful views stretch for miles, surrounded by mountains and waterfalls and feature the most diverse wildlife in the world.
Cartago: East of San José, it is home to large coffee plantations and exceptional scenery. Traveling to the surrounding mountains, the province boasts several natural wonders, including volcanoes and parks.
Alajuela: It borders the western limits of San José and is a diverse and dynamic province with its Juan Santa María International Airport and being welcomed by highly visited volcanoes.
BUSINESS ENVIRONMENT IN COSTA RICA:
When one invests in a foreign country, one looks for the “Risk Factors” and try to find the following conditions: A democratic and safe country, politically and economically stable, good education, good geographical location and most importantly how are the people who live there: Costa Rica is very blessed and has all those conditions.
Political Risks: Costa Rica is one the most stable democracies in the world: No army. No wars. No revolutions: a peaceful country where dialogue is our most useful “weapon”. Our judicial system applies equally to foreigners and citizens alike.
Safety: Costa Rica is friendly and welcomes foreigners. They have the same rights, by our Constitution, as Costa Ricans.
Economy: Costa Rica has a very stable economy. The protections in the Costa Rican financial system helped to avoid severe impacts from the past financial crisis.
The central government offers tax exemptions for those willing to invest in the country. Global high-tech corporations have established operations in Costa Rica like Intel, Glaxo Smith Kline, Amazon and Procter & Gamble, etc. High levels of education among its residents make the country an attractive investing location. Costa Rica stands as the most visited nation in the Central American region and tourism earns more foreign exchange than the combined exports of the country's three main cash crops: bananas, pineapples, and coffee.
Education: One of our biggest assets is education. A substantial part of our budget is spent on education. The literacy rate in Costa Rica is 96.3%, one of the highest in Latin America. Universal public education is guaranteed in the constitution; primary education is obligatory, and both preschool and high school are free. English is spoken by most Costa Ricans and bilingual education is taught in all schools. We have a saying that for “each soldier that we do not have, we have a school”.
Health: Costa Rica has been cited as Central America's great health success story. It has provided universal health care to its wage-earning residents, with coverage extended to dependents over time and has become popular destinations for medical tourism. Costa Rica is particularly attractive to Americans due to geographic proximity, high quality of medical services and lower medical costs. Since 2012, smoking in Costa Rica is subject to some of the most restrictive regulations in the world.
When foreigners apply for residence, they may be registered with Social Security Institution and pay a monthly fee (approximately U$250 per month) and obtain health assistance.
Nicoya Peninsula is considered one of the Blue Zones in the world, where people commonly live active and happy lives past the age of 100 years.
The people of Costa Rica are unique and its biggest treasure. They are always willing to help and make foreigners feel at home. We are known around the world for three things:
1. We are peaceful, where dialogue and education are our banners.
2. We are green: ecological and environmentally conscience.
3. We are “Pura Vida”: Costa Ricans strive for the pursuit of happiness for all residents, foreigners, and natives alike. "Pura Vida" is the most recognizable phrase attached to Costa Ricans, and it reflects the Costa Rican way of life which means pure life, or good life. A recommended response to "How are you?" would be "Pura Vida”.
Costa Rica has become an attractive and preferable place for retirees, expats, and investors around the world. Now more than ever because of the Pandemic, our country is sought after from US Citizens, Canadians, and Europeans. The experience that the world has had with the pandemic has taught us the style of life that citizens around the world would like to have with their families.
RESIDENCY AS AN INVESTOR:
The residency as an investor implies the investment of US$200,000.00 (two hundred thousand Dollars), in real estate property and movables registered in Costa Rica). (Without mortgages)
1. Applicable Law:
• Ley General de Migración y Extranjería Nº 8764.
• Reglamento de Extranjería. Nº 37112-G. 2.
• Temporary residency for two years (Renewable every two years).
• Permanent residency after three years of temporary residency.
• The foreigner doesn´t need to stay in the country while the application is approved by Immigration Department.
• Once the foreigner obtains the ID CARD, the foreigner only stays in country at least a day every year to keep the residency.
• As an exception, if the foreigner obtains the ID CARD and stays out of the country two years but keeps the investment of US$200,000.00, the Immigration Department would grant the renewal of the temporary residency as long as the foreigner justifies the absent and files the Police Record duly apostilled from the original country.
The latest news is that new benefits and opportunities are coming to Costa Rica for investors and retirees, to help revive Costa Rica's economy after the pandemic.
The bill is in the Costa Rican Congress and here are some points that are included:
- Applies to those foreigners who are granted a temporary residence as investors or retirees.
- Tax-free import benefits such as household items, vehicles, etc.
- Exemption from income tax.
- No minimum stay in Costa Rica.
- Price reduced for investors to US$150,000 instead of US$200,000.
What is the investor looking for today?
After attending so many webinars around the world since the pandemic, I know Real Estate will be sold quite differently in our regions. We will be selling a “lifestyle” that combines comfort, green areas, good health and compatible with the environment.
So…. the investor will look for:
● A place in the world where the universal health systems is excellent and capable of solving health issues on emergencies.
● A preferred placed for his family since they will be able to live where they want to, instead of where they must, since they will be working from home.
● A place that has high-end top technology since it is a protagonist in all this new way of communicating virtually with everyone around the world.● A place where social consciousness and respect to the environment is part of the agenda of the country.
● A place where sustainable building is part of taking care of the planet.
● Where education is top priority of the country.
● Where the country is politically stable and where the judicial system applies equally to foreigners and citizens alike.
● Where its people are the most appreciated “treasure”.
There are investment opportunities in free zones, beach, properties in rural and urban areas, agricultural and Free Trade.
Property types are residential, commercial, land and developments. There are wonderful opportunities to purchase in different parts of Costa Rica. There are excellent options at the beach in the Pacific and the Atlantic coasts as well as in the cities surrounded by mountains, valleys, and rivers.
Free Zones: These are industrial parks or zones that have been created to attract companies to the country. The central incentives are exemptions and tax cuts. Waivers are on income tax for an initial period of 8 years and other incentives.
• Most of it is priced in US Dollars.
• Down payment: usually is the 20% of total sale price.
• The “closings” are short (it could be done in a few days).
• Due diligence of property is done.
• Signing of the papers is done only through a Public Notary, registered in the “Dirección Nacional de Notariado” in Costa Rica. (National Registry of Notary Public).
• Assets may be owned in Corporations. Selling or buying may be done by transferring shares of the corporation. (Session of shares).
• Inscription of property is done in the Public Registry. The National Public Registry is where all properties in Costa Rica (whether titled or concession) should be registered in the Public Registry, known simply as the “Registro” where they are able to confirm the history or title chain and determine if there are any restrictions, encumbrances, or liens. Avoiding the purchase of unregistered property is strongly advised.
Transfer taxes plus closing: 3% to 4% of the total sale of the property.
• 1.25% for the notary to register the property in the National Property and perform closing duties.
• 1.5% in government stamps and fees if you do a share transfer (that is, you assume the shares of an already established corporation that holds/owns a property).
• 2.4% in government stamps and fees if you purchase a property in your own name or in the name of your own corporation. –
• Escrow fees commonly apply if you are going to use a third-party escrow such as Stewart Title. This is usually split between Buyer and Seller.
• Closing costs are usually shared by Buyer and Seller. Sometimes the Buyer is expected to pay for the 1.25% notary fee as this document is mostly on the Buyer's behalf. The other 1.5% (share transfer) or 2.4% (property transfer) may be shared equally by the Buyer and Seller. This is subject to negotiation.
• Honorary fees for direct sales: 1.5% of the sale price. The legal fees are the same in the case of a direct sale or session of shares. If buying the Corporation, it is required to do a due diligence.
Costa Rica only taxes income that is generated within national territorial limits (national source or “source of income”): it does not collect taxes for residency or citizenship. The regular income tax ranges from 10% to 30%. In general, property taxes in Costa Rica are low - .25% of the property's registered value. Some properties that exceed the sum of ¢133,000,000.00 (colones) under construction (not land), are subject to a luxury tax, calculated by sections on the value, to which tiered/scaled rates are applied, ranging from .25% to .55%, depending on the size and characteristics of the property. Currently, the taxes and fees for the purchase of the property and for the transfer of shares are the same.
REALTORS IN COSTA RICA:
There are requirements to work in Costa Rica, the real estate agent must have the status of legal worker as a citizen or as a permanent legal resident.
There are 2 accredited Real Estate Associations: Costa Rican Chamber of Real Estate Brokers, CCCBR and Costa Rica Global Association of Realtors, CRGAR. Both are bilateral partners of NAR (National Associations of Realtors) of the USA and members of CILA (Real Estate Confederation of Latin America).
The Costa Rican Chamber of Real Estate Brokers has presented this year to the Legislative Assembly (Congress) of Costa Rica the bill to be regulated by law. There is access to an MLS (Multiple Listing Service) in both associations. There are bilateral agreements and an active international real estate relationship with NAR (National Association of Realtors), with CILA (Confederation of Real Estate of Latin America). FIABCI (International Federation of Real Estate). There are international real estate franchises in the country such as Remax, Keller Williams, Century 21, Coldwell Banker and others.
COSTA RICA REFERRALS:
We encourage you to refer buyers and sellers to Costa Rica. To find this great real estate opportunity, it is always necessary and wise to cooperate with local accredited real estate brokers/agents in Costa Rica and affiliated with associations members of NAR and CILA and who are citizens or permanent residents in Costa Rica.
The "Referrals" generate commissions between 20% to 50% depending on the involvement of the referral broker/agent in the transaction. This commission is paid out of the commission amount received by the local broker/agent. Standard agreements between brokers are used for this purpose.
The payment of commissions related to international brokers for the sale of properties in Costa Rica has a "withholding tax" of 15% that belongs to the treasury of Costa Rica. Which means that this 15% "withholding tax" is reduced from the payment of the commission owed to the referral agent/broker.
We recommend that you do not offer Costa Rican properties in your local market without a referral agent/broker in our country. The international code of ethics of NAR, CILA and FIABCI is expected to prevail within our international real estate transactions in Costa Rica.
WHEN YOU COME TO VISIT US, PLEASE CONSIDER THE FOLLOWING:
• Passport required, must be valid for 6 months after arrival.
• Money in US Dollars is accepted, Visa and MasterCard preferred.
• Rental car companies are available. It may not be necessary for the entire visit since you may rent by day at resorts. Buy the insurance, even if you have credit card-based coverage. Airport transfer to resorts, many available, can be pre-arranged.
Do not forget to bring sunglasses and suntan!
I invite and welcome all of you to experience my country and we will do our best to make you feel part of our paradise!
Thank you for allowing me the opportunity to be proud of Costa Rica.