Saturday, March 31, 2007

Testimonial: Susan & Kjell, we bought our dream home

We had done our homework prior by investigating websites selling and renting property in the Escazu area. We had great expectations for our journey but never thought we would place a bid on a condominium during our first visit. We found the perfect home in Santa Ana and we still are very happy with our purchase. We found Arturo Guzman and "Properties in Costa Rica" to be professional to deal with and always willing to help out. We would highly recommend them to everybody for their real estate dealings.

Susan & Kjell

Testimonial: Joe and Sonia Trent, NY, USA

We would like to thank Properties in Costa Rica and Arturo Guzman for all the valuable assistance in finding our second home in paradise. Your kind attention and human approach made it easy for us to trust and rely on your expertise since day one. We are now living and enjoying the colors of the sun, the sea and the sky. The beauty of nature, the joy of life!

Joe and Sonia Trent, NY, USA

Planning to Invest in Costa Rica

ABC’s to Incorporating, Buying Property and Becoming a ResidentMany of our foreign clients have similar concerns when we first discuss their investment plans in Costa Rica. Almost everyone we have met wants to know about incorporating, buying property and obtaining residency.

We believe these three issues are the main components of what we would call the "typical investment package"; which, just by following some basic steps would make your Costa Rican venture a very successful one.

Incorporating in Costa Rica

The typical limited liability company (“Sociedad Anónima” or “S.A”.) must be incorporated by at least two people before a Costa Rican Notary Public. After such incorporation, the shares may be transferred and it is legally feasible to have a corporation in which one person is the owner of all shares.

The incorporators must choose a name (which must not be similar to any existing corporate name); appoint a Board of Directors (which, by law, must have a minimum of three members, President, Treasurer and Secretary) and a Comptroller. Each one of these positions must be occupied by a different person; however, the initial incorporators may occupy them.

Other crucial issues to be decided are the capital of the corporation (the higher the capital, the more registration taxes are to be paid); the number of shares composing such capital (a share cannot be divided according to Costa Rican Law -fractions of shares are not acceptable-; thus, it is advisable to have a number of shares that would permit future distributions of the participation in the company) and the representation of the newly formed company (there must be at least one representative of the company with powers of attorney to act on its behalf; however, at the time of incorporation, or later on, the powers of the company's representatives may be limited, for example, to specific actions or amounts).

Costa Rica has what we like to call a "hybrid" corporate system. The incorporation deed, as well as all changes to the company's By-Laws, are recorded in the Public Registry, where any person has access to them. However, all transfers of the company's shares are recorded in the Shareholders Registry Book, which is kept by the corporation and is only available to company's shareholders and officials; all other parties can only review it with a Court order.

When you are buying real estate, it is advisable to do it on a corporation's name. In this case, transfers could be made easier and the structure may be more flexible for other transactions and for organizational matters.

Buying Real Estate

Most properties in Costa Rica are registered in a computer system called "Folio Real". This system is centralized at the offices of the Public Registry in San José. Before buying land (or even before seriously considering an offer to buy land) a title search in Folio Real should be performed.

Such a title search will show all data on the property, including area, ownership, boundaries, location, mortgages and other liens. A few properties have not been incorporated to the "Folio Real" system yet. They are still registered in special books kept in the Public Register. Such properties may also be accurately title searched in the Public Registry.

When considering buying land, the first question to be asked is if you are being offered ownership rights (derecho de propiedad) or occupation rights (“derechos de ocupación”). In the case of occupation, you would be dealing with land that has not been registered, cannot be title-searched and must go through a long process in order to be registered. Ownership rights, in the contrary, are registered and are equal to the concept of owning land in the United States or Canada.

Another situation one may encounter regarding land, especially in beaches, is the concession. In this case, the government gives a private party the right to use the land for a specific period of time. In general terms, the concession may be considered as a lease. The concessions' registration system is different than the one for regular land, and has particular requirements regarding zoning, terms, occupation, etc.

In conclusion, before buying, before offering or even before seriously considering a piece of land, enquire about its status and perform a title search: these simple steps could save you a lot of money and effort, and will definitely make your Costa Rican investment worthwhile.

Residency

Investing in a country as beautiful as Costa Rica is the final pretext many people are looking for to leave everything behind and start a new and different life. Understandably, one of the most popular concerns is to become a resident.

Costa Rican Immigration Laws allow foreign citizens to become residents in specific cases that range from having a family relationship with a local citizen (marrying a Costa Rican, having Costa Rican children) to demonstrating the government that the applicant will not be a burden for the country, mainly showing sound resources to be established in Costa Rica and, in some cases, to create a business here. Our mainly recommended regimes are the resident pensioner and the resident annuitant status. They are both administered by the I.C.T. (Costa Rican Tourism Board).

The resident pensioner status is used for foreign citizens who have retired from government service or from selected private entities and receive from them a permanent life retirement income of no less than US$600.00 per month. Such amount must be transferred periodically to Costa Rica, and its reception and conversion into colones (Costa Rican currency) at designated institutions has to be demonstrated.

The resident annuitant regime is applicable to all foreign nationals, regardless of age, receiving a fixed monthly income of no less than US$1,000.00. The funds of the deposit can come locally or from abroad and their conversion into colones (Costa Rican currency) at designated institutions has to be demonstrated.

Investing in Costa Rica can be one of your life's best decisions. There are many things to discover and experience. Being wise enough to plan your investment will make this venture real and sound.

By Henry Land. Land & Asociaties.
The Costa Rica Guide

In a Corner of Costa Rica, a Beachhead for Luxury

By JANELLE BROWN
Published: February 3, 2006

Before visitors even leave the tarmac, though, smiling representatives from the local Chamber of Tourism are there to greet their out-of-town guests, most of whom have just arrived on the new direct three-hour flights from Atlanta, Miami and Houston. They press the real estate guide "Costa Rica Traveler" into newcomers' hands. In its pages, American visitors can find ads for dozens of different developments that will happily sell them a villa with an ocean view.

For decades the remote Pacific Coast of northern Costa Rica — the Guanacaste province — was the domain of die-hard surfers and backpackers, with other visitors deterred by the grueling five-hour drive from the country's main airport in San José. But in the last few years, Guanacaste has been transformed by a collection of hotels and real estate developments aimed at America's affluent baby boomers.

All up and down the coast, bulldozers are at work. Three major developments, including a project anchored by a Four Seasons hotel, are already selling luxury condominiums for $500,000 and up, and hundreds of smaller, more speculative endeavors are also breaking ground. The airport in Liberia, the capital of Guanacaste, is at the center of the transformation. Three years ago, when the first direct flights from the United States landed, only 50,000 people a year arrived there. In 2005, 300,000 did.

In the airport lines, Americans talk in urgent tones about the money to be made, about "Wild West" opportunities. Never mind that Guanacaste is still a region of cattle ranchers and rutted roads. The new homesteaders envision a beach, golf and spa destination equal to the Puerto Vallarta corridor in Mexico or Wailea Beach on Maui — without, so far at least, the high-rise blight. The area's promoters have taken to calling it the new Gold Coast.

"It's hard for me to look at all this change — you're used to how uncluttered it was," said Chris Mailloux, a ReMax agent whose family has been selling real estate in the area for 13 years. In one abbreviated block near his office, in the tiny fishing village of Playa Hermosa, eight developments of at least 20 homes each are under construction: "Lots that were once $50,000 are now $500,000," he said. "There's not a lot left that hasn't quadrupled in value in the last three years."

Or, as Brad Schmidt, a local builder and an American expatriate in Costa Rica for 10 years, put it, "It's like fishing behind a tuna boat during a feeding frenzy."

HISTORICALLY, the smattering of vacation homes in Central America were mostly bargain-basement retirement houses built by older expats. A gradual identity shift began when the Central American peace accord of 1987 curbed regional political instabilities, and now it has accelerated. Vacation home developments, often financed by American investors, are going up not only in Costa Rica, which has led the trend, but in Panama, Honduras, Belize and Nicaragua. American buyers are drawn to the cheap prices for oceanfront real estate on previously undeveloped land.

"The image problem doesn't exist anymore," said Roger Gallo, founder of EscapeArtist.com, a newsletter for Americans that focuses on Central and South America. "There's more money to be made in foreign real estate because the prices are lower with more growth potential."

Costa Rica has the advantages of an active tourism board and a reputation as peaceful and environmentally friendly. It also has the longest tradition of democracy in Latin America.

Bill Royster, the developer behind the luxurious Sueños resort south of Guanacaste on the Pacific near the town of Jacó, said that because foreigners are allowed to own land directly, rather than through the bank-trust leases required in some Mexican property deals. "No one is going to expropriate your property," he said.

And what about that property? In Guanacaste, the jungle runs straight from the volcanoes to the sea, where it overlooks a warm azure ocean from 200-foot bluffs. Armadillos, howler monkeys, small raccoon-like pizote, parrots and the occasional jaguar make their homes underneath the broad leaves of the mango and palm trees. The foliage grows up to 10 feet a year, though in the "gold season" — a flattering term for the dry months of December through April — most trees lose their leaves, leaving the landscape barren.

Until the developers began arriving with suitcases of cash, Guanacaste was mostly the domain of cowboys called sabaneros, whose legacy lingers at local rodeos. Roads must be shared with herds of ambling cattle and are often so potholed that local people drive on the ground along the side. Yet strung all along them are signs, all in English, advertising million-dollar villas.

"It's fairly easy to develop in Costa Rica; you have a good work force at extremely cheap prices," said William Knickman, a New Jersey developer who, with a group of friends, snapped up land in Guanacaste, formed a company called Costa Rica Lifestyle Development and is now selling lots for up to $300,000 apiece. "And it's hot, very hot, as a place for people to buy. It's booming right now."

The boom can be traced back to the 2,300-acre, $400 million Península Papagayo project, indisputably the most luxurious development on the coast. It lies on land that was set aside for tourism by the Costa Rican government in the late 1970's but remained uninterrupted jungle until 1997, when Alan Kelso, a Costa Rican developer, got American financing and broke ground. Península Papagayo has a Four Seasons resort and is expected to include three more hotels and more than 1,000 luxury homes, although, at the moment, only 44 houses and condos have been built. (They're selling for $2 million to $12 million.)

"We put the region on the map," Mr. Kelso said as he sat in Península Papagayo's command center, a facility peppered with satellite dishes. He also plans a marina, a polo field and, of course, the requisite three brand-name golf courses. "The whole challenge is to create a luxury market in a country that doesn't have

To shield their patrons from pitted roads and electrical blackouts, developers have paid for their own infrastructure. Grupo Mapache, a Costa Rican developer that is building more than 20,000 low-priced condos in the Guanacaste area, has spent $2.5 million on roads and sewers. Península Papagayo has not only paid for its roads, sewers, buses and electricity but has even set up its own paramedics and fire brigade.

"We sell 'Costa Rica Lite': all of the upside with none of the downside," said Jeff Klein, a sales agent for the Papagayo project. "We're our own municipality."

The owners of Península Papagayo and two other high-end developments, Hacienda Pinilla and Reserva Conchal, even paid for that critical airport in Liberia, putting up $3 million of their own money in 2002 as a guarantee to persuade Delta to start direct flights. Continental and American followed.

EARLIER efforts to develop Guanacaste were mostly underfinanced. On a road near the town of Playa del Coco hulks the moldering 20-foot-tall concrete gate of Cacique del Mar, all that was built of a 500-acre development planned in the 1990's. Even this forlorn property has since had a change in fortune. Stephen M. Case, former chairman of AOL Time Warner, bought it in 2005, and Guanacaste is buzzing with rumors about what he plans to build on it.

At Hacienda Pinilla, hundreds of condominiums and villas are being built around 4,500 acres of nature preserve by the Atlanta-based owner, Hoover Gordon Pattillo, who bought the land as a family vacation homestead 30 years ago. Visitors to Mr. Pattillo's modest ranch, tucked inside a tree-lined grove, are greeted with a tequila-laced lemonade and a perch on a rocking chair overlooking the sunset.

"It was destiny," he said. "I had no idea what I was going to do with the land. We'd come down once a year and stay in the old farmhouse, which had no electricity or running water." In the late 1990's he began developing home sites. "We really had to work hard to sell those first villas," he said. Things have changed. Over two weeks last year, Hacienda Pinilla sold 43 Spanish colonial condomiums for $580,000 and up without any advertising.

The Costa Rica rush can carry hazards for the unwary. Jeff Hornberger, the international market development manager for the National Association of Realtors, cautioned that Americans buying in Costa Rica should be sure to buy title insurance and should be aware that real estate agents aren't required to be licensed there. "Ninety-five percent of the time we don't hear about people having problems," he said, but sometimes Americans "come on vacation and get overwhelmed and leave their brains at the border."

Many Americans who are buying now are looking for investments, eager to get in on the boom. But others simply love Costa Rica, with its warm seas and unspoiled jungle landscapes.

"This is my garden; look at this!" Jean Capezza, 59, said as she gazed down over the jungle to the sea from her perch at Reserva Conchal, an upscale golf-course-anchored development of 2,300 acres that will eventually have several hundred homes selling for $500,000 to $2 million each. Ms. Capezza, a retired administrator for Verizon in Boston, and her husband, Tony, 63, a retired public school administrator, bought a Mediterranean-style four bedroom condominium in early 2004 and spend seven months a year there.

Their house has already nearly doubled in value, but the downside of the real estate demand is the incessant grind of bulldozers nearby. The Capezzas fear more flights landing in Liberia, new condos up the hill, even the appearance of a Burger King in the nearby town of Tamarindo. "If we wanted the roads of Florida, we'd be in Florida," Ms. Capezza said. "We hope progress comes slowly. Very slowly."

The Maritime Zone in Costa Rica

There is a zoning law in Costa Rica that is important to understand for those who are about to or already have purchased coastal properties in Costa Rica.

This Maritime Zone is probably the most misunderstood zoning regulation. Basically it makes all the coast public property with the following conditions. The law was passed in 1977. It divides the coast like this:

the first 200 meters from the high tide

That 200 meter zone is further divided into two parts:

  • The first 50 meters are inalienable public property
  • The next 150 meters are granted for leasing by the Municipalities (the local governing body) to private individuals or corporations

The first fifty meters are then meant to always be public which explains why you cannot build a fence around 'your' beach. There are only two or three properties in the whole country that are excluded from this rule (contact us for information about these {link a contact us generico}.

The second 15 meters can be leased by the cities or Municipalities in exchange for an annual fee. These are the so called 'Concesiones' or 'concessions'. This is not titled land. Not only do you pay an annual fee but you also must comply with the 'Regulatory Plan' (Plan Regulador) that specifies what can and cannot be built in that zone. It can establish commercial, residential, tourist projeccts, environmental protection amongst other things. It is, basically, the Zoning Plan.

If you want to build something that is not allowed for in the Plan Regulador then you will have to apply for a modification of the plan.

These concessions are typically leased for periods of 15, 20 or more years. They are automatically renewable. If you hold a lease and the municipality wants to cancel, they have to justify their decision and this may end up in court if the lease owner wants to contest the decision.

Basically, once you are granted a concession it is quite difficult for it to be taken away as long as you are complying with the stipulations in the contract.
It is important to know that concession owners must meet the following requirements:

  • Be residents with a a minimum of five years residing in Costa Rica
  • Costa Rican individuals
  • Or Costa Riacn corporations with at least 50% Costa Rican ownership

Filing for a concession is done at the city or municipality with jurisdiction to approve it.

Another requirement is to have a tourist declaration from the The Costa Rican Institute of Tourism (ICT) - the government's institute on tourism affairs. A valuation of the property performed by the local IRS will establish the annual fee that one would be charged for the concession. If you get the approval then the City Council votes and approves a "resolution project" which is sent by the mayor of the township. Then the mayor will sign the "Concession Agreement".

After the signature the ICT has to approve the plan if the property has a "Tourism Declaration". The local department of agriculture (IDA) must also approve it in certain cases. Finally it is sent to registartion before a Notary Public in the General Registry of Concessions.

This is a long and convoluted procedure but the end results are very rewarding. Make sure to contact us {link a contact us generico} at Properties in Costa Rica in order to get proper legal and real estate expert guidance.

Declare your financial independence

It's no surprise people want to do what they want, when they want -- but first they need to plan.


June 30, 2005: 9:39 AM EDT
By Grace Wong, CNN/Money staff writer

NEW YORK (CNN/Money) - As Independence Day rolls around, are you free? Financially, that is.

The meaning of financial independence can be just as difficult to nail down as figuring out what is the perfect level of rich.

For some, it may mean not having to live with mom and dad. Others may describe it as being able to eat as much caviar as they please.

Ultimately, financial independence boils down to one thing: freedom of choice.

"Financial freedom is so intertwined with what a person wants to achieve in life," said Ron Pearson, a certified financial planner with Beach Financial Advisory Service. "It doesn't necessarily mean never having to work again, but instead has more to do with realizing your own dreams."

Maybe you had a fantasy of "making it" as a rock star but took a corporate job to pay the bills. Or perhaps your parents pushed you towards a career in law when you really love the arts.

With some financial planning, you can make the daily grind pay off and get back on the fast track to getting where you want to go.

Step 1: Set the goal

"You have to understand why you want money," said Stacy Francis, certified financial planner and owner of Francis Financial.

She has her clients write down their reasons for wanting money, which helps them define and prioritize their ambitions, she said.

Being crystal clear about what you want puts everything in perspective.

"You might want to buy a new dress, but when you know your priority is to send the kids to college, it makes it easier to make that choice," said Judi Martindale, a CFP in California.

Step 2: Assess the cost

Once you've set your goal, the next step is to figure out what it's going to cost to get there.

If you want to sell your house to live on a beach in Costa Rica, you're not going to have to save as much as if you want to be a jetsetter and keep a home in London.

First, you need to estimate your annual living expenses. For the jetsetter, you need to tally up the cost of two mortgages, taxes, trans-Atlantic flights and other expenses such as food and insurance.

Then, figure out what income you'll have coming in -- retirement savings if you're planning on leaving the workforce, personal savings or earnings if you intend to keep your job.

With those two numbers, you can figure out how much you'll need to achieve your dream.

Calculators can come in handy during this stage of the planning process. These tools can provide a general picture of how long it'll take you to reach your savings goal or how living costs vary from one location to another. You can even see how long it'll take you to become a millionaire.

Step 3: Craft the plan

Then you need to start working towards that goal, and you have the best chance of succeeding if you start out with a solid budget. (For a step-by-step guide to creating a budget.

"The biggest predictor of whether you're going to reach financial independence is by looking at what you're spending and saving," Francis said. "It's as simple as that, it's not rocket science."

Many people cringe at the thought of budgeting, but it really doesn't take a lot of time or effort to keep track of your expenses.

There's already a written record of items you charge and write checks for, which leaves only cash payments unaccounted for. Once you start monitoring your spending habits, you'll be surprised to see where your money goes.

Ideally, you want to be saving at least 10 to 15 percent of your income, Francis said. She recommends her clients be prepared to replace at least 100 percent of their income when they stop working.

Another way to make budgeting bearable is to break down costs, she said.

If you want to buy a $500,000 house in five years and want to put down 10 percent, or $50,000, you'll need to save $10,000 each year. That sum may seem unmanageable, but if you break it down, it comes to putting away $830 each month, or just over $200 a week.

One of the best strategies for getting ahead financially is to downsize your lifestyle. Losing the second car, or selling your $400,000 house and moving into a smaller condo, can translate into huge savings.

Simpler substitutions go a long way, too.

If you opt for the house brew rather than a specialty frothy drink when you pick up your morning coffee, you can save $800 a year. If you keep doing that for 35 years and invest your savings, you could end up with $150,000, assuming an 8 percent compounded annual return.

You need to be prepared for some tradeoffs, but that doesn't mean you have to deprive yourself of what matters most, Pearson said.

He said one of his clients works a stressful job as a power plant operator, but makes room in his budget for flying, his favorite pastime and a major stress reliever.

Achieving your financial dream doesn't mean you have to give up on your values, either. Last year, Americans reached into their pockets to give about $249 billion to charitable causes, setting a new record.

Pearson said one of his clients, a doctor, has saved huge amounts by living below his means. He's interested in helping the blind, and now that his financial planning has put early retirement on the horizon, he is considering transitioning into the non-profit world, either by setting up a foundation for the blind or by giving aid to organizations devoted to that cause.

If philanthropy is a priority in your life, but you can't afford to make large gift donations, you can find different ways of giving, such as by donating your time to volunteer or charity work.

Whether you want to supersize or downsize your life, get away from it all or see it all, you need a plan to get you there.

There are no hard and fast rules, but a good rule of thumb is to make sure your plan matches your risk tolerance and goals.

Can Retirees Live Better Abroad?

My husband and I are seriously considering another country for retirement. What should we consider?


November 2, 2004: 12:16 PM EST
By Lewis Schiff, the Armchair Millionaire

NEW YORK (Armchair Millionaire) - Dear Armchair Millionaire: My husband and I are seriously considering relocating to another country for retirement. What are the financial issues we should consider in this kind of move? -- Ready to Retire

Dear Ready,

If you do end up retiring abroad, you may find that you have plenty of American neighbors. Because the U.S. does not track the number of its citizens who leave the country, it's tough to get an exact number of how many Americans retire overseas. However, the U.S. State Department estimates that there are about 4 million U.S. non-military citizens living abroad, and that about a quarter of them are retirees.

Our recent question about retiring abroad to members of the Armchair Millionaire community revealed some interest there, too. Here are a few of the comments we heard:

"Yes, I have thought of moving to another country. Costa Rica would rank right up there at the top because of its beautiful climate, scenery and cheaper cost of living." -- John C.

"New Zealand. Just a beautiful, lush countryside. English-speaking. Dollar is strong. Imagine California with only a population of 3 million instead of 33 million and coastline on the north, east, south and west." -- Joey

"I consider moving out of the States all the time. Contrary to what many Americans believe, there are now several countries -- including Canada, the Nordic nations, and other parts of Western Europe -- that now boast a higher standard of living than we do (not to mention superior healthcare for the dollar). Also, more than ten countries now tout more civil rights and freedoms than we do (disappointingly ironic when you consider the label, "Land of the Free"). And for retirees, there's always the option of taking your American dollars where they buy more. -- Jon

Pulling up roots and moving to a new country is obviously a huge step, so above all else you should make the decision carefully. There are dozens of issues to consider, from cultural and language issues to the weather. My checklist zeros in on the key financial issues you should consider.

The Armchair Millionaire's Checklist of What to Consider Before Moving Abroad

What is the real cost of living? While the lower cost of living in many countries is one of the primary things that makes living abroad attractive, you need to figure in additional costs that you might occur abroad that you might not here in the U.S.

Travel back and forth between your adopted country and the U.S. is one obvious cost that will offset the lower cost of living, but you will also want to look at whether the exchange rate is favorable to you or not.

How will you obtain health care? Medicare does not cover health services outside of the United States, so you will need to explore how your medical needs will be taken care of.

Some countries with government-sponsored health insurance also extend coverage to resident foreigners. In other countries, you may need to purchase private health insurance. As a last resort, you may need to rely on a U.S. health insurance company that will provide coverage for Americans living abroad.

What will you pay in taxes? As a U.S. citizen, you still have to pay taxes on your income regardless of where in the world you may be living.

However, living abroad may qualify you for various deductions and credits that you would not otherwise receive. So consider whether your tax liability will substantially change if you choose to live abroad.

How are the communications? While we take reliable phone and Internet links for granted here in the U.S., they do not exist every where.

Given that you'll probably want to manage your U.S. banking, investments and bill paying activities online from your home abroad, you'll need access to a good telecommunications system.

Can you buy a home? Many countries do not allow foreigners to buy real estate, or place restrictions on which property you may buy.

If buying a retirement home is in your plans, be certain to understand any restrictions in the country of your choice in advance.

THE BOTTOM LINE: Moving abroad -- whether for retirement, a new job opportunity or just to sample another way of life -- can be a complicated and costly step. Be sure you understand exactly what you're getting yourself into before making the move.

Shopping the World for a House

The real estate boom knows no borders. It's not just the rich and eccentric who are buying abroad.

June 22, 2004: 11:24 AM EDT
By Sarah Max, CNN/Money senior writer

BEND, Ore. (CNN/Money) – Eyebrows went up when Dale Anderson and his wife, Kim, told their friends they were buying a second house in Paraiso del Mar, a new housing development in La Paz, Mexico.

"They thought it was outrageous," said Anderson, 63, a small business owner in Canton, Ohio. "Then they started looking into it themselves."

Like a growing number of Americans, the Anderson's friends soon realized that buying property outside the country isn't such a far-fetched idea. Seaside condominiums and golf course homes in Paraiso del Mar, for example, range from $180,000 to $375,000. That's a bargain considering what similar property would cost in California, Florida or South Carolina.

"This will be a major life change," said Phillip Allen, 55, a business development consultant in Denver who plans to relocate to Paraiso del Mar with his fiancée, Trish Rudeen, as soon as construction on their two-bedroom home is completed next year. In the mean time, they've bought a share in a sailboat and a copy of "Spanish for Dummies."

"I had never been to Mexico until this past May," said Rudeen, 53. "I was pleasantly surprised."

It's a small world after all.

Real estate agents in Mexico, the Caribbean and Central America say they've seen an influx of American buyers over the past couple of years. "We have definitely noticed a trend of more buying abroad," said Jeff Hornberger, manager of international business development for the National Association of Realtors.

Although it's tough to track overseas real estate transactions, traffic on EscapeArtist.com and its affiliated sites reflects a growing interest in living and buying real estate abroad. The site has 1.5 million unique visitors of a month, according to founder Roger Gallo, and 700,000 people subscribe to the site's online newsletters, which include the "Offshore Real Estate Quarterly."

"We are adding between 4,000 and 5,000 subscribers a month," said Gallo, speaking from his office in Panama.

La Paz, Mexico is an emerging second-home market for Americans. Money Magazine named it a
La Paz, Mexico is an emerging second-home market for Americans. Money Magazine named it a "Best Place to Retire" in 2003.

Good weather, inexpensive real estate and, in some countries, low taxes are part of the appeal. At the same time, rising home values stateside have made it easier to pay for second properties. The Internet, meanwhile, makes it easier to shop the world market for real estate, and in the case of some overseas buyers, live outside the country full time.

"Prior to 9/11 it was a lot of retirees looking for somewhere warm and cheap," said Les Nunez, a Canadian who moved to Costa Rica nine years ago to open a RE/MAX franchise. "Now I'm seeing a lot of younger American buyers particularly people with portable skills, like graphic artists and software designers."

According to Nunez, a 2,500-square foot condo in Costa Rica's capital, Santa Jose, ranges from $150,000 to $200,000. Property taxes for that same condo run about $200 a year, he said, and capital gains taxes are "nonexistent."

Gallo's countries of choice for real estate investments include Argentina, Brazil, Ecuador, Uruguay and, of course, Panama. "You can build here for about $35 a square foot," he said, adding that this is one country south of the border where financing and title insurance are widely available.

Americans are also heading north. According to Scott Brown, senior vice president for Playground Destination Properties in Vancouver, British Columbia, Canada – and Whistler in particular – has long been a popular market for buyers from nearby Washington. "But about year and half ago we started seeing the Texas buyer," he said. "People want to come here to ski in the winter and escape the heat in the summer."

Still an emerging market

Taking your home search to different parts of the globe requires even more scrutiny of the fine print.

In Mexico, for example, foreigners are technically not allowed to own land within 50 kilometers of the coast. They can buy such land via a fideocomiso or trust deed that makes them beneficiaries of the land for 50 years, after which point it can be renewed. Still, many Americans may not be comfortable with such an arrangement. "I love Mexico, but I wouldn't buy there," said Gallo.

According to John Glaab, vice president with The Settlement Company in Los Cabos, a number of reputable companies, including Stewart Title and First American Title, offer title insurance in Mexico, thereby protecting buyers if they lose their property because of a dispute in ownership.

Another consideration for Americans buying abroad is financing. In most countries mortgages are not widely available, but that seems to be changing in Mexico and elsewhere.

"You're starting to see 20 or 30 year mortgages that are similar to what you'd get in the U.S.," said John Fair, the developer of Paraiso del Mar, adding that the rates are about two percentage points higher, while down payments of 20 percent to 30 percent are typically required.

Property taxes, though they depend on where you buy, are generally quite low. "In La Paz, they're about 0.2 percent a year," said Fair. That's about $600 a year for a $300,000 house.

Sellers don't get the same capital gains break they get in the United States. The capital gains tax equivalent in Mexico is 33 percent this year and will go down to 32 percent next year, said Fair, though sellers can deduct what they owe in Mexico from their capital gains liability in the United States.

"I know capital gains [tax treatment] is not as good as it is in the United States, but that's not a factor for us," said Phillip Allen. "We don't plan to sell."

New Rules for C.R. Residency ...

by Christine Pratt
courtesy of The Tico Times

published 01-aug-02

Foreigners thinking about applying for Costa Rica residency should be quick about it – plans are in the works that will, starting in January, oblige them to do it from outside the country, through a Costa Rican consulate.

According to Immigration Director Marco Badilla, the new procedure is not because the law is changing, but because Immigration officials now seek to apply the law that already exists.

"At no time will residency requests be processed from applicants who have entered the country with a tourist visa," reads Chapter 2, Article 41 of the General Immigration Law.

And Badilla says the new administration’s goal is to apply the letter of the law. "The consulates abroad will receive all the documentation and will forward it all to us," Badilla said.

The applicant will pay all the regular costs, plus the transfer costs of mailing the documents. This will apply only to new applicants – those who have pending applications will be processed without having to start over via a consulate."

At least, that’s what Badilla and Chief Consul Ricardo Otárola hope.

Otárola said both institutions await the Attorney General’s opinion on their request to apply existing practices to the some 6,000 pending applicants, even though the law demands otherwise.

"What we don’t want is for all the pending applicants to have to start from scratch through a consulate," Otárola told The Tico Times, but it depends what the Attorney General says.

Badilla said the ruling could come at any time. Both Immigration and the Foreign Ministry expect to begin the "new" procedure at a still undetermined date in January.

Applicants must then originate the residency-application process from their home countries by working directly with the nearest Costa Rican consulate. It will no longer be possible to apply while here, or by using one of the many residency services, including that offered by the Residents’ Association of Costa Rica (ARCR).

ARCR’s Ryan Piercy admitted that, pending the Attorney General’s ruling, all anyone can do is "sit tight and wait."

But, if the ruling will allow pending applications to be processed, those who are thinking about become Costa Rica residents should probably begin the procedure now, before the change takes place in January.

"Right now, a tourist who has been notified of deportation can’t apply for residency," Piercy explained of the "perpetual tourists" who arrive here on 90-day tourist visas, then overstay and are arrested by Immigration officials. "But a legal tourist still can."

Both Piercy and residency facilitator Raquel Solís agree that past stories of consular inefficiency don’t bode well for the new residency procedure.

Complicated at best, the process requires official Spanish translations of reams of documents, including birth and marriage certificates, good-conduct records, statements explaining why the applicant seeks residency, educational transcripts, recent fingerprints. Applicants must designate a local "apoderado" who can receive legal correspondence and act on their behalf.

"If it’s hard for a Costa Rican consulate to authenticate a single document without losing something, how can it be expected to handle the entire residency application?" Solís wanted to know. "Tico consulates may be in the U.S., but they are still run by Ticos."

Otárola admitted that consular officials abroad will need additional training, but couldn’t say by press time what the Foreign Ministry is doing to prepare them to take on residencies.

Badilla said procedures for renewing an already obtained residency will not change, nor will the procedure for acquiring tourist visas, which is stamped inside a visitor’s passport upon entry. Likewise, legal tourists may apply for work permits.

But he added that the tourist card – another convenience currently extended citizens of the U.S., Canada and land-traveling Panamanians – will be eliminated as of Dec. 31.

The tourist card makes it possible for citizens of these nations to enter Costa Rica without passports. It is issued upon entry – or via a consulate abroad – to travelers who present certified birth certificates and valid photo identification.

After Dec. 31, U.S. citizens, Canadians and Panamanians will need passports to enter Costa Rica, just as all other nationalities do.

"From a legal and security standpoint, we’ve decided that the tourist card is obsolete," Badilla said.

Purchasing Property In Costa Rica

A Guide to Understanding the Real Estate System and Buying Process

Introduction

The acquisition of real estate is one of the most significant investments a person makes during his or her lifetime. It can also be one of the most stressful. In foreign countries such as Costa Rica, the normal stress of the purchasing process can be compounded with other risk factors, such as language barriers and unfamiliarity with local laws and procedures. That said, foreigners can and do legally and successfully purchase property in Costa Rica. In fact, Costa Rica offers potential buyers many types of real estate products including houses, condominiums, time-shares, farms, finished lots and beachfront property. The following guide is designed to help buyers navigate their way through the real estate buying process for all types of purchases. The guide is divided into three main sections covering:

I. Property Types and Property Rights

II. Purchase Process:

a. Legal vocabulary of property purchase
b. Methods of Purchase
c. Buying process step-by-step d. Fees

III. Investment Protection: strategies and tools to protect property investment

I. Property Ownership and other common forms of possession

Just like in the US, Canada, and Europe, there are different types of property available to buyers. Understanding the various types that are available for purchase is critical in the evaluation process. This section highlights the property types that can be purchased in Costa Rica and the implications of each type of ownership for the buyer.

a. Fee Simple:

the owner of the property the absolute right to materially own the property, use it, enjoy it (i.e. usufruct), sell it, lease it, improve it (i.e. transformation), etc., subject only to conditions outlined in the Costa Rican Laws. Fee simple also means that if the owner is obstructed from enjoying any of his/her rights to the property, he/she has the right to be made whole, in other words, have the property restored in its original condition. Buyers who purchase fee simple title have the most rights under to law to enjoy and use the property as they see fit.

b. Concessions in the Maritime Zone:

1. Public Area: The first 50 meters measured horizontally from the high tide line. This zone is not available for ownership of any kind. No kind of development is allowed except for constructions approved by governmental entities. Further, this area is deemed a public area and any individual wishing to utilize this area for enjoyment has the right to do so. In other words, there are no truly private beaches in the Maritime Zone.

2. Restricted/Concession Area: The next 150 meters. This area is available for Concessions to be granted. A concession is in essence a “lease” on the property granted to the lessee for a specific period of time. Normally the concession period is granted for 20 years. An owner of a concession may build on that concession, subdivide the concession and perform other acts to the property. However, appropriate permits from the local municipality must be obtained.

3. Ownership Limitations: Unlike fee simple property, foreigners do not have the same rights as citizens when it comes to purchasing concession property. The law establishes that foreigners cannot be majority owners of a concession property. A foreigner can, however, enter into a partnership with a Costa Rican citizen where the ownership is divided 49% / 51% between the foreigner and Costa Rican respectively. One exception is if a foreigner has resided in Costa Rica for at least five years, then they may be majority owners of a concession. Both foreigners and Costa Ricans alike are required to purchase all Maritime Zone property through concession.

c. Properties in Condominium:

i. When US citizens think of Condominiums, they normally think of large apartments or townhouses. In Costa Rica, however, there is a specific law called “Condominium Law” that provides certain benefits to developers of many different types of properties, including single family residence projects, finished lot projects, condos, etc. This set of laws allows a developer to restrict and regulate certain aspects of the development. Each Condominium developments has its own by-laws containing all of the restrictions, limitations and privileges that can be enjoyed by individuals who purchase a property in such a development. Ownership of property “in condominium” is fee simple ownership, but usually carries with it a few additional restrictions set forth by the developer. It is advised that you require the owner of the property to give you a copy of the by-laws to check for architectural guidelines, land use restrictions, and other limitations that may be placed on your property. Most often, developers use the condominium laws to allow them to build private roads in a development and set architectural guidelines. For the most part, condominium laws are designed to protect the integrity of a development and maintain the “look and feel” of the project.

d. Untitled property

i. There are properties in Costa Rica that are not recorded at the Public Registry of Properties. Families have inhabited some properties of this type for generations while others have never been occupied. In either case, it is possible that someone claims that they “own” the property and may put it up for sale. They may even have fence lines or other boundary markers that separate “their” property from a neighbor’s. Regardless of the time that an inhabitant has lived on the property or to what extent they have demonstrated ownership, unless that property is registered at the Public Registry, there is no official owner. i.e. the title is unclear. It is strongly recommended that this type of property be avoided at all costs because there is no way to prove that the “owner” has the right to transfer the property, or even worse, what the dimensions of the property really are.

e. Time Share:

i. This option allows an owner the right to use a property for certain weeks of the year. In most cases the time-share ownership grants similar rights as implied in the condominium regulation except that in the time-share it is limited to certain weeks during the year. In this manner one single unit is subdivided into parts and sold individually. Time-share resorts are not common in Costa Rica.

II. The Purchase Process

A. Basic Terminology – Feeling comfortable with the purchase process starts with understanding the most common terminology. While the purchase process may seem very simple, there are some keys ideas with which a buyer should be familiar. The following defines the most common vocabulary used in real estate transactions in Costa Rica.

a) Folio Real: This is the “social security” number of properties. It is the unique number assigned to each property to identify it and distinguish it from other properties. This number is comprised of three parts: the first number indicates the province, the second group of six numbers is the number of the property itself and the last group of numbers indicates how many co-owners the property has. All titled properties MUST have this number in order for clear title to be obtained.

b) Transfer or Conveyance Deed: (escritura de traspaso): This document contains all of the stipulations regarding the transfer of real estate including basic information about the buyer, seller, the property, and any special terms of sale, such as easements or mortgages. An attorney who is also a Public Notary must prepare this document and the deed must be recorded in his/her Notary Book as well as at the Public Registry of Property. Stewart Title provides this service through our underwriters who are also attorneys. Once the deed has been prepared and signed at the close, it is the attorney’s responsibility to record the deed immediately at the Public Registry. The recording process consists of two phases. In the first phase, the notary presents the deed to the public registry for its annotation; from this moment the property is protected against any third party interest. After the registry verifies the deed is structurally correct, the second phase of registration begins and the property is recorded in the name of the new owner. Because Costa Rica operates on a “first in time, first in right” system, registering the deed immediately is critical to ensuring that the new buyer’s rights to the property are ahead of any other claims by third parties.

c) Public Registry of Properties

d) Public Notary: Attorney licensed by law to perform legal acts with Public Faith. All transactions performed by a Notary are recorded in his/her Notary Book. A public notary is necessary in order to purchase a property. Most attorneys in Costa Rica are also Public Notaries.

e) Power of Attorney: ( Poder )

(1) This document authorizes a person to act on behalf of another to perform specific actions such as the purchase of a property. This tool is especially useful for clients that wish to close on their property without returning to Costa Rica. It is best to sign the power of attorney before leaving the country because the law requires that the power of attorney be signed in the presence of a Costa Rican notary. Thus, a visit to a Costa Rican consulate in the US is necessary. One exception to this rule, however, is if the property is being purchased through a corporation. In this case, a signed proxy letter will suffice and there is no need to visit a consulate.

f) Survey Plan ( Cadastral Department ): In addition to the Public Registry of Properties, which holds all property deeds, Costa Rica also has a Cadastral Office that holds all of the property surveys. In order to transfer, mortgage or acquire a property, a survey must be recorded at the Public Registry. When dealing with property segregations, a municipality authorization is also required to be inserted on the survey. The official drawing of the property is validated through an approval process by the Public Registry of Properties as well as by the municipality in which the property is located. Because the Public Registry and Cadastral Office are separate entities, it is not uncommon for old property surveys to be on file at the Cadastral Office. If this is the case, it is recommended that a new survey plan be registered with the Cadastral Office so that there can be no dispute over boundary lines.

B. Purchasing Methodologies

1. Acquiring Properties through direct transfer: A purchase process whereby one or more physical individuals acquire a property in their personal name.

2. Acquiring Properties through corporations: A common practice in Costa Rica is to acquire properties through a new corporation or through an existing corporation that currently owns the property of interest. The process of setting up a corporation is not complicated, but does require a knowledgeable attorney who understands the exact protocols and procedures necessary to properly set up the corporation. The advantage of this system is that it allows a buyer to protect their asset anonymously. Further, if a purchaser acquires a property through an existing corporation that already owns the property, there are no government transfer taxes and stamps to pay. The reason is that transfer taxes and stamps must be paid anytime that there is a change in the ownership of the property. If a buyer acquires the shares of an existing corporation, technically there is no change in the recorded owner of the property (i.e. the corporation still owns the property). However, if a property is acquired through forming a new corporation to buy the property, the transfer taxes and stamps must be paid because the name of the property owner has changed. The risk for the buyer in acquiring an existing corporation is that the corporation might have other liabilities and there is no way to verify 100% that the corporation is clean. When buying a Costa Rican corporation, it is important to keep in mind that there are other obligations and responsibilities that must be addressed. Examples include yearly tax declarations (even if the corporation is inactive), payment of income taxes if any, and keeping the legal books of the corporation up to date and in order.

C. Step-by-Step through the purchase process (Using Title Guaranty & Escrow Services)

1. Once a buyer has seen a property of interest, the next step is to understand what the process of acquiring the property may entail. The following are the basic steps that a purchaser follows when buying a property.

Step 1: Sign an Option to Purchase/Sale with seller

Step 2: Deposit funds into escrow

Step 3: Title research performed and Title Commitment issued (review if property is free and clear of defects)

Step 4: Closing – Execution of Transfer Deed, Endorsement of Shares and/or Mortgage Deed and disburse funds

Step 5: Register new owner with Public Registry

Step 6: Receive official Title Guaranty

D. Fee Structure

1. Transfer taxes, stamps and other charges: In order to record the transfer of the property, the government charges 1.5% of the purchase price and an additional 1% is charged for other stamps at the Public Registry.

2. Notary Fees: Notaries are required by law to charge 1.25% as their legal fees.

3. Survey fees: If you require or demand a new survey for your property, there are qualified surveyors available to perform this function. Pricing depends on the location and size of the property.

4. Mortgage registration fees: The government charges .6% of the mortgage value to register the mortgage deed on the property

5. Title Guaranty fees: Guaranty fees are typically based on a sliding scale depending on the purchase price.

6. Escrow Fees: Fees are dependant on the escrow provider.

7. Incorporation: Fees for purchasing a corporation typically run between $500-$1000.

III. Protecting the real estate investment

One of the greatest concerns of foreigners purchasing real estate in a foreign country is to ensure that the transaction will be executed legally and if the system can ensure a lifetime of enjoyment of the property. The Costa Rican legal system, if followed correctly, does give ample protection to investors, but if the transaction is not executed properly, loss can and does occur. To guarantee the security of any real estate investment, there are three tools that should be present in any real estate transaction.

a. Adequate legal representation and experienced Notary - While a notary’s primary duty is to provide Public Faith to a transaction, his/her job is also to act as the legal representative of the buyer, providing legal advice and representation throughout the process.

b. Title Guaranty - As in the US, the title guaranty serves as a contract by which a third party (Guaranty Company) commits to indemnify losses due to legal situations that could affect the property, minus any exceptions or exclusions from the coverage. This legal document grants the buyer the security and peace of mind that the property has free and clear title to and is protected in the event of defect. The process of issuing a Title Guaranty includes the issuance of a Title Commitment before the closing to allow the buyer time to examine the legal status of the property and evaluate if the property is in proper condition for purchase. The final title guaranty is issued after the close and is based on the title commitment. The Title Guaranty is a new concept in Costa Rica and Latin America in general, but it has already proven to add value to initial real estate purchases, re-sales and has encouraged transparency and increased liquidity in the real estate process.

c. Escrow - Most buyers from the US understand Escrow service to include not only the managing of funds for a property purchase, but all of the administrative work required to execute a closing. In fact, in states where an attorney is not required for a real estate purchase, the escrow agent becomes the central party responsible for ensuring that all documentation is in order before the close. In Costa Rica, the escrow agent performs many of the same duties. The primary function is the financial service to prevent manipulation or mishandling of funds prior to closing. The escrow agent is a neutral third party with responsibility for issuing checks and executing payments. This system gives confidence to all interested parties (e.g. attorneys, brokers, seller, buyer) that funds are protected during the buying process and that all funds will be disbursed appropriately to all parties at closing.

Conclusion

The real estate buying process in Costa Rica need not be intimidating or confusing. By understanding the steps in the process and pitfalls to avoid, a buyer can confidently invest in and enjoy their property for years to come.

How Much Does it Cost to Live in Costa Rica?

An important factor that determines the cost of living for foreigners in Costa Rica is their lifestyle. If you are used to a wealthy lifestyle, you’ll spend more than someone accustomed to living frugally. Either way, you will still find Costa Rica to be a bargain.

San Jose’s cost of living ranks close to the middle when compared to 118 cities worldwide. The cost of living in Guatemala City or Panama City is about 14% higher than in San José. Corporate Resource Consulting firm that compares costs of goods and services rates San José among the least expensive coast-of -living cities in the world. It is second to Quito, Ecuador in the Americas in terms of affordability.

In most areas housing costs less than what it does in the U. S. and hired help is a steal. Utilities (telephone service, electricity, and water) are cheaper than in North America. You never need to heat your home or apartment since Costa Rica’s climate is warm. You need not cook with gas, since most stoves are electric.

To read the complete version of this article purchase “Christopher Howard’s The New Golden Door to Retirement and Living in Costa Rica"

From "The New Golden Door to rettirement and Living in Costa Rica" by Christopher Howard. ALL RIGHTS RESERVED. No part of this article may be reproduced without written permission of the authors and copyright owner.

Choosing a Corporate Structure to do Business and/or invest in Real Estate in Costa Rica

Many foreign individuals starting a business in Costa Rica or merely purchasing real estate for investment purposes decide to use a corporate entity as the owner of such. This decision is a very wise one, and it is what we highly recommend to our clients as the first choice to be followed.

Ownership through a corporation allows one to have flexibility and more predictability in areas ranging from estate planning (if share ownership is properly structured the investor can avoid his heirs a painful and lengthy long-distance probate procedure), tax management (as an example, rules on corporate expenses are more flexible than the ones on personal ones), and representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring local presence in the country).

The first question often asked by our clients is whether to use (or form) a Costa Rican corporate entity or use one already existing and controlled by such individuals abroad. Our advice is, in most cases, the use of a local entity. Although foreign corporate entities can own land and engage in business activities in the country, registration procedures (both at the Public Register and with government entities) as well as negotiation of contracts with private parties can get complicated, delayed and/or find obstacles when they are involved.

In any event, if a foreign entity will be used, note should be taken that we normally recommend registering the foreign entity in the Costa Rican Commercial Register as a branch or at least to register specific powers of attorney for such also in the Costa Rican Commercial Register. Both cases require a special and formal procedure that may take several weeks.

As mentioned before, in the great majority of cases, the use of a local corporate entity is preferred. Although Costa Rican commercial law contemplates many types of corporate forms, only two of them offer the investor the comfort of having structures similar to the limited liability companies to which he or she may be used to in their countries of origin.

Such corporate forms are the “Sociedad de Responsabilidad Limitada” and the “Sociedad Anónima”. In both cases, shareholders are only responsible for their participation on the company’s social capital and their own personal assets are fully protected and out of reach from any potential creditor the company may have.

The “Sociedad de Responsabilidad Limitada”, also referred to as “S.R.L.”, “Limitada” or “Ltda”, is a simpler form than the “Sociedad Anónima” and in most cases fills-up the blanks on its legal treatment from the much broader regulation of the “Sociedad Anónima”. S.R.L.’s are usually used only if any of their special features are especially appealing to the investor.

The special features of the S.R.L. are mainly the following:

1.Shares cannot be transferred to non-shareholders without the previous express consent of the other shareholders, who have a right of first refusal to purchase them.

2.These companies require, for their administration, no more than one individual (Manager), thus this is an especially appealing structure for cases in which the investor does not want to use and register (making public) the names of additional individuals to form part of what in the S.A. would be called a Board of Directors, as explained below.

The “Sociedad Anónima”, also referred to as “S.A.”, is the most widely used corporate structure in Costa Rica. It is pretty flexible and its legal treatment is extensive. In general terms, it can have any type of social capital (usually a low amount is used without any negative consequence) divided in as many shares as the investor desires (normally structured in a way in which they can be divided in as much shareholders that can be previewed, since such shares are, by law, not divisible).

The S.A. has many features, of which the most important are:

1.Since the positions of President, Secretary and Treasurer are legally mandatory and must be occupied by three different individuals, it must have a Board of Directors of at least three members, as well as one Comptroller, who must not hold any powers of attorney on behalf of the company.

2.Shares are represented by physical documents and more than one of them can be included in a certificate. They can be transferred to any non-shareholder without the approval of the other shareholders. Transfer is made through a combination of a transfer contract, the endorsement of share certificate(s) and an entry in the company’s Shareholders Registry Book.

3.Its By-Laws can be changed at any time, as well as any powers of attorney existing for the company, by means of a Shareholders Meeting, which can be held with the presence of all the shareholders or with individuals appointed by a proxy issued by them.

4.It is possible to establish special features for the protection of minorities and their voting rights.

5.Their legal representatives (holding powers of attorney to act on behalf of the company) are liable for any actions taken against the interest of the company and/or its shareholders.

6.They must have three corporate books (shareholders meetings, shareholders registry book and board of directors meeting book) and three accounting books. These books must be authorized by the local tax authorities and are a requirement for implementing any change in the company’s By-Laws or in its power of attorney structure since no shareholders meeting can be held without being recorded in the specific book authorized for such purposes.

Companies in Costa Rica must additionally register before the Tax Authorities. In the event the company is not involved in business activities in the country for the specific fiscal year (for example, when it is solely used for holding assets), formal tax registration is not required (only book authorization) although a fiscal year end declaration is always needed (though it will state that no economical activity existed during the period) in order to avoid the application of penalties.

The normal fiscal year for companies declaring taxes in Costa Rica goes from October 1 to September 30 of each year; filings can usually be made until the end of December. A different fiscal year can be authorized for companies that are fully owned or related to foreign entities that have a different term in their countries of registration.

It is important to conclude that the choice of corporate structure must ideally be made at the time the investment or business project is being created. This decision will have a major impact and specific consequences on the implementation of said project and if taken wisely, it will be one of the foundations for its success. By Henry Land. Land & Asociaties. The Costa Rica Guide.