Investing
Despite the negative things mentioned about Costa Rica, foreigners still choose to stay here and make their investments, believing that it remains to be one of the best retirement destinations in the region, by far. Through its ministries and financial institutions, the Costa Rican government remains to be pro-American, meaning that there will be no socialist leader advocating for the demise of the USA while nationalizing most corporations currently in private hands. This makes the Costa Rican business market favorable for most expats and investors.
It’s no wonder that Costa Rica has gained the nickname “Silicon Valley of Latin America” after companies like Acer, Microsoft, GE, Abbot Laboratories, and Intel Corporation decided to make huge investments here, both financially and physically, with the establishment of some of their production and distribution facilities set up here. We are currently seeing a transition from an economy dependent on agricultural goods to an economy that is service-orientated. Furthermore, the Costa Rican government has long aimed to attract hi-tech corporations through the promotion f its highly educated and computer-literate workforce.
Costa Rica is creating a competitive advantage for itself, and the world’s financial authorities are not too slow to notice this. It is one of the proponents of continental free trade and has every right to be, after ensuring that their local economic and political atmospheres are stable and consistent. These are just a few of the many reasons Costa Rica is an undoubtedly good place to make an investment in.
U.S. business magazine Fortune did a report ranking San José Latin America’s fifth best city in which to do business, and placed it within the 25 best cities in the world. According to the report, the points considered were the city’s ability to create opportunity for its residents, its business climate, and the satisfactory rate of the business needs of companies investing here.
There are many reasons why Costa Rica has such magnetism for qualified foreign investors, perhaps the most important being the enduring political stability. As you know, Costa Rica has had a strong, democratic government without interruption since the 1940s, as well as an excellent centralized banking system. In fact, The World Bank recently selected Costa Rica as the most stable country in Latin America. There are also no government ex-corporations or interference, unlike in many Latin American countries.
Many opportunities await foreigners who start new businesses previously nonexistent in Costa Rica. Investors in Costa Rica have equal rights and laws to protect them. Regulations for conducting business are the same for both local and foreign corporations; meaning both can fully own and control local businesses without any access limitations or restrictions. Also, Costa Rica is easily accessible from all parts of the world by land, sea, or air.
Although there may be a lot of competition, tourism is now the leading industry in Costa Rica. Numerous opportunities exist in this field. With so much public attention, the country offers a gray investment environment for real estate. Costa Rica has recently caught many eyes as a hot tourist spot but also as a great place to purchase real estate. With so much public attention and a vast number of tourists visiting Costa Rica every year, the country offers a great investment environment for real estate. Below are seven great reasons to invest in Costa Rica Real Estate.
Additional reasons for investing in Costa Rica are: asset protection (creditors, judgments, liens, bankruptcy and divorce), privacy from individuals and governments and fewer taxes (income tax, inheritance tax, estate taxes and probate fees). Also, Costa Rica presently boasts one of the five hottest real estate markets in the world.
WHY INVEST IN COSTA RICA?
- While the rest of the world is going through a major economic downturn, things are looking good here. The IMF recently gave Costa Rica’s financial institutions and fiscal policies a passing grade.
. - The government has reserves, they did not make any investments on Wall Street and sub-prime mortgages do not exist here.
. - Costa Rica is still affordable for your retirement dreams. Property taxes, hired help, dining out, fruits and vegetables and above all high quality medical are still much cheaper than in the United States.
We will feel the trickle-down effect from what’s happening in the U.S. but we will fare well. For example, our tourism doesn’t depend exclusively on the U.S. Market. A large number of European visitors come here every year and Chinese tourists are now interested in Costa Rica.
Stable Government:
The government is one of the people and one that very much sees the value of tourism. The stable government ensures that the money you put into your property is safe. Political turmoil will never be a reason for illiquidity in your Costa Rican investment. There are many other great locations to invest in, but stability should play a huge factor in anyone’s investment decisions.
Stable Currency:.
The Costa Rican colon, also denoted as CRC is the official currency of Costa Rica. Colones come in notes of 1,000 up to 20,000.
Approximately 90% of the places of business in the country accept the US Dollar.
Tax Incentives:
As mentioned earlier, the Costa Rican government has created one of the most attractive investment environments in Latin America.
Capital Gains Tax= 0% in Costa Rica. The capital gains taxes are exempt for a business if the money is derived from an activity that is not the normal course of business for the company (This exemption is established through the use of SA, or Sociedad Anonima).
Property Taxes in Costa Rica = .25%. This rate is significantly lower than most places in the world. As a result people are buying in Costa Rica which increases demand and ultimately increases value. There are not many places where you can buy a piece of property that has incredible appreciation potential with such low holding costs.
Corporate Tax: The Sociedad Anonima (S.A.)
These forms of corporate structures allow owners of property to keep their names away from the corporations they own (literally translates as “anonymous society”). When a property owner purchases property through these S.A.’s they use a shareholder’s loan to fund the purchase. Rental income generated is taken out of the corporation as dividend income and deducted against the initial investment and thus no taxes are paid.
Income Tax: Only income generated in Costa Rica is subject to income tax
Costa Rica offers large amounts of income to be deductible and free from any tax.
**all tax information should be verified by independent tax professionals **
Proximity to Major U.S. Cities:
When investigating vacation destinations and environments for second homes or investment property, it is important to factor travel times to the destination. Costa Rica’s proximity to major US Cities gives even more reason why investors are buying property in Costa Rica. Great tourist destinations need to be close and easily accessible.
Major US Carriers offer direct flights to and from Costa Rica from the following international airports (3-5 hour flight times) -Miami -Houston -Atlanta -Dallas -Chicago -New York -Los Angeles -Toronto
Healthy Local Economy:
For baby boomers and entrepreneurs, spiraling costs of living abroad, oppressive taxes and government regulation in the US have placed Costa Rica high atop the list of places to retire without sacrificing standard of living. This is what savvy investors are looking for!
No Ownership Restrictions:
Foreign Ownership is promoted in the country of Costa Rica. Titled, fee simple properties are all registered in the National Registry of Costa Rica properly protecting your ownership rights.
Excellent Lending market:
Prior to 2006, there was no market for lending in Costa Rica and investors bought and sold property on a cash basis. Now, financing at reasonable rates is now an available option. This addition to the real estate industry has made it possible for many more investors to buy property in Costa Rica and will only increase the demand over time.
As you can see there are many great reasons to invest in Costa Rica. Many people believe that it is too late to make any money. This is not the case! The time is now to invest in this beautiful country and incredible vacation spot.
Be sure to check out Costa Rica’s Gap Investors for more investment ideas
Diana Wilson
