Costa Rica Expat Tours

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Why Attend the Costa Rica Southern Zone Expat Forum?

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Costa Rica Southern Zone Expat Forum

10 Reasons to Attend the Costa Rica Southern Zone Expat Forum…

As you might have heard, Coldwell Banker is hosting a Costa Rica Southern Zone Expat Forum in October (see more details below). The forum will be all about opening the minds of the participants to the high quality of expat life offered in Perez Zeledon.

To help fully convince you of your need to attend, here are 10 solid reasons why YOU should be at the Costa Rica Southern Zone Expat Forum…

  1. Because you will learn that Perez Zeledon is the up and coming retirement mecca of Central America. You might have heard about Boquete in Panama from International Living as being the new retirement haven? Well, Perez Zeledon offers much more, including a vibrant and growing city, the most breathtakingly beautiful mountains of Costa Rica, and the ability to live in a cool elevated mountain micro-climate and still be less than an hour from the gorgeous Costa Ballena coastline.
  2. You will learn about the amazing things happening in San Isidro de El General, the key city of Perez Zeledon, and the gateway to Costa Rica’s still pristine southern zone. You’ll learn about the new international hub airport that’s being planned for the city. You’ll learn that a Four Seasons resort, one of the nicest in all of Central American, is located 30 minutes from downtown. Okay, I’m not giving any more away. You’ll just have to show up and learn about a lot of stuff you just didn’t know about this place.
  3. You might notice it on the drive into town, but Perez Zeledon offers some of the most scenic mountain vistas of all of Costa Rica. After all, the city of San Isidro is flanked on one side by the towering Talamancas, the highest mountains of Cost Rica, and on the other by the coastal range we call the Fila Costeña. I’ve lived in Costa Rica for going on two decades and I know the entire country pretty darn well. I know of no more beautiful a place than Perez Zeldeon.
  4. Some expats want to be surrounded by other English speaking folks that look and talk like them. Those are the ones that often opt for touristy locales like Tamarindo, Jaco, Manuel Antonio, or even Dominical. Others want the full cultural immersion experience. Well, the latter is what you get in Perez Zeledon. The city of San Isidro has a population of around 50,000 and the entire canton of Perez Zeledon, over 150,000. This is middle class tico existence at its best folks, and we gringos aren’t going to change that anytime soon.
  5. You’ll learn that San Isidro de El General is home to great health care, perhaps as good as it comes outside of the gran metropolitan area of San Jose. We have a regional hospital, many private clinics, resident specialists of all kinds, and great dental care to boot.
  6. If you’re on a fixed income, Perez Zeledon is a great place to live and not break the bank. If you’ve been living in Costa Rica already for a while, especially in one of those touristy locales, again, like Tamarindo, Jaco, Manuel Antonio, or even Dominical, you’ve noticed that there ain’t nothing cheap about it! In fact, prices can be as high or higher than back in the States. Well, Perez Zeledon is different. This is not a tourist locale and you can find values of all kinds, like at the weekly farmer’s market that’s the largest in the region.
  7. You’ll find out that there’s simply nowhere in Costa Rica that offers the ability to live in rugged mountains in the shade of the highest peak in the county, Cerro Chirripo, and still be only an hour or less from the Costa Ballena coastline. And, oh, what a gorgeous coastline that is. I call it the “Big Sur” of Costa Rica!
  8. You’ll find out that downtown San Isidro de El General is like one big shopping mall. You can find anything you need or want and great deals to boot. The second-hand clothing stores around town are amazing. It’s probably because San Isidro de El General is close enough to the Panama border to almost be considered a “border town,” but without all the ugliness that’s usually associated with those types of towns.
  9. You’ll find out that Perez Zeledon does indeed have a touristic draw, especially with Chirripo trekkers. But you’ll learn about many other naturalist areas of interest due to its innumerable rivers, waterfalls and nature reserves.
  10. You’ll find out that surprisingly, as rugged as those verdant mountains are, those charming little mountain pueblos that dot the hills and populate the canton actually have great infrastructure, with good roads, the best quality of air and water you’ll find anywhere and all the services that make mountain living in Perez Zeledon so darn cool and comfortable.
Ok enough with the spoilers, just come and see for yourselves. And, since I am in charge of the whole affair, I’ll make sure you have fun!

We’re contemplating adding a morning bus tour, sort of a mountain loop that I often take my expat tour customers on, for day two. It would terminate at the weekly Thursday Farmer’s Market, that always tends to blow the minds of my expat tour customers, as it is an under roof football field-sized offering of everything locally grown.

What do you think about that idea?

The Costa Rica Southern Zone Expat Forum will be a one-day event for fellow expats living in other areas, or folks who just happen to be visiting on the event’s date, who want to know more about the high quality of expat life offered in Perez Zeledon. We’ll have some influential guest speakers and a whole lot of fun. The forum will be held at the Simple Market, which is one of the new hip eateries providing a cosmopolitan flair to San Isidro city life…

Don’t dicker though, space is limited!

Click on the image below to learn more, or just call me (Scott) at 8559-2686.

Costa Rica Southern Zone Expat Forum

Costa Rica Buy and Build versus Buy Built Dilemma

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Costa Rica Buy and Build versus Buy Built

Many of my customers aren’t sure whether they want to buy land and build, or just buy a finished house, turn-key and ready to move in, with suitcases in hand. Others are completely and adamantly clear on the issue.

This post is written for the former types…

So, what is the better choice?

Unfortunately, there’s no clear answer to this question. It depends entirely on your objectives and capabilities.

So, you ask, why would anyone want to undergo the hassle of buying land and building in a foreign country, instead of just finding a quality home, already built, that passes inspection?

Well, there are many reasons…

Here are a few that come to mind…

There’s the reason of pure investment return. It is true that you can, or it is possible, to buy a lot and build and end up with something worth more, considerably more, than you put into it. For instance, you could buy an acre of land at the beach, with an ocean view, for say, $125,000. You could build a 2 bedroom, 1,500 square foot, home on it, for say 120 per square foot, or $180,000. Add a pool for another $20,000 and be “all-in” at $325,000 and at the end of the day have something you could potentially sell for $350,000.

“On paper” you just increased your net worth by $25,000 and have an unrealized 8% return on your investment.

Notice, I said that it’s possible to accomplish the above. It’s also possible to screw up in a myriad of ways and end up paying more to build than the home will be worth once built. The key to success in this regard? Well, not overpaying for the land, of course. Also hiring a builder that keeps costs at budget, or below. And, perhaps most importantly, building something that will have a high re-sell value.

So, again it’s possible, but there are a lot of variables (or risk factors) involved. And the above calculations do not put a cost on the time, effort and humiliation you will probably undergo in the process!

Some people have an idea of what they want and just can’t find it already built. So, they have to hire an architect, draw up the plans, and build to their own specifications. If you are in that category of “picky” buyer, then by all means take the plunge and build. However, if you want to also have success with regard to point #1 above, just make sure that your idea is something other people would also find attractive, if you know what I mean.

Then you have that person who finds the “perfect” piece of land and just has to build on it. I find it a bit difficult that the “perfect” piece of land actually exists, but I have had buyers who just fell in love with a lot, usually because of the view. There’s an awful lot of land out there for sell, listed and unlisted, so be careful about regarding any particular piece you might stumble upon as being “perfect.”

Also, make sure you can actually get a construction permit to build on your “perfect” piece!

Oh, buy the way, don’t be one of those gringos who tries to do everything the short-cut way, for instance, building a house without a permit. Yes it can be done and is still done (although less often than in the good ole days), but that doesn’t mean YOU should do it!

Some buyers just relish the challenge of building in Costa Rica. Now, those are rare birds, but if you are an experienced builder back home and believe you can handle the heat of building in a foreign country, then by all means have at it.

Of course, you can also have a buyer who’s a combination of some, or all, of the above. If that’s you then I would say you are the best possible candidate to build successfully in Costa Rica.

I’m not going to go into the ins and outs of building, although here’s an article by Ivo Henfling that does that to some extent. You will probably need to hire a general contractor type, who speaks English, to handle things for you. That is, unless you can communicate well enough with Costa Rica contractors who don’t speak English AND you will be present in Costa Rica a good deal of the time during which the building will take place. It can take anywhere from 8 months to a year to build. It’s usually better to try to accomplish a good chunk of that, especially before being under roof, during the dry, or summer, season (December through April). Otherwise, workdays will be limited and the timeline can get drawn-out.

Building a home in a foreign country can be an exciting and rewarding undertaking. It can also be a nightmare that you’ll spend your first years in Costa Rica recovering from, if you ever do fully recover! In my opinion, it’s smart to weigh your objectives against the potential risks very carefully and proceed intelligently.

That’s not to say that building here is some monumentally difficult task. Geez, countless “gringos” have done it quite successfully.

And you can too!

Before you decide regarding the Costa Rica buy and build versus buy built dilemma, please make damn sure you know exactly what you’re getting yourself into.

The Number One Costa Rica Investing Mistake

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The Number One Costa Rica Investing Mistake

I was having lunch with some clients the other day and the question came up, “what’s the number one Costa Rica investing mistake?”

I’ll have to admit the question threw me back for a moment or two. After all there are so many of them, like…

  • paying too much…
  • not doing your due diligence…
  • getting ripped off, or lied to, by lawyers, sellers, realtors (yes, those guys), builders, etc., etc…
  • not having adequate or legal water…
  • buying or building something that you’ll never be able to resell in 100 years (now that’s a big one)…
  • I could go on…

However, I really don’t believe any of the above would constitute the Number One Costa Rica investing mistake.

So, I guess you want to know what it is…

wait a minute…drum roll….

Buying in the wrong damn location!

Yep, in my humble opinion that’s the one. And if you couple that one with any of the above, especially the poor re-sell value one, boy you’ve got a real potential disaster on your hands.

How do you avoid this number one Costa Rica investing mistake?

Well, some attempt to avoid it by renting for a time. However, there are some issues with that idea (and I’ll probably soon do a post on that topic alone). For starters, where will you rent and how do you know that THAT place is truly where you want to buy? Also, which direction is the market moving in? If the answer is up, you might end up paying a lot more by waiting around. Finally, how much time? I’ve seen a lot of folks get mired in “paralysis of analysis” by adopting the rent first, buy later stance.

I think the better option is to make one, or maybe two (or even several), reconnaissance trips and scout out various areas that tend to tick your boxes. Stay in each area a week or so, as opposed to renting there for 3 to 6 months (which is really a bit of overkill). You can get a good sense of whether an area is for you, or not, in a week or two, I think. That is, if you really take the time to get out an explore that area and immerse yourself with its culture a bit.

I might be tooting my own horn, but I really think a good framework to run each potential location through is my 4 C’s of Costa Rica expat living one. You know, the framework with the 4 criteria of Climate, Convenience, Culture, and Context. The first three are easy enough to get a handle on, but it’s that last one that throws folks and that’s probably the most important one. It’s also the one that really requires more time in the area to come to grips with.

The bottom line, or the context of the Context, is this…does this place really reflect the type of life that I want to live in Costa Rica…for the long-term?

If you’re an old fogie expat like me, you probably don’t want (or have time for) too many more mistakes in this regard.

If you end up buying somewhere that seems nice enough to begin with, but ends up being a den of complete misery after a year or more, well, then you’ve kind of f’ed up, haven’t you? Oh I can just sell and move on, you might be thinking. Think again, the average time on the market in our area is about 2 years! And for some properties, it’s forever!!

You might be able to “sell and move on” only after taking a serious investment bath, under a faultily-wired suicide shower, if you know what I mean.

I believe the location decision is indeed a crucial one when you’re considering moving your entire life to a foreign country. Costa Rica is very diverse, geographically, demographically and in many other ways. You sort of have a whole smorgasbord of potential at your behest.

You can can be a beach bum, living in a sultry hot and humid touristy locale. You can be a cosmopolitan city dweller, sipping lates while writing your magnum opus. You can be a highlander, living in some verdant towering cordillera and perfecting your yodel. You can be Indian Jones, complete with a floppy fedora, machete and severe case of jungle rot.

Catch my drift?

So, the moral of this story is take your time when it comes to the location issue. Don’t rush into anything regardless of what your “friend” who’s been to Costa Rica one or two times might tell you. In fact, be careful even listening too much to the local expats in particular areas you want to check out. I mean, yes do talk with them, but take what they tell you with a grain of salt. Some of them might just be trying to rationalize their having committed the number one Costa Rica investing mistake themselves!

Granted, the above advice is for folks intent on buying. Others are just fine with renting for years before making a decision to buy, or perhaps never buying at all. There’s certainly something to be said for that mindset of remaining footloose and fancy free. Owning a property in a particular locale does tend to tie you down there. And even when you’re able to break away, you’ll be constantly worrying about that little piece of paradise with your name on the title.

Bottom line is to weigh these decisions carefully before you actually sign…on the bottom line…

Perez Zeledon – Costa Rica Retirement Mecca?

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Costa Rica retirement mecca

On my morning walk today, through my little “hood” of Quebradas, Perez Zeledon, acknowledging a gorgeous good mountain morning to other expat walkers living in the area, something dawned upon me…

Everybody around here, at least the expats, are sort of old fogies…myself included!

Hey, I’ll be hitting 60 in a couple years. Granted, 60 is the new 40, but I have to tell you, my get up and go seems to have got up and went on many mornings these days.

I got to thinking about the concentration of older folks here in Quebradas and you know what, it makes perfectly good sense. This place really is (or is becoming) a Costa Rica retirement mecca.

By this place I mean the whole of Perez Zeledon, of which Quebradas is only one small part of, albeit a very popular part!

Now, granted, Perez Zeledon is not quite as “on the radar screen” as other more touristic locations that have attracted the lion’s share of expats to Costa Rica. And of course there’s San Jose and the entire Central Valley, which surely has the highest concentrations of them.

Nevertheless, the point of this post is that there’s no reason that Perez shouldn’t be a (or perhaps the) Costa Rica retirement mecca in the near future. And by the looks of things here in Quebradas, it is in fact slowly becoming just that.

Now why is that?

Well, there are many reasons. I’ll express them below in terms of my usual 4 C’s of Costa Rica expat living (climate, convenience, culture and context)…

First, there’s the climate. While the Valle General, where the city of San Isidro de El General is located, can get pretty hot during the day (however, not as hot as the beach, mind you), all you have to do to beat the heat is drive up into the towering and verdant Talamancas for a few minutes. There you’ll arrive at one of the many mountain pueblos, like Quebradas, that have high enough elevations to experience near perfect weather via one of Costa Rica’s famous “micro-climates.”

You see in Costa Rica the weather is fairly consistent, at least temperature-wise, all year long. However, temperature can vary greatly by altitude, if not by season, and here in Perez we’ve got plenty of altitude. The entire valley is overlooked by Costa Rica’s highest mountain, Chirripo, that stands at some 12,536 feet.

Next there’s the convenience factor. San Isidro de El General is the second largest city outside of the Gran Area Metropolitana of the Central Valley. It is also perhaps Costa Rica’s fastest growing one these days. The medical care in San Isidro is varied and quite good. You have the canton’s regional public hospital located here, as well as numerous private clinics and specialists of all types. You’ll also find a surprising number of dental-care options.

We have shopping galore, new eateries opening up all the time, a mall with a cinema, and, wouldn’t you know it, a gargantuan Walmart currently under construction.

We also have an airport that’s slated to undergo a major expansion and become a domestic hub for Costa Rica flights, as well as possibly offering limited international service.

The culture of Perez is also one of the draws that makes it a potential Costa Rica retirement mecca. Unlike the beach destinations, where tourism is rampant, as well as all the good and bad stuff that goes along with that, the mountain culture of Perez is more authentically tico.

Perez is a solid middle class tico canton. Many of the ticos here are farmers, landowners, or business owners. They are really salt of the earth people. Their’s is the predominant culture and I don’t think the steady influx of old fogie gringos, like me, will be changing that any time soon.

On the contrary, the high tourist traffic beach destinations tend to overtake the local culture and become what I often call a “bubble culture” that’s just not what I choose to want to live within. Hey, I grew up in Myrtle Beach, South Carolina, if you know what I mean!

Granted, if you see the context of your Costa Rica expat existence as a beach bum, or surfer dude, then by all means opt for the playas, where you can grab your board and take off for the waves and then party the night away. For us old fogie’s, however, the tranquil mountain culture seems to be more our style.

And we can visit the beach any time we want. In Perez, it’s less than an hour away!

Oh yea, I almost forgot that’s another thing that makes this place so great. You can have your cake and eat it too in Perez, meaning mountains AND beaches!

If you want to learn more about this new Costa Rica retirement mecca, I’m hosting a Costa Rica Southern Zone Expat Seminar in October.

In short, it will be a one-day seminar for fellow expats living in other areas, or folks who just happen to be visiting on the seminar date, who want to know more about the high quality of expat life offered in Perez Zeledon. We’ll have some influential guest speakers and a whole lot of fun. The seminar will be held at the Simple Market, which is one of the new hip eateries providing a cosmopolitan flair to San Isidro city life…

Don’t dicker though, space is limited!

Click on the image below to learn more, or just call me (Scott) at 8559-2686.

Costa Rica retirement mecca

New! – Conventional Mortgages for Costa Rica Expats

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Mortgages for Costa Rica Expats

The usual answer for the question, “can I get bank financing in Costa Rica?,” has been a resounding no.

However, that might be changing!

We had the good folks from ScotiaBank Costa Rica come and give our agency a presentation recently on the topic of their new program for granting mortgages for Costa Rica expats (non-residents).

The ability to actually get a 20 or 30 year conventional mortgage as a non-resident would be a welcome change. The Costa Rican real estate market has been a predominantly cash market, with the only real opportunity for financing coming from the sellers of properties themselves. Usually such seller-financing is available, if at all, only for a short term of 3 to 5 years, at simple interest rates of from 5 to 8%. The terms are completely up to the negotiation between buyer and seller.

From what I was hearing there are a few “catches” with regard to ScotiaBank’s new mortgages for Costa Rica expats program…

These loans are only available to non-residents that meet certain criteria. Probably of most importance is that a non-resident with less than 6 months in Costa Rica can only apply for a mortgage for a vacation home and not a principle residence.

The initial interest rate would be fixed for three years at 8.5%. Afterwards, it would be a floating rate pegged to the New York prime, plus 2.5%. With fixed rate mortgages currently under 5% in the U.S., this dollar rate of 8.5% is quite high and not a fixed rate. Could it go lower than 8.5% in the future? The answer I got was yes, but of course it could also go higher, much higher. In fact, there is no ceiling as to how far it could go!

The terms for these mortgages range from 20 to 30 years, depending on factors like time in (and ties with) country and credit worthiness. You would have to submit a U.S. credit report if no credit had ever been established in Costa Rica. And for practically all non-residents, that would be the case.

The loans can be prepaid without penalty, but only after two years of amortization. Prepaying a loan in the first two years would incur a 5% penalty.

There is an income requirement of at least $5,000 per month. It also matters what percentage of monthly income is for payment of any currently existing mortgages or debts, but I was not completely clear on those percentages. You would have to prove income with tax returns, social security receipts, and the like.

Loan-to-value ratios range from 60 to 80%, depending on a number of factors. The properties will have to be professionally appraised and the “value” in the LTV ratio will be the appraised value. I can see this being a problem in many deals, as often the purchase price and the appraised value will probably not coincide.

Also, the bank will not lend for certain types of constructions, for example stick-built homes. Most homes in Costa Rica are concrete block, or concrete pre-fab, but these days newer and lighter methods of construction are being used and homes are being built in our area with Chilean pine, which is apparently completely insect resistant. However, a Chilean pine-built home would apparently not qualify for a loan. That sucks because the pine homes I have seen have all been spectacular.

Loans would be extended for construction, as well as already built homes.

I asked the question of whether any mortgages for Costa Rica expats had been extended so far, to which I received the quick retort, “of course they have.” However, none of us Coldwell agents have had any experience with this so far. I will be interested in seeing how accommodating this bank will be to our customers. I have found Costa Rica banks to be overwhelmingly bureaucratic and I would imagine the process of getting a non-resident mortgage will be challenging, to say the least.

The advent of conventional mortgages for Costa Rica expats could have a dramatic impact on the Costa Rican real estate market. I am sure if one bank has success with this others will quickly follow suit. One of the “brakes” on this market has long been the fact that such mortgages weren’t available. It is only a small percentage of wannabe expats that have the kind of cash laying around to buy a property in Costa Rica for $300 to $500K, or even more!

I am of course excited about this new development, but will be reporting in the future as to the actual practice of granting these loans and whether or not it indeed is practical enough to make a difference for the investing appetite of the average North American.

Do I Really Need a Costa Rica Corporation?

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Do I Really Need a Costa Rica Corporation?

I get this question a lot. And truth be told, virtually all real estate transactions in Costa Rica by foreigners (certainly all that I’ve been involved with) have been conducted with a Costa Rica corporation interposed. That is, the buyers are invariably recommended to use, and invariably do use, a corporation, or limited liability company, as opposed to making the purchase in their individual names.

For starters, there are two basic kinds of entities most often used for real estate purposes. The first is the Sociedad Anonima, or S.A. It is most analogous to a C-Corporation in the U.S. The S.A. is the most formal of the two entities and requires officers and a board of directors, annual meetings, etc. The other type of entity, more often used, is the Sociedad Responsibilidad Limitada, or S.R.L. It is most analogous to the Limited Liability Company, or L.L.C., in the U.S. It is governed by a manager or managers and the process for maintaining one is less formal than the S.A. Both of these entities afford liability protection for the owners, so there’s not a whole lot of difference in that respect. Attorneys will most often recommend the S.R.L. simply because it’s easier for foreign owners to maintain.

So, why do attorneys recommend the use of a Costa Rica corporation for purchasing Costa Rica real estate?

Reason number 1, most often cited, is the limitation of liability, or liability protection for the owners. That means that if there is some liability inducing incident, such as someone getting hurt on your property, only the assets in the name of the entity can be reached. The owners’ personal assets cannot. That is basically the same reason such entities are used for business purposes in the U.S.

But there are others…

One of the first things a new owner of Costa Rica real estate will want to do is to have all utilities transferred over from the former owner. However, that will be very difficult for a foreigner to do with just a passport and no residency in Costa Rica. The Costa Rica corporation, however, can have those utilities transferred into its name and the owner can accomplish this with a simple document called a personaría juridica that shows the owner is acting on behalf of the S.R.L. The same goes with many other forms of transacting business in Costa Rica without residency. For instance, opening a bank account. Now, it is possible to open a bank account with a Costa Rican bank simply using a passport, but such accounts are severely limited. It is much better to open one in the name of your S.R.L., at least until you obtain your Costa Rica residency.

There are other, more esoteric, reasons that a Costa Rica corporation can be beneficial. For instance, if you die owning Costa Rican property it will be much easier for your survivors to carry on with management and even disposition of the property if you own it with them in an S.R.L., as opposed to your individual name. Otherwise, they will only be able to take such control after going through a lengthy and frustrating probate process in Costa Rica.

For owners who are trying to transact business in Costa Rica while outside the country, the Costa Rica corporation will make it much easier. By authorization of a simple proxy letter, the entity can grant a power of attorney to someone in Costa Rica. The proxy letter can be signed by the owners of the entity while outside the country and such signatures do not have to be formalized for legal use in Costa Rica. That is not true for the granting of a power of attorney from person to person, which would either have to be done while present in the country before a Costa Rican notary public, or a signature out of country would need to be executed at the nearest Costa Rica embassy in the case of a general power, or with the use of an apostille in the case of a special power.

If you are conducting a business with your corporation, as opposed to simply using it as a holding company, or inactive corporation, you might find there are tax benefits. Just like in the U.S., more things can be deemed deductible for business purposes, as opposed to being non-deductible personal expenses, if those expenses are undertaken in the name of the entity.

There are some drawbacks to using a Costa Rica corporation for purchasing Costa Rica real estate. One is that a corporation tax has to be paid each year. However, for most inactive real estate holding companies, that tax is very minimal at only around $120 per year.

Another complication that was enacted into law a couple years ago, but only implemented as of March 1, 2019, is the registration of shareholders (or managers). Each year the president of the S.A., or manager of the S.R.L., must register all owners of the entity, as well as its capital stock. This is further complicated by the fact that only residents of Costa Rica can accomplish the registration process. Otherwise, you will have to grant a power of attorney to a Costa Rican citizen, or resident, to do it for you. There are fairly substantial fines for not doing this registration.

Back in the good ole days parties to real estate transactions would try to reduce closing costs by doing share transfers. The idea being that if the shares of the entity owning the real estate were transferred from seller to buyer, rather than transferring the title itself, you could avoid the transfer tax and other typical closing costs. Also, since the property was probably declared for property tax purposes at a very low level, the new owner could maintain that low declaration and continue to pay virtually zero, or very minimal, real estate property taxes (pegged at a quarter of 1% of the declared value). Those loopholes have been slammed shut and don’t let anyone tell you differently! Any attempt to do the above would be considered tax fraud under current law and can get you into a heap of trouble.

Attorneys will almost always advise foreigners to use a Costa Rica corporation for purchasing real estate. The typical S.A. or S.R.L. can be set up in a matter of days and costs range from $500 to $700.

Important Disclosure: While I was, once upon a time, an attorney in the U.S., I am NOT one in Costa Rica (only a lowly real estate agent). So, please take the above as general guidance with a grain of salt and seek competent legal counsel for all things legally related (such as using and setting up entities) in Costa Rica.

Update: Once upon a time consumers had one choice when purchasing services like water, electricity, telephone and internet. However, nowadays some of that has been opened up to competition. Probably as a result, it is now much easier to open up accounts for utility services, telephone and internet in your personal name with just a passport. Corporations are really no longer necessary for this purpose.

New Costa Rica Capital Gains Tax

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Well, it’s official now, or almost. As of July 1, 2019, there will be a new Costa Rica capital gains tax of 15%.

Many, especially realtors, are aghast at the nerve of the Costa Rican government for doing such a thing. The real problem the government faces, however, is a burgeoning budget deficit. At least the current administration of Carlos Alvarado, unlike the do-nothings of the recent past, is doing something about it.

Capital gains taxes have never been very popular with the upper echelons of whatever society that decides to enact them. After all, the rational goes, the ordinary income that bought the investments, the sale of which generates the tax, has already been taxed! At least, that is the general argument from the right. From the left, the idea for the tax is a way to “soak the rich.”

In the U.S. the capital gains tax has long been a hot-button source of vehement contention between the left and right. Any attempt to raise the tax is decried by the right as socialistic and any to lower it by the left as catering to the rich. The tax in the U.S. is a much more complicated mess than what is being proposed in Costa Rica, with vast differences in the rates on long versus short-term gains and a myriad of loopholes. It is one of the areas most cited in the progressive outcry against “crony capitalism.”

So, who will be most affected by the new Costa Rica capital gains tax?

For starters, a personal residence is exempted from the tax. Now, hold on you loop-hole-loving capitalists…that doesn’t mean your second and only home in Costa Rica will qualify as a “residence.” To be honest, the particulars of what constitutes a residence haven’t been completely ironed out, but I would suspect that the Costa Rican government will be wise enough to close any loopholes that would allow second homes owned by North Americans in Costa Rica to escape the tax.

The average middle-class Costa Rican doesn’t own anything other than a residence, so the tax really isn’t aimed at them. It is aimed at the upper classes who own investment properties. And it is especially aimed at foreign investment in Costa Rican assets, the types of investments made with foreign-sourced income that never received any form of taxation in Costa Rica to begin with, thereby throwing water on the double-tax argument.

As I stated from the outset, the tax will be 15% of the gain from the sale of a capital asset. Capital asset certainly encompasses either real estate, or the shares of a Costa Rican company owning real estate. It will be important to be able to document clearly the cost basis in the asset being sold. Many owners of properties in Costa Rica have for years declared a far lower value for property tax purposes than the property in reality has. Those folks are going to have a hard time boosting their cost basis in order to lower the tax, which is 15% of the difference between that cost basis and the realized sale price.

The government has provided a one-time “exemption” for properties that were owned prior to the enactment of the tax, or prior to July 1, 2019. For those, the owners can opt to pay a 2.25% tax on the gross sales price, as opposed to 15% on the gain. For instance, if you sold a property for $200,000 and had a $150,000 cost basis, it would generate a $7,500 tax on the $50,000 gain (at the 15% rate). However, if you made the one-time election, you would only pay 2.25% on the $200,000, or $4,500.

The new Costa Rica capital gains tax must paid 15 days after the closing of a sale.

Will this tax put a damper on North American real estate investment in Costa Rica? I don’t think so. In fact, Costa Rica is simply joining the ranks of many other Latin American countries that have already implemented such a tax (like Colombia, Ecuador, Panama, etc.).

I believe that the typical life-style-related reasons North Americans often make such investments will overcome the future sting of having to one day pay the tax. However, what it might in fact do is put a damper on the real estate flipping that often goes on in Costa Rica’s hottest real estate markets.

Costa Rica, like any other sovereign nation, has the right and indeed the obligation to take care of its internal affairs, even if doing so might affect outsiders negatively. Even though I’m a realtor down here, I applaud the move by Costa Rica to get its affairs in order. It will remain to be seen, however, if the implementation and, more importantly, enforcement of this new Costa Rica capital gains tax will actually make a difference for the good of the country.

Costa Rica Expat Creativity

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I never was much of a creative person until I moved to Costa Rica. Before I came I’d been a tax lawyer and then owner of a small M&A advisory firm. Not very creative stuff, unless reducing corporate tax bills strikes you as being a creative effort. I guess it can be. However, get too creative with that stuff and you might wind up with more creative time than you ever bargained for, behind bars!

What is creativity anyway?

One way, maybe the most common way, to answer that is that creativity is making something from nothing. But in reality that rarely ever happens. Usually there is some sort of something there and the creative person comes onto the scene and adds to or changes it, making what was seem entirely fresh and new, original even.

Take Andy Warhol’s Campbell’s Soup Can paintings, for instance. Definitely not original in the sense of something from nothing, but nevertheless a very famous series of creative endeavors indeed.

Shortly after arrival to Costa Rica, something sparked the creative impulse in me like living in the U.S. never did. In my case, the creativity came in the form of writing.

I started blogging back in 2005. I’d founded a tour outfitting company and kept most of my writing geared towards Costa Rica tourism-related topics. And then gradually I began writing about other stuff as well, stuff that just hit me early in the morning when I would usually sit down to write.

One of my first blogs was entitled 365 Reasons I Love Costa Rica, which later morphed into, simply, Costa Rica Guy. Many of the older posts appearing in this blog are from those initial efforts. The idea for 365 was to write a different reason every day for a year. But as I wrote the reasons began to gain more and more distance from Costa Rica as the seminal topic. I delved into philosophical stuff, political stuff, and environmental stuff, among other more trivial topics, always attempting to have a Cost Rica tie-in, often very loosely woven.

Later on I started a much more philosophical blog entitled Revolutionary Misfit. I have recently backed off writing in that one because the motivation to do so these days always seems related to politics. And, well, I’d rather spare myself. Nevertheless, there are years of posts in that blog that tell the story of how I came to think the way I currently do.

I believe that Costa Rica, or the expat life in Cost Rica, was, in large part, my muse. I’ve written before about how Costa Rica shifted my paradigm from being quite conservative (politically and otherwise) ideologically to, well, sort of a wild-eyed lefty, or progressive as I like to call myself these days. And that shift would often be evident in my almost daily writing.

About the same time that I launched the Misfit blog, I also began to write eBooks. I wrote a number of them, all still available on Amazon. None have reached any “best seller” list, to put it mildly. However, I’m proud of every word written. Getting all that out of the brain and into cyberspace can be a heart-wrenching, soul-revealing and vulnerability-enhancing endeavor.

Right now I have a memoir of my Costa Rica expat life ready to be edited and perhaps one day published. I’m in no hurry, however, and continue to mull over it and massage the content from time to time, maybe even add to it as my Costa Rica story continues to unfold.

My latest creative effort is a podcast. It’s called the World Changers Expat Podcast. The idea is to interview expats, not just in Costa Rica, but around the globe, who are using their creative impulses to make a difference in the world. I’ve so far recorded three episodes. The goal is one per month.

I’ve seen Costa Rica expat creativity displayed in all sorts of ways. Some do it through an art form (writing, painting, sculpting, music, etc.), arts and crafts, or some type of well-being therapy. Others do it by starting organizations geared towards helping people, animals, or the planet. A lady I recently sold a property to is getting creative via her Tibetan bowl therapy. All you have to do is go to the weekly market, or feria, in Tinamastes and you’ll see a whole bunch of Costa Rica expat creativity unleashed.

Of course, many of our resident expats were creative before ever coming to live in Costa Rica. Others, I’d venture to say, not so much. My Tibetan bowl friend was herself a real estate agent before Costa Rica. Now, there are some ways to “creatively” do real estate, but I’ve found that the pursuit of money and the material it buys, is a sure way to dampen the creative impulse. In fact, I was far more creative before I ever got involved in real estate and I’m now trying to find my way back to the level of creativity I was enjoying in Costa Rica before I became a realtor, despite my ongoing need to make a buck here and there.

I believe we humans are at our core a creative species. Perhaps the only species on earth whose creativity doesn’t merely flow from instinct, but from some deeper region of the brain and the consciousness it either produces, or acts as a kind a radio receiver, allowing us to tune in to a universal consciousness, or perhaps both.

The bottom line is that if you’re contemplating becoming a Costa Rica expat get ready to be inspired creatively. There’s something about this place that just does that. I don’t know if it’s the overwhelming natural beauty, or just the impact (perhaps “shock” is a better word) from living somewhere as strange to the senses (including sense of logic) as Costa Rica can often be.

Probably it’s a little of both.

Don’t plan on coming down here and just vegging out on ocean and mountain views. Open up your mind and let the creative juices flow. The world can stand to benefit from less human effort towards increasing “GDP” and more towards making the world a more beautiful and humane place for its inhabitants.

The world needs your unique brand of Costa Rica expat creativity.

Perez Zeledon – A Costa Rican Growth Story

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Ciudad de las mujeres lindas

Back in the day, we’d make the trip up from Dominical to San Isidro from time to time. Usually because we didn’t want to retraverse that god-awful stretch of still then unpaved road between Dominical and Quepos.

I remember on one of those trips, maybe my first, waking up early and walking around town. I believe it was Saturday. It seemed like any other medium-sized Costa Rican town, with one notable exception. And that was the seemingly over-abundance of beautiful Costa Rican women.

I’ve since learned that the canton (or county) of Perez Zeledon, and more specifically the city of San Isidro de El General, is famous for its gorgeous girls. And what’s even better, the rumor is that the ratio of women to men is astronomically out of whack. Now that I’ve lived here for quite a few years, I can attest to the former claim, although I’m not so sure if that supposedly outlier ratio is really statistically significant.

I moved to Perez back around 2011, or about 8 years ago. I just got fed-up with the big city (meaning San Jose) hustle and bustle. I wanted to go somewhere with mountains and close-by beaches and this place fit the bill perfectly. The feminine fame that it boasted didn’t hurt either. I was on the outs and separated from my wife at the time (we’ve since long reconciled and are living very happily together) and just wanted to get the hell out of dodge.

My first rude awakening came one day when I parked downtown in an area marked yellow, or not for parking. I admittedly did notice that, but thought what the heck, this is podunksville and surely no one will notice or care. Well, I was dreadfully wrong. I returned to a car with no license tags. To be honest, it took me a couple of days to even notice it. At first I thought I’d been robbed of the tags, but a friend told me that more than likely they’d been taken by the transito (or traffic police). I went to verify and sure enough they’d been taken. On top of that I had a fine to pay of around $500 to get them back. I paid the fine and then was told that the tags had been destroyed and had to be replaced.

Anyway, you get the message – bienvenidos a podunksville!

My things have changed in a hurry. I learned my lesson about parking where I shouldn’t. During a bad storm back in 2015 the famous Cristo de Perez (the statue of Christ that overlooked the city – see photo) suffered a lightning strike and burnt to the ground, much to the dismay of many devout Catholic residents.

And I have fallen deeply in love with this place.

These days San Isidro is gaining fame as the second largest city outside of the San Jose/Heredia/Alajuela/ Cartago metropolitan area or GAM. And it must certainly be the most important Costa Rican growth story going these days.

And for good reason. Where else in Costa Rica can you find the highest mountains and one of the most gorgeous coastlines (the Costa Ballena, with popular beach areas of Dominical, Uvita and Ojochal) in such close proximity?

Answer: nowhere.

Many have heard of Costa Rica’s unique “micro-climates”, or places where you can beat the heat and find near perfect weather just by driving up the hill a ways. Well, there’s no place where that’s more true than Perez Zeledon. I live at 900 meters altitude (close to 3,000 feet) and the weather is very temperate. However, down in town, about 7 minutes away, it can get much hotter. That’s because it’s about 300 meters lower down there in the valley. And I’m only 40 minutes from the beach at Playa Dominical, where Central American sea level can be as hot as what you might imagine, being this much closer to the equator than, say, North Carolina.

The city of San Isidro de El General and indeed the entire canton of Perez is undergoing a major growth spurt. Evidences of that are everywhere. We now have one of the nicest 5-star resorts in all of Central America (Hacienda AltaGracia) in the area of Santa Teresa de Cajon, about 30 minutes out of town in the folds of Cerro Chirripo, Costa Rica’s highest mountain. We have an airport renovation project soon to be underway, which will transform our little airstrip into a modern domestic (possibly even international) airport with flights to all areas of the country. We have new stores and restaurants opening weekly. I believe there are like 5 sushi restaurants now. And to top it all off in alarming fashion, we have a new Walmart under construction!

We also have the area’s regional public hospital and lots of private care options as well, via private clinics with all manner of specialists, and a multitude of dental care options. And, finally, we have our “small” (or tiny mall) with a movie theatre!

I certainly don’t want to see my little piece of paradise turn into what I came here to escape. But the Costa Rican growth story that I’ve been witness to so far will only make the convenience factor of living in those gorgeous mountains just outside of town, well, all the more convenient.

There are surely many more chapters to be written in this Costa Rican growth story that’s Perez Zeledon and its “gateway to the southern zone” city of San Isidro de El General. I’ve been selling real estate in the area as a Coldwell Banker agent for several years now. I honestly believe there is a lot more room for growth around here. We need more jobs to lure folks from the big city and airport projects, Walmarts and the like can do that trick.

More and more would-be expats seem to be hearing about and exploring the area. And why not? Here you can live near a pretty darn killer city, be in a perfect climate, be surrounded by incredible flora and fauna, and be close enough to the beach to go surfing after breakfast and make it back by lunch!

There’s just no way around it, the southern zone of Costa Rica is where it’s at these days and Perez Zeledon, the Costa Ballena coastline, and the famed Osa Peninsula are three very solid reasons why.

Reveling in Costa Rica Expat Inconspicuousness

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I guess many of you probably think that most of us expats down here are hiding, or running, from something. Truth be told, some of us are. Those are the ones that tend to show up in the headlines of the American Expatriate newsfeed (that is, once they’ve been discovered).

But that’s not the majority of us, thank god. No, the rest of us just want to live our lives substantially free from interference…in the form of rules, regulations, or even societal norms. Because we expats are far from normal. I mean who in their right mind would uproot from the country of their birth and move to some strange exotic land, full of mystery, adventure and romance?

Sounds horribly frightening, doesn’t it?

Oh wait a minute, so you feel enticed by that thought, eh? Well, in that case, you might want to come down and see for yourself what’s going on in this little slice of paradise.

I just hope I’m not encouraging “too many” of you in that direction…

I’ve noticed that the mountain expats are reveling in Costa Rica expat inconspicuousness to a higher degree than the beach ones. We’re kind of a rugged, individualistic lot up here in the proverbial holler. The thought of keeping up with the Joneses is just not something we worry about too much, or at all. I haven’t seen too many mountain expats that I’d say were guilty of being “show-offs.” In fact, most of us would rather never even show up…at all…that is, on the radar screens of nosey neighbours, back home annoying acquaintances, and certainly not da gubment.

The beach is a different story…probably because there are more of us down there, or maybe it’s just the heat (or various and sundry substances) softening the brains of the beach-minded. Now lighten up, just kidding there beach expat!

But, in reality it does seem, at least to me, that there’s a higher degree of preening pretentiousness down there amongst the beach crowd expats.

As for me, I’ve never enjoyed standing out in the crowd. In that regard escaping to Costa Rica and reveling in Costa Rica expat inconspicuousness has suited me very well. I wear it like a well-worn coat on a cold winter’s night. I feel very comfortable in my Costa Rica inconspicuousness. I’ve grown so accustomed to it that I’m afraid living in the U.S. could never suit me now. So, I guess I’m stuck here.

Of course I’m posting this to a real estate related blog and I am a real estate agent down here. In that regard, there’s a limit to which I can remain both profitable and inconspicuous. But life is filled with such dilemmas and we just have to learn to live with them, wherever we might find ourselves.

Another reason to revel in Costa Rica inconspicuousness is the alarming, and growing, incivility back home.

No, no, no…it’s better to remain inconspicuous, living in the moments we and our circumstances create for ourselves. It’s better not to meddle in the business of others and, to the extent we can, make sure they don’t meddle in ours. That is the essence of “pura vida” living. And Costa Rica offers that. It offers the ability to get away from all that meddling and incivility.

The incivility is, more often than not, the indirect result of the meddling, wouldn’t you agree?

Better to just live your life the way you see fit without anyone looking over your shoulder or through a magnifying glass, trying to discover ways to rationalize how much better they have it than you do.

My last post provided some insight into my Costa Rica story…the how’s and why’s behind my Costa Rica presense. Of course when I first arrived I was more than ready to make the big splash, as we Americans often desire to do. However, gradually I faded into the dense jungles of Costa Rica inconspicuousness.

Now, if you read that post you might get a good idea of what motivated me in this direction, away from any semblance of limelight. And boy do I feel a whole lot better and less stressed as a result of that momentous paradigm-shift. I honestly believe it has added a decade or so to my time on the surface of this old revolving rock.

If you’d like to revel in Costa Rica expat inconspicuousness with me, I highly encourage a Costa Rica expat tour for starters.

Geez, I guess I just potentially blew my cover…

I realize this has been the kind of post generally written when one can’t honestly think of anything actually worthwhile to write about…

Nevertheless, I hope you catch my drift…

Pura Vida!

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