The Republic of Costa Rica is located in Central America, bordering Nicaragua to the north and Panama to the south, with the Pacific Ocean on its west coast and the Caribbean Sea on its east coast. The vast majority of the population are of Spanish descent.
Compared to many other Central American countries, Costa Rica is relatively affluent and politically stable, and has as a result become a popular retirement destination particularly for North Americans, and also many European nationalities. It is also a very popular tourist destination, and the government has taken advantage of the country's environmental and wildlife assets to promote the growth of eco-tourism. Around a quarter of the land consists of national parks and other protected areas in which there is an abundance of wildlife and plant species. Tourists and expatriates alike are also attracted by the pleasant tropical climate, diverse landscapes and many sandy beaches along the long coastline. The country has eight active volcanoes which are also tourist attractions.
Overall, Costa Rica is probably a good choice of retirement destination for expatriates, but the low level of wages and salaries in the country make it more difficult for foreign employees to have a good standard of living here, unless they are employed by an overseas-based company.
- There is NO wealth or inheritance tax in Costa Rica.
- Sales tax is currently 13%, gasoline carries an additional tax burden.
- Imported items carry heavy customs duty when they are luxury items - cars have an import duty of 33% - 80% depending on the age (2 to 10 years). Non-luxury items (agricultural machinery, computer supplies and equipment) attract very little duty. Each person has a $500 exemption for personal items every 6 months.
- Income tax and social security run at 10% - 15% for both depending on the income level.
Taxes on property:
- Transfer of property title is approximately 2.75%, including transfer taxes and attorney's fees.
- Property tax 'impuesto terretorial', annual - 1% of assessed property value (about 10 - 40% of market value), this goes to the city government, in certain areas additional taxes pay for trash collection and street maintenance.
- Capital gains - NONE.
Almost all properties in Costa Rica are registered on a central national registry network and allocated a “Folio Real” number. The first step when interested in a property is to run a check for the full details via the Registro Nacional website: http://www.registronacional.go.cr/
You can also acquire a property by buying through a corporation, which is a very straightforward procedure. The business must be incorporated by minimum two different people with a Costa Rican Notary Public present. Following that, shares can be transferred to one person if necessary. You will need to register a Board of Directors which should include three or more people – these can be the original incorporators. Once the business has been incorporated the property can be acquired through its name.
Retiring in Costa Rica
Many foreigners retire to Costa Rica because of the tropical climate, lower cost of living and good health care. There is a well established community of expatriates, at least 50,000 Europeans and North Americans live in Costa Rica. That makes it easy to find suitable housing in communities that are magnets for expatriates and where many of the services you take for granted back home will be available.
You can buy a home on the beach or in the mountains for much lower prices than a comparable home in Florida or California, or most urban areas in the U.S. and Europe. Land too is inexpensive in many areas. Some developing areas have condos on or near the beach for as little as $40,000. More established areas commonly offer ocean view or beach front condos for $150,000. Prices for homes and condos in beach areas commonly run to as much as $450,000, depending on their fixtures, living area, lot size and other extras.
In other areas of the country a home's price will depend on the location and amenities. Costa Ricans have very different priorities and values than expatriates, so not all homes you see advertised will be suitable for you. A good quality home, close to an area favored by expats, with many amenities you expect, will run from $80,000 to $120,000. Better homes in better locations will run from $140,000 to $250,000. Homes over $250,000 are commonly available, but these are real luxury homes in prime locations.