COST OF LIVING
RETIRE FOR LESS IN COSTA RICA
Most of us dream about spending our retirement years traveling and enjoying time with family and friends in a beautiful vacation destination. The reality is that so many vacation resorts and properties around the world have become prohibitively expensive. Costa Rica provides the ideal, affordable alternative.
Not only is it possible to buy a spectacular ocean-view property along Costa Rica’s southern Pacific coast for around U.S. $100,000 (or a more modest lot starting from as little as U.S. $40,000) and to construct a professionally built custom dream home for only U.S. $90 per square foot, but the cost of living in Costa Rica is significantly less than in most other countries around the world.
It’s possible for a couple to live extremely well in Costa Rica for U.S. $1,500 to $2,500 a month. The cost of buying an excellent restaurant dinner or fresh, locally grown organic fruits and vegetables is considerably less than what you’d expect to pay in North America or Europe. The maximum income tax rate is 15 percent and property taxes are likely to be just a few hundred dollars a year. A visit to a doctor typically costs less than U.S. $50 and prescription drugs are inexpensive and readily available over-the-counter in most pharmacies.
All in all, you can live a luxurious retirement lifestyle in Costa Rica on just a standard retirement income. Plus, you can do it in one of the most stunning environments and hospitable climates on earth.
WORKING AND INVESTING IN COSTA RICA
In order to work in Costa Rica you must first obtain either a work permit or legal residency. However, as a foreigner, you are permitted to purchase real estate and/or start your own business. You may also purchase such investments as certificates of deposit, which earn tax-free interest and, if purchased through a state-run bank, are insured by the Costa Rican government.
Costa Rica provides a great deal of commercial freedom and protection for private business. It’s possible to establish a private corporation in Costa Rica without having to obtain legal residency or citizenship. Many foreigners do this to hold real estate and other investments. In the case of real estate holdings, it provides protection from capital gains tax, since Costa Rica doesn’t charge capital gains tax on property held inside a Costa Rican corporation. Plus, it offers the additional advantage of protecting your estate from probate taxes in the event of your death.
Before setting up a corporation, it’s wise to discuss the various issues involved with an attorney who can advise you on the specific rules involved. Expect to pay around $300 to $1,000 for the paperwork involved.
FUTURE ECONOMIC GROWTH
Costa Rica’s economy is on the verge of what is expected to be a major economic boom. With over a million visitors each year, tourism has become its main source of foreign capital. And now, more and more of those who initially came to explore the country as eco-tourists, and who fell in love with its incredible natural beauty and healthy lifestyle, are returning to buy property.
Real estate prices along Costa Rica’s more developed northern Pacific coast have quadrupled in value over the past five years. And now, as the Pacific coastal highway is nearing completion and plans are underway to build a new international airport in the south, the southern coastal region is expected to follow suit.
Costa Rica benefits from the US-Central American-Dominican Republic Free Trade Agreement that was ratified in 2007. Another reason for Costa Rica’s fast-growing economy is that in recent years, due to its political stability and lower corporate operating costs, it has managed to attract foreign industry. Some large U.S. firms such as Intel and Proctor and Gamble have opened manufacturing and administrative facilities resulting in computer microchips growing to represent 20 percent of Costa Rica’s exports.
Those same benefits that have drawn large corporations to invest in Costa Rica are attracting those looking to invest in vacation and retirement property. Costa Rica provides an opportunity that no longer exists in most parts of the world – a chance to buy land and build a dream home while prices are still extremely affordable. Plus, at a time when other forms of investment are providing lackluster returns, it provides a chance to diversify into a real estate opportunity that is likely, over time, to increase significantly in value.
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