I got this email a couple of days ago. Since these are common questions – in fact, we had most of them – I’m answering on the blog.
“I have enjoyed reading your info on the net. We are thinking of buying a small condo and living in Costa Rica in the winter. If we rented the condo out the other months, how do you get your monies back to your country of origin (home)?“
You wire it. Complicated, lots of paperwork, but do-able.
“Is this legal?”
Making money here? Or transferring money to and fro? It’s legal to rent out your property for money. The work question is fairly complicated. You can’t work for a salary unless you are a permanent resident which takes at least three years. But if you have rental income, I guess you aren’t really working, you are investing. In fact, you will need someone locally to manage your property (or you are insane) so you are providing work for locals. That’s a good thing!
And it must be legal to wire money from Costa Rica internationally… Costa Rican banks do it all the time.
“Do you pay tax?”
If you deposit money into a bank in a country with a government, somebody in that government is going to tax that money sometime. If you have two governments involved, brace yourself. Money you put in a bank will probably be assumed guilty as taxable income until proven otherwise. Get your ducks in a row.
“They tell us taxes on homes there are so cheap, but it sounds like this is all changing.”
Yes, things are changing here very fast. I don’t know that Costa Rica’s property tax rate has gone up – I don’t own any Costa Rica real estate so I only know what I read… It’s more that authorities are assessing properties on real values, rather than on the amount the buyer reported. Said reported amount being historically and ridiculously less than the actual sale price.
“We’re nervous to make the move, then find out its more expensive than we thought.”
It will be. Last night, a friend told me they did the math on staying in Boulder or moving to San José. All things considered, it was cheaper to stay in Boulder. I concur. Once you are here, the cost of living is not appreciably less. Obviously, they did move here. But not because their money goes further. For us, quality of life is so much better, it’s worth the effort.
One caveat: if you moved here several years ago and thought to buy Costa Rica property when it was really cheap, your cost of living would be much more appealing than for those of us who moved here in the last two years. But inflation still takes its toll. Chicken breasts (boneless, skinless), one of our markers, was 2,000 colones a kilo (about $2/lb) when we arrived. It’s now 3,250/kilo ($3.25/lb). That’s quite a jump. Other food has gone up proportionately. The price of eggs has doubled. I understand prices are taking similar leaps everywhere.
“If we rented out our place for awhile, that offsets costs. But we don’t know if that’s a no-no to have this money coming back home and don’t know who to contact about the proper way of doing it. Do you?”
You can have your money go home or stay here, whatever you want. To find out exactly how, where, when, how much tax liability you may incur, you need to ask your attorney/accountant in your home country as well as your attorney/accountant in Costa Rica.
If you want a referral for an attorney, join the Costa Rica Living group (free) and search for attorney recommendations on there. HINT: make sure the person whose recommendation you are taking has been a CRL member for awhile and has LOTS of posts.
Don’t rely solely on a Costa Rica real estate salesperson’s advice. Or any salesperson’s advice. Please. Don’t just take my word for it, either. I’m a singer in a geezer band and an unpaid blogger. Who has been known to exaggerate from time to time.