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The Big Attraction of Costa Rican Investment Property

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As part of the phenomenon that Latin American real estate markets have become, and like so many of its neighbours, Costa Rica is amid an unprecedented real estate boom. What sets Costa Rica apart from its neighbours, and in fact the world, is its incredibly stable and peaceful democracy and society as a whole. The Costa Rican army was disbanded in 1948 and a treaty of neutrality enacted in 1983. This peaceful environment, which is endemic of a low crime rate, is certainly something that will attract investors toward Costa Rica when weighing property investment options.

Also an attraction is the potential for capital appreciation. An article in The International Herald Tribune last year quoted Chris Mailloux, a ReMax agent who has sold property in Costa Rica along with his family for 13 years as saying, "Lots that were once $50,000 are now $500,000. There's not a lot left that hasn't quadrupled in value in the last three years." He also hinted at the upturn in the availability of new property, telling IHT that in one small block near his office, eight developments of at least 20 homes each are under construction.

Another attraction is the strong rental yields of between 7-9% for larger 100sq.m properties, and as always increasing as property size decreases. As for taxes, the first $2,698 earned from rental is exempt from tax. After that the rate is progressive between 10%-25%. The lack of Capital Gains Tax, unless from a habitual transaction (recurring), is a counterbalance to the rental tax when considering a Costa Rican property investment.

Again similar to other Latin American states and again advantages being the low living costs and lack of restriction on foreign ownership of property, the only restrictions are that the first 50 metres from the high tide line is public property, and the next 150 meters can only be leased to foreigners who have lived in Costa Rica for more than five years. That leaves plenty for all those who are attracted to Costa Rica's unique features, including volcanoes, jungles, beautiful valleys, and of course sun, sea, and surf. Potential investors will also be keen to know that Costa Rica has a good strong infrastructure, security, and you choose a dry or humid climate by buying on the pacific or Caribbean coast.

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About Liam Bailey