Expat Living in Costa Rica: You Need Three Best Friends

The legal, tax, and social structures of other countries can be very, very different from those of the U.S.  Though many of the titles and words may seem familiar to us, costly mistakes can be made if incorrect action is taken.  This is where establishing these three best friends can make sure your expat dream does not become a nightmare.

EVERYONE NEEDS A SENOR BOB
After touring Costa Rica, I decided that I wanted a second home in Jaco Beach.  It is advisable to spend some extended time renting in your selected location, so I decided to take my son on a month-long surfing vacation there.  The first item on my list:  Find a place to stay.

Enter:  Bob Johnson (www.oceansiderealty-cr.com)
Talking with Bob Johnson, realtor with Oceanside Realty was a breath of fresh air after my conversations with other rental agencies in Jaco.  Everyone but Bob told me that a month’s rental in Jaco Beach would cost me around three thousand dollars.  Everyone but Bob just wanted to rent to me at the highest possible price.  In talking with Bob, I found out that he wanted more:  he wanted to find me the best deal for my dream to happen.

My son and I had a marvelous adventure that month.  Senor Bob found us what’s called a ‘tico’ (locals) condominium at half the going rate of other rentals.  During our stay, Bob made sure we avoided the costly tourist traps and connected us into the local activities.  It seemed like everywhere we went, everyone waved and smiled at Senor Bob.  Before we left, I let Bob know that I was interested in buying a property – a problem-seller, not a problem-property.  With all the American owners in Jaco Beach and the downturn in the economy, I sensed that it was just a matter of time before someone would be looking to unload their property at a discounted rate.

Fast forward a couple of years to this year’s visit to Jaco Beach.  I’d been there a week trying to connect with Bob, when I bumped into him on the street.  He was engaged in a lively conversation with a condo owner who (that day) decided to dump six tico condos to raise cash.  As Bob closed the call, he told me the price:  $45,000 each.  Approximately half the current value!  When I expressed personal interest in buying one, Bob took me right over to the complex to make my selection.  It was in the same complex my son and I had spent our month of surfing.

Since then, Bob has become a valued and trusted friend to me.  He introduced me into his network of contacts, hired (and supervised) trustworthy contractors, and helped me find the best local deals – as well as an English-speaking local bank.  Bob worked closely with my next two best friends to make sure all my legal and tax issues were handled correctly. 

LOCAL LEGAL PROFESSIONAL
When it came time to finalize the purchase of the condo, I knew I needed someone to protect my interests and correctly help me weave through the legal and regulatory issues of Costa Rican law.  You see, the condo that I was buying was owned by a corporation; technically I was buying the corporation that owned the condo.  Many property owners in Costa Rica structure their real estate this way to bypass paying the 5% transfer tax. 

Enter:  Roger Peterson (www.plawcr.com)
I met Roger Peterson of Petersen & Philips Law Offices at an International Living Conference.  After hearing him speak and talking with him personally, I knew that he was knowledgeable, professional, and truly liked building on-going relationships with others.  We both knew that while the corporation transfer might solve one problem, it had the potential for creating a larger problem:  were there any hidden liabilities or other issues that I might become responsible for?  As part of his service, Roger reviewed the corporate documents (all hand-written in Spanish), conducted an extensive registration and governmental investigation, and received certified documentation that there were no outstanding debts.  As we went through this process, I really felt like Roger was working to protect me as we weaved through the complex legal and governmental processes of buying property in Costa Rica.  Roger also has a plan for my future.  Knowing that the laws will be changing in 2012, allowing the corporation to dissolve and remove the property without taxation, Roger will help me navigate this process as well.  The cost of having Roger take care of my legal issues was much less than I expected and well worth the price. 

LOCAL TAX PROFESSIONAL
After being happy with my purchase, I came to understand that I owned an active, Costa Rican corporation with additional tax and reporting responsibilities.  When I arrived in Jaco Beach to vacation in my new condo, I brought all the paperwork and tax returns with me to review in greater detail.  As I looked at the tax returns, I became concerned that I might have missed something.

Enter:  Manrique Rodriguez, CPA (www.pbagcr.com)
Strongly bilingual, Manrique Rodriguez of Pacific Business Accounting Group, met with me to review my tax documentation.  He confirmed that I had inadvertently missed the filing deadline of the corporate income tax return.  He also raised several important questions for which we needed answers.  The tax laws in Costa Rica, as in other countries, can be as confusing as the IRS laws in the U.S.  In just two days, Manrique unravelled the tax complexities I faced.  He had strong relationships with the local tax and government authorities.  When Manrique called, they answered.  And when they talked, Manrique understood and could explain to me what the issues were.  We made the right decisions together.  We filed the tax return.  We avoided unnecessary tax complications.  Manrique was to me what I try to be for my clients:  a good guide.

In fact, all of these men have been good guides to me.  They are knowledgeable and competent in their chosen profession.  They are more interested in building relationships than making a buck, and get a great deal of satisfaction helping others make the right decision.  They all share an authentic pride in maintaining their professional reputations and are generally well-known and well-liked in their communities.

Good guides can help protect your dreams, connecting you with the right people, getting you in the right places, and making sure you do the right things.   I can’t imagine owning real estate or operating a business in Costa Rica without the support of my three new best friends:  Senor Bob, Roger, and Manrique.

These kinds of conversations are all part of our overall services to our clients at NCH Tax & Wealth Advisors.  Please contact our office if you have any questions:  (866) 729-6425.  We are happy to help provide the direction you need.

Please feel free to pass this along to anyone you think might benefit from this information.  We appreciate all referrals.

Comments

[Hand carry bags]

Amazing post and very interesting stuff you got here! I definitely learned a lot from reading through some of your earlier posts as well and decided to drop a comment on this one!