Should I buy a property through a Costa Rican company as a foreigner

by Quatro Legal Corporate Team | Mar. 02, 2024 | Article, Corporate

I’m an expat. Should I buy property in Costa Rica through a corporation?

If you’re a foreigner thinking about purchasing property in Costa Rica, you might be wondering whether it’s necessary or advisable to use a company as a purchase vehicle and whether the benefits outweigh the costs. This question comes up frequently.

To ensure you’re not swayed by the seemingly helpful advice from a random person at the local restaurant suggesting that using a corporation isn’t the best approach, here are the key points you need to consider:

5 Reasons to consider a corporation when purchasing property in Costa Rica

Let’s review the top considerations to research when deciding how you will purchase property in Costa Rica as an expat.

1. Flexibility

Using a corporation to purchase property in Costa Rica offers significant advantages, particularly for foreigners.

It enables you to handle company decisions related to the property from abroad, eliminating the need to travel to Costa Rica or arrange a meeting at a Costa Rican consulate for certain legal formalities.

This approach streamlines the decision-making process and enhances flexibility. It allows shareholders to remotely sign a proxy letter, empowering their attorney to hold a shareholder meeting in Costa Rica on their behalf for any necessary tasks, such as authorizing upgrades to your internet speed. This setup not only saves time and money but also simplifies the management of your property from anywhere in the world.

2. Asset protection

Owning property through a company provides a protective layer between the company’s assets and your personal liabilities. This separation means that debts or legal issues not related to the company will not affect the property and its assets.

This safeguard is crucial if you engage in other business activities under your personal name that could potentially generate contingencies. By holding the property in a company’s name, you ensure that these external challenges do not impact your property investment.

3. Estate planning process

Incorporating a corporation can play a strategic role in estate planning, serving not just as a vehicle for purchasing property but also as a key component of a broader estate planning framework. This can be linked to a Will, Trust, or other legal entities.

We advise that, in tandem with forming a company, you execute a Will that pertains to the shares of the holding company rather than the asset itself. This approach ensures that your Will remains relevant and does not require updates with each acquisition or sale of assets, provided the corporation is utilized as the legal vehicle for these transactions. This strategy simplifies estate management of your property in Costa Rica and ensures continuity and protection for your assets within the corporate structure.

4. Residency in Costa Rica

In Costa Rica, foreigners acquiring real estate are eligible for investor residency, regardless of whether they invest personally or through a corporation. The company shares can be used by your Costa Rica real estate lawyer as the investment proof to meet the investor requirement.

5. Property fraud

Costa Rica real estate fraud is uncommon but can happen. The normal form in which property fraud occurs is when owners are affected by illegal transfers of their properties or by falsifying documents to use properties as collateral for bank or private loans.

Per our experience, this is more likely to happen when the property in Costa Rica is recorded under a foreign client’s name, as scammers take advantage of impersonating owners by using false passports or identification documents.

Usually, scammers choose properties that they know the owner has not visited Costa Rica for long periods of time (which can be checked with the Immigration Directorate database), legal obligations over the property are not met (property is not up to date with its declarations and taxes), the property is physically abandoned with no maintenance provided or caretakers on site.

When a company owns the property, other legal documents are needed to accomplish the sale (e.g., a shareholder’s meeting authorizing the sale/purchase), which makes the process more complicated for scammers.

Having a company implies additional expenses compared to buying a property in your name. You would have to pay legal fees for incorporating, pay annual corporate tax (about US$125 per year), and have to comply with some annual obligations. However, we truly believe its benefits are worth it when purchasing property in Costa Rica.

To make your life easier, Quatro Legal has maintenance packages in which we take care of everything to make sure that your corporation and property are always in full compliance.

For more information, please fill out the courtesy e-meeting form at the bottom. We will be glad to assist you!

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