As most of you may already know, Costa Rica offers various Residency programs or categories. Investor is one of these Temporary Residencies. In this case, the law states that in order to be eligible for Investor status, you must prove that you have invested a minimum capital of $200,000. And the law is clear, it must actually be a minimum $200,000 cold, hard cash. So even if you purchased a property for $45,000 a few years back, and due to the upswing in market prices it is now worth $200,000, you still would not qualify.
And so, as it goes, on paper the process is fairly straightforward, however in application, this is where proper legal counsel should be sought out. When applying for residency under the Investor category for real estate it is of utmost importance that the purchase and documents are set up correctly so that you can indeed qualify for Investor status. In this case, we see various times that had a client contacted legal help sooner, the documents could have been drafted to meet Immigration policy.
In reality, there are two ways in which people can purchase a property in Costa Rica: directly, meaning you have a deed stating that you are investing X amount on a land/house; or through a corporation.
Many people opt for purchase under a corporation for various reasons. Probably the main reason this is done is because there is more than one investor involved in the purchase. And if a corporation is used, two common watch outs include:
- Distributing shares properly. Say you and your spouse purchase a $300,000 property, to apply for residency under Investor status one person must own the $200,000 value of shares.
- The deed must indicate a value of at least $200,000. Sometimes, to avoid paying transfer taxes, and lower attorney fees, a lower purchase price is stated in the deed. For a $200,000 property, the deed may say $100,000, and even if you paid the $200,000, if this occurs, you will no longer qualify.
Expert Advice
When applying for Investor status for residency in Costa Rica it may make more sense to purchase the property directly, without involving a corporation. Purchasing with a corporation not only means additional paperwork, but a lot of room for errors that may just eliminate the possibility of applying as an Investor. Involve your attorney early in the process to ensure a smooth process.
Written by Irene Brenes
