Purchasing Property in Costa Rica, in a Corporation 11/15/2018
While real estate can be purchased by individuals or corporate entities in Costa Rica, purchasing property through Individuals can own one or multiple properties under a holding company. The legal entities in Costa Rica are either a Sociedad Anomina (S.A.) or a Sociedad Responsabilidad Limitada (SRC), which is similar to an LLC.
You can also purchase property in the name of your retirement fund or the corporation that represents it such as an IRA or 401K.company is a popular option for foreigner buyers. There are many advantages to housing your property under a corporate entity. It protects both privacy as well as assets and is a preferred way to hold the property for both foreigners as well as native Costa Ricans. Its sole purpose is to serve as a holding company for real estate titles and does not have any other function.
Here are four reasons to purchase property through a corporate entity:
By having the company held in a corporation you cannot be personally sued or held liable for accidents involving tenants, guests or employees on the property. This provision is especially useful to protect yourself if you are planning to rent the property out and use it as a source of income.
- Capital Gains Tax
When you purchase a property through a corporation, you do not have to pay a capital gains tax. If the property value increases and you decide to sell, you don’t have to pay capital gains tax, real estate transfer taxes or recording fees.
A property bought and held under a corporate entity provides an added measure of security keeping your personal life and finances private. It provides a level of protection from intrusion into personal and business affairs.
- Wealth Protection
If you have a spouse or children, you would like to have inherited the property, putting the property in a holding company is strongly recommended. Through a corporation,
the transfer of ownership can easily be done through shares without the usual hassles of title transfer. By having the property title under a holding company the transfer of title can be simplified. A Costa Rica attorney can you walk you through setting up the company to minimize taxation in the event of your death.
Purchasing Costa Rica properties through a corporation is the preferred strategy for most foreign buyers for the reasons outlined above. Of course, consult with an attorney to find out if this approach is the best option for your particular situation.
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