Costa Rica Real Estate

Public construction sector records a steady growth since 2007. In January 2009 growth increased by 21% than in the same month the year before.

These statistics are investigated by the index of monthly economic activities from the Costa-Rican central bank. This indicator makes for a monthly estimation of changes in production and investment.

One of the factors for this positive impulse in the construction sector is the improved capacity in execution of the regarding projects. For example the public health insurance (Caja Costarricense de Seguro Social) has the second largest budget of all public institutions. 57.5% of this budget was used for new construction projects in 2006. According to information from the institution, this rate increased to 94% in 2008.

The institution for electricity and telecommunication (Instituto Costarricense de Electricidad) has the third largest budget of public institutions and invested 84% in 2006 in construction projects. This value increased to 90% in 2008. The growth in the public sector compensates the current decrease in the private sector, which was 8% in 2008.

Because of the searing European tax havens like Switzerland feelings and emotions ran high at the moment. Switzerland was threatened with an entry in the black list of the OECD (Organization). This pressure from all sides now enables to work out dragnet investigations in order to catch tax evaders.

According to the recent verdict of the Federal Administrative Court of Bern Switzerland not only will carry out administrative assistance with tax fraud but also with defraudation of tax. For this reason also dragnet investigations on tax evaders could be carried out. The international famous and protected banker’s secrecy of Switzerland is weakened by these legal changes.

The secure anonymity of former days for international investors is no more guarantied. Costa Rica poses an interesting alternative. The country is already called “Switzerland of Central America” and offers in various fields a similar anonymity as it was in Switzerland a short time ago. There are no numbered accounts, but via corporations you can act, open bank accounts and invest. There are no taxes on revenues of foreign countries. Tax on profits with the highest rate of 30% are on a comparatively low level and no taxes are charged on private capital.

Costa Rica is the oldest stable democracy of Latin America and abolished military already in 1949. The high standard of living, a good general education as well as free medical care give the country an outstanding position in comparison to other emerging nations.

Because of its great basic conditions already now Costa Rica offers an attractive alternative for European investors. This is a fact which only will get stronger due to the current European tax politics.

You have found your dream property in Costa Rica, which you are interested in purchasing, and you want to move forward. If you do not have enough capital to make the purchase, you might consider applying for a mortgage or credit at a bank.

Currently, times are difficult for banks, especially in the United States and other developed countries, and therefore, it is not easy to get a mortgage or credit. If you consider getting financing from a bank in Costa Rica and you research credit products there, you will realize very quickly that the interest rates from Costa-Rican banks are everything but attractive, particularly for those who are used to lower rates. Additionally, the application process is a lot more complicated than in the United States.

However, there is another option – owner financing.

If you wish to buy a home but do not have the credit and cannot afford the down payment, owner financing is an option. Owner financing, or seller financing, is a process by which the seller offers a part or all of the home purchase price with or without a mortgage on the property.

In Costa Rica, there are plenty of motivated sellers who are willing to owner finance, which might be your best option, if any of the following situations apply to you:

• You do not qualify for traditional loans.
• You do not have enough funds to pay the closing costs on a mortgage.
• You wish to avoid paying a large sum of fees. (This is where owner financing can save you thousands of dollars in loan costs.)
• You wish to avoid the lengthy loan process and close on the home within a few days. (This can be done through owner financing or seller financing.)

If the seller does not immediately need all of the proceeds from the sale, owner-financing a home can be a great investment. When you put money in the stock market, you might get a 6% return, or perhaps a little more. Or you could lose 5, 10, or 20% of your investment. By contrast, owner financing gives the seller a guaranteed return on the interest rate on the loan, whatever it is.

Although sellers who owner-finance technically can charge a higher interest rate than banks, in Costa Rica, the majority do not, as they are eager to close a deal.

The main risk to the seller is that the buyer will fail to make the monthly payments (known as "defaulting" on the loan); but in that case, the seller can reclaim the house ("foreclose" on it) and sell it to get his or her money back.  This is possible, because the mortgage will be registered in the national registry in account of the buyer. The seller is safe, as long as he or she can sell the house for at least as much as is left on the loan.