Tips on Getting a Second Home in Costa Rica

Tips on Getting a Second Home in Costa RicaYour home wherever it may be is paid off or almost aid off.  Your financial situation is stable and it is time to get a second home as either a vacation home or for investment purposes.  The question in your mind is where will you buy that second home?

Tropical Costa Rica has been the answer to this question for well over three decades for various reasons that include but is not limited to the amazing weather which boasts an average temperature of 70 to 81 degree year round!

In addition, Costa Rica is one of the wealthiest Central American country that places emphasis on education with no standing army making this Central American paradise affordable to live in with amazing investment potential.

So let’s go ahead and get started on what you will need to buy real estate in Costa Rica.

The Local Housing Market – Whether you are looking this second home in Costa Rica to be a vacation home or an investment home, looking at both the local resale and the rental markets are of great importance.  First, are home prices currently on the rise which would increase the possibility of a profitable sale in the future? If you are looking at an investment, what about the rental market? Is the forecast of rental prices going u or down? You will certainly want your rental income to be able to cover mortgage costs, taxes and expenses.

Property Maintenance – Even though general maintenance in Costa Rica is considered a bargain in comparison to the United States, when you are calculating the cost, make sure to include routine maintenance and potential repairs. If you are buying a property to rent out, be certain to note any requirements and safety obligations for your area. Not everyone is a handyman and even if you are, you may not have the time to deal with it so you should consider hiring a property management company to handle ongoing maintenance concerns if not hiring outright a known and trusted superintendent to manage the property.

Cost of Insurance – Home insurance in Costa Rica is for all practical purposes a monopoly that is run by the Instituto Nacional de Seguros better known as INS.  The cost will depend on the location and value of the house but in general, expect to pay higher insurance costs, especially if you plan on renting out the property.

Financing – If this is your first home in Costa Rica, plan on being subjected to more scrutiny than you were on your primary residence. Banks often require a higher down payment on second homes, and interest rates may be higher as well. 

Tax Implications – Owning abroad can be as simple or as complicated as you want to make it.  Just make sure you understand the tax implications of owning a second property in Costa Rica. For example, if you plan on renting it out, you'll need to report the rental payments as income. On the other hand, operating expenses, such as insurance, utilities and repairs, may be considered deductions in the United States but may be different in the Costa Rican Tax system.

We certainly hope that these tips will help you when you are considering to make a second home in Costa Rica and if you need any help or advice, the staff of TicoRealty is here to help you.

 

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