Costa Rica Overview
Costa Rica is located in Central America between Panama and Nicaragua and is one of the most stable and robust democracies in Latin America, with a long-standing commitment to economic growth and social development. Christopher Columbus was the first non-indigenous explorer to discover Costa Rica when he arrived in 1502 on his fourth voyage to the new world. From that point on it was a Spanish Colony and due to the immense amount of gold the Spaniards found named it Costa Rica – Spanish for “rich coast”. Costa Rica is increasingly becoming popular for foreigners over other countries for number of reasons, including:
Foreigners allowed to own fully titled property
Stable democratic government
Water is safe to drink
Easy access from the United States
Pacific Ocean views and property not as susceptible to hurricanes as land on the Atlantic and Gulf of Mexico
Affordable cost of living
Extremely safe country (no military)
Natural beauty. 5% of the world’s known plants and animals call Costa Rica home.
Access to Costa Rica from the United States is available from numerous cities offering direct flights, including: Los Angeles, Phoenix, Houston, Atlanta, Miami, Newark and New York City. There are an increasing number of foreign airports now offering direct flights as well from both South America and Europe.
Costa Rica is recognized as one of the safest and most stable countries in the world. The current peace in Costa Rica can be traced back to 1899 with what is considered the country’s first truly free elections. That began a trend that continues through today with the exception of two lapses: 1917 – 1919 and in 1948 (over a disputed election) Costa Rica was one of the original 51 charter countries to join the United Nations in 1945 and in 1949 signed a new constitution. The Constitution of 1949 is one of the most important documents to the country and to foreigners buying property in Costa Rica. The Constitution of 1949 abolished the country’s military, established a nationwide healthcare system and guaranteed foreigners all of the same rights as its citizens – including the ability to own title to property. The ability to own fully titled property is a great advantage to foreigners compared to other country’s, such as Mexico, where
The current 4.2 million population of Costa Rica is unlike many of their Central American neighbors. Present-day Costa Ricans are largely of European rather than mestizo descent; Spain was the primary country of origin. Their population is highly educated with literacy rates reaching 96% and enjoys one of the healthiest lifestyles in the world, with a life expectancy of 77 years. Few of the native Indians survived European contact; the indigenous population today numbers about 29,000 or less than 1% of the population. The majority of the population lives in the country’s capital city of San Jose. San Jose, and the surrounding area’s population, holds 2.8 million of the country’s 3.8 million people.
Costa Rica’s infrastructure allows travelers the ability to easily travel from one end of the country to the other end. However, the Costanera Highway, which follows the entire Pacific coast, is now just being completed. The last remaining area to be paved is a 25 mile stretch from Quepos to Dominical that is being built as of this writing. Once this highway is completed access along the country’s entire Pacific coast will be a seamless paved highway. Flying to Costa Rica is very convenient from most cities in the United States with either direct flights or only one layover, to either San Jose or Liberia. Costa Rica has two international airports; San Jose (the country’s capital), and in Liberia, in the north of Costa Rica. San Jose International Airport (airport code SJO) had long been the only international airport that was served by most United States airlines and many worldwide carriers including: American Airlines, Northwest Airlines, Continental Airlines, United Airlines, Delta Airlines, TACA Airlines, America West, Mexicana, Iberia Airlines, KLM, and Virgin Atlantic.Within the last decade, Liberia International Airport has opened accepts flights from around the United States and the world, and is located in the capitol of Guanacaste, the Northern Pacific region of Costa Rica. Liberia International Airport is fast becoming the airport of choice for those travelers only interested in the sunny beaches of Guanacaste and also the new all inclusive area of Papagayo Gulf. Because of this airport property values have increased dramatically in recent years in the Northern Pacific coast region. The southern region has many regional airports which allow travelers to fly in to the region without having to drive over the mountainous terrain of the central part of the country. In March 2006, the Costa Rican government publicly announced the building of a new southern region international airport. The government’s goal is have the airport up and running by the end of 2012. It is expected that property in the Southern Pacific zone will increase in value, similar to what happened in the North, once the airport is open. Since the announcement, property values have already increased.
Financial Landscape of Costa Rica
Costa Rica's major economic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian Continents. Costa Rica’s most valuable resources are its pristine beauty, endless beaches and great climate. To ensure that future generations are able to enjoy the splendor of Costa Rica, conservationists and federal agencies have protected over 25% of the country’s land in the form of national forests, private reserves and animal sanctuaries. Due to this dedication to protection, Costa Rica has become a popular destination for retirees and eco-tourists. Costa Rica’s commitment to economic growth has resulted in a per capita GDP of US$9,600 and unemployment at a healthy 6%. In recent years.
U.S. – Costa Rican Relations
The United States and Costa Rica have a history of close and friendly relations based on respect for democratic government, human freedoms, free trade, and other shared values. The country consistently supports the U.S. in international issues, especially in the areas of democracy and human rights. Law enforcement cooperation, particularly efforts to stem the flow of illegal drugs to the U.S., has been exemplary.
The United States is Costa Rica's most important trading partner and accounts for over half of Costa Rica's exports, imports, and tourism. In addition, the United States accounts for more than two-thirds of its foreign investment. The two countries share growing concerns for the environment and want to preserve Costa Rica's important tropical resources and prevent environmental degradation. In 2003, two-way trade exceeded $6 billion between the United States and Costa Rica.
Upwards of 20,000 private American citizens, including many retirees, reside in the country and in any given week there are more than 30,000 American citizens visiting Costa Rica. Citizens from Canada and the United States can stay for 90 days without a visa when visiting Costa Rica.
Central America Free Trade Agreement (CAFTA)
CAFTA's goal is to establish a U.S.-Central American Free Trade Agreement (FTA) that will expand and make reciprocal the market access for goods, services and agricultural products that the U.S. Congress has unilaterally granted to these six countries over the past 20 years. Countries involved with CAFTA are: United States, Costa Rica, Dominic Republic, El Salvador, Guatemala, Honduras and Nicaragua. CAFTA would do following between the U.S. and the six Central American and Caribbean countries:
Immediately eliminate tariffs on over 80 percent of U.S. manufactured exports to the six Central American and Caribbean countries, with remaining tariffs eliminated within ten years.
Immediately eliminate tariffs on over 50 percent of U.S. agricultural exports, with most remaining tariffs eliminated within 15 years.
Substantially reduce or eliminate barriers to U.S. services in all key sectors, including construction, energy, entertainment, distribution, financial, information technology and telecommunications, and professional services.
Expand opportunities for the thousands of U.S. small businesses already exporting.
Promote economic growth, development and the rule of law through greater economic opportunities and strong rules promoting the protection of intellectual property rights and investment.
Promote improved enforcement of already strong labor and environmental protections and continued improvement in those protections through closer economic engagement and capacity-building projects.
The Unites States ratified CAFTA in the summer of 2005. Costa Rica ratified it in October 2007.
Banks and Money
There is an ample selection of state owned and privately held banks in San Jose, and throughout the country. The official currency of Costa Rica is the Costa Rican Colon; however U.S. dollars are widely accepted and almost all major credit cards are widely accepted (Visa, American Express, MasterCard).
Costa Rica has long emphasized the development of democracy and respect for human rights and is extremely stable. The United States and Costa Rica have strong political ties, in part, due to over 50% of Costa Rica’s trade ending up in the United States. In fact, during President Arias’ recent inauguration First Lady Laura Bush was in attendance and since that time President Arias has met with Bill Clinton for the Clinton Global Initiative. Several factors have contributed to this tendency, including enlightened government leaders, comparative prosperity, flexible class lines, educational opportunities that have created a stable middle class, and high social indicators. Also, because Costa Rica has no armed forces, it has avoided the possibility of political intrusiveness by the military that other countries in the region have experienced.
Costa Rica is an active member of the international community and, in 1993, proclaimed its permanent neutrality. Its record on the environment, human rights, and advocacy of peaceful settlement of disputes give it a weight in world affairs far beyond its size.
Costa Rica has one of the most advanced telecommunications systems in Latin America, with telephones and fax machines all over the country. Newspapers and magazines from North America and several European nations are sold in many shops and hotels in and around the capital. Satellite TV (Direct TV) is used by many of its residents and foreigners to follow the news or to watch Monday Night Football. DSL high speed connections are available and prevalent throughout the country and internet cafés are found in almost every town – small or large.
Costa Rica is considered an ecological sanctuary because of its great variety of natural treasures. Although the country is only slightly smaller than the state of West Virginia, Costa Rica is home to approximately 5% of the world’s known plant and animal species and contains five major climatic zones. In fact, National Geographic declared Corcovado National Park, in the Southern Pacific zone as the “most biologically intense place on the planet.”
Costa Rica has oil deposits off its Atlantic coast, but current President Arias’ administration has decided not to develop the deposits for environmental reasons. The country’s mountainous terrain and abundant rainfall have permitted the construction of a dozen hydroelectric power plants, making it largely self-sufficient in electricity, but it is completely reliant on imports for liquid fuels. Costa Rica has the potential to become a major electricity exporter if plans for new generating plants and a regional distribution grid are realized. Mild climate and trade winds make neither heating nor cooling necessary, particularly in the highland cities and towns where some 90% of the population lives.
Costa Ricans have an up-to-date, affordable state-run “cradle to grave” health care system and one of the best, low-cost medical care systems in the world when preventative and curative medicines are considered. Hospitals, clinics and complete medical services are available in all major cities and throughout the country. The United Nations consistently ranks Costa Rica’s public health system as the best in Latin America and one of the top 20 in the world. The infant mortality rate is less than that in the United States. This puts Costa Rica in first place in the world for life expectancy from this age forward.
Costa Rica has one of the most comprehensive and affordable medical systems in the world. There are numerous hospitals and clinics throughout the country that provide affordable healthcare to all residents. Hospital CIMA is one of three large private hospitals that cater primarily to foreigners and Costa Rica’s elite in San Jose. CIMA is managed by Baylor University (Waco, TX). Most medical facilities throughout the country accept Blue Cross-Blue Shield, as well as other large insurance providers. Additionally, Hospital CIMA accepts United States Veteran’s Administration coverage.
- Please contact Sol Property Group to learn more about Medical Tourism options available.
- In the South Pacific region a new 80,000 ft2 hospital was opened by President Oscar Arias in March 2008. This is the newest hospital in the country.
- Many Costa Rican doctors have been trained in Europe, Canada or the United States. Also, most speak English. The cost for medical services is much less in Costa Rica than the United States. As an example of costs: One night in hospital (adjustable bed, cable TV, phone, and nursing) ranges from approximately $120 - $200/day.
Pharmacies are numerous in Costa Rica and they stock most standard medicines available in Europe, Canada and the U.S. Most drugs requiring a prescription in North America are freely available “over the counter” in Costa Rica
The quality of dental work is equal to that found in Europe, Canada or the U.S. On the average, dental work costs about 25 to 30% less than in the U.S.
- Cosmetic Surgery
Costa Rica has long been the destination for those in search of the “Fountain of Youth.” People from all over the world flock to Costa Rica for cosmetic surgery due to the skillful surgeons and affordable prices (25% - 60% lower than prices in the U.S.). Each year thousands of men and women take advantage of the low-cost, high-quality care provided by Costa Rica's cosmetic surgeons and dentists.
Real Estate Financial Structure of Costa Rica
- Costa Rica’s real estate market has experienced tremendous growth over the past decade. As the federal government has increased infrastructural spending, property values have increased as well. Since the 1949 signing of the Constitution, foreigners have enjoyed all of the same rights as residents. This includes ownership of property. Unlike other popular tropical countries, specifically Mexico where it is not possible for foreigners to fully own the title to property, foreigners are allowed to own and enjoy all the same property rights as residents in Costa Rica. Additionally, title insurance is available from Stewart Title, Chicago Title and First American Corporation – all large foreign based title insurance companies.
How much are property taxes?
- Yearly property taxes are 0.25%. Put another way, for every $100,000 worth of value your property is worth, you will pay $250 every year in taxes. Paradise Brokers can help facilitate that process.
How do I insure my property?
- In Costa Rica there is only one insurance company, Instituto Nacional de Seguro (INS). INS is a government approved monopoly that is the only company that is allowed to sell insurance (life, auto, home). Therefore, one does not need to spend anytime comparing rates as everyone pays the same. Each region has insurance brokers that must be involved with every insurance transaction (set up, file a claim). Paradise Brokers can help facilitate this process. We recommend that all of our clients maximize their insurance coverage to protect their assets, their liability and themselves from unforeseen events. An all inclusive policy can be purchased that covers the following in the Pacific region:
The annual cost of this policy is 0.22262% on the value of the assured good plus 13% sales tax.
- Accidental fire
Hurricane winds, falling of trees and malicious damages
- Land slides
- Earthquake, tidal wave and volcanic eruption
- Loss of rent
- Expenses of rent
Put another way, home insurance will cost $258 per year for every $100,000 of home value (not including the land). Theft insurance can be another 1.4% for the items that are listed to be protected. An updated list of items must be given to the INS agent and it can take up to three weeks to get Theft insurance.