The cost of home and car ownership in Costa Rica
TICONUEVO | JUNE 14, 2014
Let’s continue last week’s discussion of bargains: inexpensive and/or plentiful things you’ll discover in Costa Rica.
Our last utility to mention is water. It is delivered to us from the local municipality and is just a whole lot less expensive than in the States.
We had to water our acre like crazy during the dry season this year to give the recently planted landscaping a chance to take root and our bill was “outrageously high” (around $60 a month), but I know folks in our town that pay on an average of about $8.00 a month all year long.
In summary, utilities by and large are less costly than in North America.
Now, let’s talk about homeownership. It is, perhaps, where the largest single savings is experienced when compared to North America.
Housing by comparison to the States is less expensive in Costa Rica. It depends on what you buy and where you buy. (Remember the real estate saying, “location, location, location” applies here as well). Using our house for example—a large three-bedroom modern home built in 2008, with a terrace and views, completely renovated to North American standards and situated on one acre with a free-standing guest house and a security entrance—cost us about 55-65% less than a comparable home in California even after plummeting prices resulting from the Great Recession of 2008.
You are likely to buy your house in Costa Rica outright and have no mortgage
If you want to own a home in Costa Rica, you are likely to buy it outright and have no mortgage, no monthly payment and no interest to pay. It eliminates a large expense on your monthly budget. (Bank-financed mortgages in Costa Rica are a rarity and expensive with double-digit interest rates.) Buying a lot and building a house to your dream home standards can be a lot of work and many hassles, but can also produce big savings in the reduced cost of the property and permits and the greatly reduced labor cost of building it.
Costa Rica home owner insurance is less expensive
Costa Rica opened up competition in the insurance arena to go head-to-head with its government-owned insurance provider I.N.S. Homeowners’ insurance for us is less expensive here. There is an additional saving as there is no liability coverage to buy because it is unavailable, but home injury liability lawsuits are rare or non-existent. One great cost-saving benefit that comes with a comprehensive I.N.S. homeowner’s policy (or an auto policy for cars six years old or newer), it’s three one-way taxi trips of up to 40 kilometers per policy year to the airport—as they say an “up to $120 annual value” and money that stays in our pocket.
Everything related to car ownership is on a par or a little more expensive than in the U.S.
Unfortunately, our experience so far is that automobile insurance is not one of this country’s bargains compared to the States. In fact, everything related to car ownership is on a par or a little more expensive than in the U.S. with the major exception of automobile service and repair labor, which, as I’ve said before, is significantly less expensive.
Taxes in Costa Rica
For the majority of folks in North America, taxes are a major consideration and most often a significant expense, especially for homeowners. In Costa Rica, property taxes are just not a big concern. Using California for comparison, property taxes are about one-fifth or less the cost of a comparable property (not a property of equivalent assessed value). Even when the relatively new corporation tax of $180 (corporations are used here as a hedge against legal liability) is added on: there is very little pain at tax time. The automobile is heavily taxed here, but even so annual auto taxes and fees are generally on a par with the U.S. The biggest exception is the steep automobile tariff of roughly 70% levied on the value of new or used cars coming into Costa Rica.
Like Europe, Costa Rica has a value-added tax on almost everything. It is usually included in the net price you pay and, for that reason, this tax can be easily overlooked. If you realize that almost everything you purchase has a 13% sales tax included, it should cause you rethink your perception that some things are pricey. In Costa Rica with this value-added tax, there also seem to be fewer other types of taxes levied on the population.
Next week I’ll cover food-related purchases that can be noticeably less expensive than in North America.
The author of this blog, Ticonuevo, is a US expat who moved to Costa Rica and used the services of GoDutch Realty to purchase a property in Costa Rica. In his blogs, Ticonuevo describes his own experiences of taking the step of moving to Costa Rica and getting a new life started.