Residency in Costa Rica and your IRA or 401K account
by Ivo Henfling
Most people don’t realize they need residency to live in another country but your IRA, 401K can be your solution.
There are many ways to apply for residency in Costa Rica but you have to keep one thing in mind: if a Costarican applies for residency in your home country it’s not going to be so easy.
Look at your options many years before you retire in Costa Rica. If you own a traditional or Roth IRA, you can transfer or rollover the funds to a self-directed plan with no penalties.
Learn more about this way of investment and getting your residency in Costa Rica in place.
An Easy Way to Residency
Not necesarily you need to have a retirement fund to be able to get your Costa Rica residency, you can purchase ANY property in Costa Rica to get your residency as an Investor, as long as you play by the rules.
Purchase a property
Costarican law specifically excluded personal investments in the past, such as the purchase of a home in Costa Rica, lots or buildings to qualify for the investor category, but on August 28, 2009 the Director of Immigration issued Circular UPI-239-2009-LAS which modified the types of investment that could be made to qualify for this category.
“The investment amount must be of US$200,000 or more according to the official exchange rate which is established by the Central Bank of Costa Rica. The investment can be made in tangible property, shares, negotiable instruments, productive projects or projects which are deemed of national interest”
A Real Estate IRA
A Real Estate IRA is a self-directed IRA that holds real estate. With a self-directed IRA or real estate IRA, you are not limited to the investment offerings of an IRA custodian or trustee. By using an administrator for your self-directed IRA account, you have much greater flexibility in the number of investment choices you have.
A better ROI
If one day in the future you want to retire in Costa Rica or move here and you have your retirement funds sitting in an IRA account or any other retirement fund account, we have a good solution to not only your future residency requirement but also to a much better option to investing your money at a more profitable ROI.
Use your Retirement funds years before you move
Purchasing Costa Rica real estate years before you retire, gives you not only an option to get your feet wet in another country and confront you with a new culture and a new language. It gives you the option of planning ahead of time, making a much higher profit than you are making now with those retirement funds.
You are allowed to form a partnership in an IRA real estate purchase. You can partner with someone else’s IRA or even yourself or your spouse. There are many combinations possible, as long as you live by the self-directed IRA’s rules, ask your GoDutch Realty agent about it. The rental income will go to your IRA account so your IRA funds will be able to grow much faster. Make sure you check on the limitations though.
Sell the property and live on it
Once you decide to move to Costa Rica and live on the property yourself, your IRA can sell the property to you, the funds will roll back to your IRA account and you have been doing all this legally without having paid any taxes on those funds. Costa Rica doesn’t have capital gain taxes, so your profit will be tax free.
Get your residency now
When your self-directed IRA sells the property to you, make sure the property is registered at the closing for over $200,000 and you register the value in the municipality for the same amount, as this will qualify you for the investor status in Costarican immigration. $200K registered value in the municipality will make your property taxes more or less $500 per year.
We specialize in retirement fund real estate
GoDutch Realty’s agents are all well trained and can guide you through the maze of requirements needed for a retirement fund investment in Costa Rica. We have also the rigth connections to take care of the legal side and make a smooth transaction possible. Several of our own agents are using their IRA for their Costa Rica real estate investments. Contact us now for more information.
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I DO want to remind our readers that we appreciate any referrals you can send us. I know you all meet people on the plane, in the supermarket, at yoga, at the gym, at the Blooms ladies club, at the potluck organized by your community. Please remember the GoDutch Realty agents when you talk about your home in Costa Rica, when you meet someone who wants to purchase one, we appreciate it.