Costa Rica Blog

With the colon's increase in value this year topping 11%, it was the second highest appreciating currency worldwide.  In a reaction by the central bank to control the astonomical increase in the value, the bank has announced plans to purchase up to $50 million dollars per month in foreign currency to curb the rise in value of the colon.  The rapid rise in value of the colon will make both tourism and exports more expensive.  The central bank has traditionally allowed the colon to float in a range between 500 and 640 colon to the dollar but this week the colon approached the upper ranges in value, at 504 colons to the dollar. 

By purchasing foreign currencies, the central bank hopes to decrease the value of the colon.  The higher value of the colon makes real estate and exports more costly to international investors.  This is a good thing for the many North Americans who have already purchased property there, as the value of thier property increases.  It does make real estate more expensive for new buyers unless the property is priced in dollars, not colon.  Fortunately our prices at Pacific Lots are priced in dollars but as the dollar continues to lose money worldwide, there is pressure to change our pricing system to colons.  For those who have purchased property using a self directed IRA, the gain they realize over time reflects the increase in the value of the colon as well as the increase in value of the property.  As the dollar continues to lose value, more Costa Rican real estate, home sites and lots will be priced in colons. 

The vast majority of investors opt to purchase property in Costa Rica through an Anonymous Corporation called a Sociedad Anonima (S.A.).   This protects you against loss in the case of being sued if someone hurts themselves on your property.  It also makes it easier to attain services like setting up a bank account, getting a phone line, etc.... Additionally, it makes it much easier and less expensive to sell your property if you choose to do so in the future.  In that case you are not subject to paying the transfer tax. The company shares are simply transferred. Costa Rican corporations also do not pay income tax. This is a major advantage if the corporation is going to retain profits (ie. rental income) for future investment. It can also make estate planning less complicated. You can transfer or will shares of your corporation to someone else.