Financing Options and Owning Land in a Corporation
Financing Options: how it works
We require 10% down to hold a lot and you then have 45 days to bring the deposit to 20% if financing. If you are taking the cash discount, we use the same 45 day period for you to pay the balance in full. You basically need 20% down to set up for financing, with the balance paid in 12 quarterly installments ove 3 years. Interest rates go down as your down payment goes up. We really don’t want to be in the finance business and the financing is offered by the developer. Interest rates are 10% with 20% down, 9% with 30% down (within the first 45 days of when you put the 10% deposit down to hold the lot). 8% with 40% down, 7% with 50% down, etc, but also keep in mind that everything (including finance terms and interest rates) is negotiable. (even price is negotiable) So don’t be afraid to make an offer that meets your needs, the worst that can happen is we say no. When you make your deposit of 10%, you then have 45 days to bring it to 20%. You then have 90 days between each payment. There is a one time fee of about $500 to set up financing but we pay all the closing costs, deed stamps, registry fees etc.
Owning Land in Costa Rica in an SA:
We suggest to all owners that they own their land in a corporate form, referred to as a Sociedad Anonima or SA. We set up a corporation that will be used to hold ownership of your property. Owning property in a corporate form is suggested in Costa Rica for a number of reasons. We have shell corporations (SA's) already set and registered in the Costa Rican mercantile registry to transfer ownership of your property to and we then transfer ownership of the shares of the corporation to you, which is recorded again in the mercantile registry. Owning via a corporation has a number of advantages; first there is no capital gains tax on the sale of land in Costa Rica that is owned by a corporation. Second if you or your husband (assuming you are married) or anyone else who is also named as a shareholder of the corporation should die, there is no probate required to pass ownership of the corporation to the remaining owner(s). This avoids a big issue if one of the owners of the corporation passes away. Corporations are legal entities of their own and live on in eternity. You can sell the land by simply transferring the shares of the corporation to the new owner, no land transfer takes place, no closing costs, document stamps, registry fees etc are required to sell land in a corporate form and the land value remains within the corporation at the original basis, a plus for property tax purposes. You also have limited liability when you own land via a corporation. So for example if you built a rental on the property and someone drowned in your pool, the next of kin could not sue you, they could only go after the assets of the corporation. You also have some annonimity via corporate ownership. There are other advantages to corporate ownership as well.