Corporate vs. Personal Ownership in Costa Rica

Buying property in Costa Rica: Corporate vs. personal ownership

A frequently asked question that many investors have is: What are the benefits of corporate vs. personal ownership in Costa Rica? Foreigners can purchase titled property in their own names, but purchasing under the name of a Costa Rican entity also offers benefits. The primary advantage is that corporate ownership reduces personal accountability for property. A power of attorney can then be issued to purchase or sell property. Foreigners who are unable to obtain utilities on their own can do so through a Costa Rican firm.

Corporations pay an annual tax based on whether they are “active” or “inactive.” An active corporation generates income through activities such as holiday rentals and pays $190 in taxes. Inactive corporations pay $115. In Costa Rica, corporations such as Sociedad Anonima (S.A.) and Sociedad Responsabilidad Limitada (S.R.L.) are very common.

Here is a list of the different benefits and drawbacks. While this list is not comprehensive, RE/MAX Blue Ocean can assist you in a personal assessment with the help of our legal team to help you determine the optimal structure for your specific goals and circumstances.

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Advantages of Buying Property in Costa Rica Through a Corporation:

Asset Protection

One of the main advantages is asset protection. In Costa Rica, shell corporations are legally considered individuals. This structure allows people to protect their possessions properly. For example, if you are involved in an automobile accident, placing your property in a separate organization protects it from potential legal issues relating to the car.

Flexibility

Purchasing property through a corporation provides flexibility. You can appoint a power of attorney to perform certain activities, such as setting up utilities or managing sales remotely from overseas, which will alleviate logistical difficulties.

Convenience

Operating through a corporation simplifies administrative processes such as applying for utilities and opening bank accounts, which can be more difficult for foreigners who lack resident status.

Drawbacks of Buying Property in Costa Rica Through a Corporation:

Expense

Registering a business in Costa Rica costs roughly $700, plus annual fees such as corporate taxes, which average around $120 per year.

Administrative Burden

Along with the initial and recurring expenses, there is the continual administrative load of annual shareholder registration and asset disclosures. Depending on your method, this may result in additional costs.

Advantages of Purchasing Property in Costa Rica under Your Personal Name

Lower Costs

Personal ownership saves hundreds of dollars in upfront closing fees.
You won’t have to register shareholders or pay company taxes; therefore, your annual expenses will be lower.

Cons of Buying Property in Costa Rica in Your Personal Name:

Liability

Personal ownership exposes the property to potential liabilities in worst-case scenarios, such as accidents.

Inconvenience

Managing property in your own name requires a physical presence for signings and can provide difficulties for remote transactions, such as selling a property from abroad.

The great advantage of using a corporate or personal ownership in Costa Rica is that you do not have to negotiate the complexity of property purchases on your own. Contact the knowledgeable professionals at RE/MAX Blue Ocean for help tailored to your specific requirements. We are here to help you every step of the way, assuring a seamless and educated journey into Costa Rican real estate.