COSTA RICA TAXES AND RENTAL PROPERTY

Costa Rica taxes that were enacted into law over a year ago have started to be implemented. So if you own a property in Costa Rica and are renting it out when you are not using it, I hope by now you have been contacted by your property manager, CPA, lawyer or the person that is helping you manage your affairs here.

Costa Rica Rental

Let’s start with a little background history. For many years, people that purchased their Costa Rica vacation property realized that there is a very good rental market for condos and homes in the area. That’s especially true from December to April which is considered the high season. If properly marketed and well maintained, an owner can very easily cover all their expenses and put a nice profit in their pockets–a win, win right!

Well, here comes the tax man “Ministerio de Hacienda”, the Costa Rica equivalent of the United States Internal Revenue Service or the Canadian Revenue Canada. Many expats as well as local Ticos have never reported the earnings from their rentals. The Costa Rica taxes that were already in place covered this but, as always with taxes, people find a way around paying them. In Costa Rica it is almost like a sport trying to avoid paying taxes. Let’s face it–what country in the world does not want a piece of your profits or salary?? If you know of a place, let me know. I may move there, but I highly doubt it.

Costa Rica taxes
The administration for Costa Rica taxes has finally found a way to catch up with the thousands of rental properties and business that have not been paying any income taxes at all or even filing tax returns. Heed my warnings, please.

Playa Hermosa taxes
You may be thinking, “I do not operate a Costa Rica business, so what do I care?”. Well, do you own a Costa Rica property? If yes, the next questions are: Is the property held in a Costa Rica corporation or in your own personal name? Do you know if the corporation was registered as an active corporation? (meaning it does business and receives income) Or, was your corporation registered as inactive? These are all important questions you should be asking yourself so you don’t get into a mess with the tax authority. If you do not know the answer to these questions, I highly recommend you contact the attorney that helped set up your Costa Rica corporation to know for sure.

Costa Rica taxes

Starting the new fiscal year of 2019, which starts October 1, 2018, most Costa Rica corporations are required, by law, to issue a “factura electronica” (it is a legal registered receipt) for all funds received in the course of doing business or providing a service. As an example, if your pool guy has a legal company that is already paying taxes and he wants to get paid, he will have to give or send you an electronic receipt to get paid. This shows the income to the tax man. The same goes for when you are renting your property. You will need to give each renter a “factura electronica” for the money they paid for the rental time.

Costa Rica Tax
Now I maybe got you thinking “HA HA it is just the pool guy. Let him send me a receipt. I will pay it, but who is going to know?” The Tax Man will know!! The system is set up so that when a service provider wants to be paid, he sends a “factura electronica” (the key word here is electronic) or invoice.  Well, this same information is sent to the tax authority and they will be cross checking who got it, who sent it, and who is liable for taxes.
Are you renting your property? Then you have a Costa Rica business and need to follow the laws. I am not the tax police, not a CPA nor am I a legal advisor, but I do own a Costa Rica corporation that does make income. So I made darn sure that I contacted my CPA to make sure I am compliant with Costa Rica taxes.


Many good and responsible (those are two key words) property management firms are following the laws as they do not want to end up being responsible for a client’s tax liabilities. I know of one that actually fired a client because the client refused to follow the direction and still wanted to rent. I am sure this will start to push the really low-priced “Property Manager” out of business, and I feel sorry for the property owner that does not do the right thing.
My recommendation is you contact the person that is assisting you in Costa Rica with your rentals, before the tax man cometh. If you need a recommendation, I will be happy to offer. Just send an email to me at JosephEmanuelli@remax.net. Do leave a request for information or help on this blog comments section.

COSTA RICANS GIVE LIFE, WILL YOU?

Thanks to the generosity of Costa Ricans that give life, eighty-eight people are alive and well today. They are enjoying a new lease on life due to receiving an organ transplant. I know this is a weird subject, but one that should be looked at or considered if moving to Costa Rica. Of course, it is a personal decision.

give life through organ donation

Reported by the Organ and Tissue Donation and Transplantation Program of Costa Rica’s Social Security Fund, CCSS or CAJA as it is known locally. Sixty-eight of the organs transplanted came from, unfortunately, deceased donors and the rest from living donors. The recipients were suffering from terminal damage to either heart, liver, kidney and lung and would not be here today if not for those that are donors.

Costa Rica Organ Donation
The number of people willing to donate organs to give life is going up.  As an example, in all of 2017 there were only 34 donations of organs from people that died in an accident. If you ever have driven in San Jose or on some of the highways here in Costa Rica, you’re more likely to get into a car accident than die from an earthquake or a volcano explosion.
Some have said that even through the pain, shock and confusion of having a loved one pass away from an accident, they actually found some peace and solace by knowing that their deceased loved one was willing to donate usable organs to help another human being live on.

organ donation Playa Del Coco
Even in Costa Rica, drivers as well as everyone are being encouraged to sign up for organ donation by medical specialists. Many professionals have agreed that a person who dies in an accidental death can provide organs for up to nine others. Not just organs but many things like tendons, heart valves, tissue, and skin.  The list of ways to give life goes on and on.

In Costa Rica over thirty-five thousand people have registered as organ donors. If you are thinking of moving to Costa Rica and you want to donate, you have to register yourself as an organ donor. I have!! I am not sure how much of this 58-year-old body is useful, HAHA, but you never know.  I will leave that to the pros. I signed up and it is listed on my driver’s license. If you want to give the gift of life upon your death while living in Costa Rica, just follow the procedure on the website www.ccss.sa.cr/donar

donate organs

You can give the gift of life, even if not moving to Costa Rica.

For the United States of America Click https://www.organdonor.gov/register.html

For Canada Click https://organtissuedonation.ca/en

 

POAS VOLCANO, COSTA RICA

Costa Rica’s Poas volcano recently reopened after being closed since a sizable eruption in April 2017. I previously wrote about volcanoes in Costa Rica and making the move to live here, but thought I would elaborate on Poas just a bit further.

Poas volcano

The Poas Volcano National Park was the second most-visited park in Costa Rica (Manuel Antonio is first) with more than 400,000 visitors per year. The beautiful drive up the 8885-ft mountain is worth it by itself, but make sure the driver is not doing the sightseeing, if you know what I mean. Upon arriving you are rewarded with the sight of one of the world’s largest craters. At the bottom of the crater is a steaming, acidic, blue-green lake. The rain-fed lake is surrounded by smoke and steam rising from fumaroles. Water from the lake is constantly seeping through cracks in the hot rock, evaporating and building pockets of steam. When the pressure in these pockets exceeds the weight of the water above, the steam breaks through in geysers that shoot up to 820-ft high.

Poas volcano

Poas has always been a mildly active volcano, erupting 40 times since 1828. But on April 12, 2017 Poas awoke from a 64-year snooze. The explosion was mainly driven by water heated at the summit crater/vent area generating what is called a phreatic eruption. Plumes of steam shot 3,200-ft in the air, and ash and incandescent rock fell in the surrounding area, suggesting the presence of magma relatively close to the surface. Relatively close is too close for me! Can you imagine the thought of passengers on a flight out of San Jose passing over when it erupted–they got quite the view! Visitors and residents in the surrounding area were evacuated and the volcano and the park were closed for an indefinite period.

Costa Rica Vocano From Plane

After that eruption, there was concern that there would be no future warning of impending danger to visitors. “Before, there were premonitory earthquakes that would alert us that the system was preparing for an eruption, but not anymore,” stated officials of the National Emergency Commission.

Live Volcano, Costa Rica

Dr. Mauricio Mora, volcanologist for the National Seismology Network, commented that Poas Volcano is right now “an open system that presents important degasification and could present an eruption at any given time.” A similar situation occurred with the Turrialba Volcano in 2012 and this park still remains closed 6 years later.

I recently read that the park is reopening, which kind of spurred this blog. My first reaction, and I still think this, is why?? Well, because the closure of the park has had a huge negative economic impact on businesses that depend on  visitation to the area. Reportedly sales dropped by 71%, and the National System of Areas of Conservation lost millions in revenue from entrance fees to the park. As always, it comes down to $$$$.

The businesses in the affected area are predominantly small hotels, restaurants serving local fair, souvenir stores, and roadside stands selling locally produced strawberries, blackberries and cheeses. By the way, if you ever get a chance to try these highland blackberries and strawberries, you will never want to buy any others. Logically, those businesses suffered without any visitors to the area.

Costa Rica Stawberries                   

However, in my humble opinion, it seems wrong to invite tourists to an area that can be dangerous just so the locals can sell them something on the way…

Poas volcano area fruit Stand

So the Technical Assessment Committee for Volcanology and Seismology set safety criteria and stipulated the conditions necessary to authorize the re-opening of the park. Shelters were remodeled or built near the crater. Like this will help them if there is another big explosion! More gas monitoring systems were installed. There is also a new digital ticketing system to limit access to 50 people at a time, and time spent at the crater will be limited. If an emergency does occur, a protocol will be put into effect that will move visitors to a safe place containing 70 helmets, 140 air filters and 70 individual-use masks. What about fireproof suits???

Poas Volcano is an easily accessible and beautiful national park. I know–I have been there a few times since living in Costa Rica. The crater is spectacular, although because of cloud cover it is not always visible. So, get there early, and buy some strawberries on the way down to help out the local residents!

GETTING YOUR COSTA RICA DRIVERS LICENSE

You have made the move to Costa Rica, and you are all excited about starting a new life in a beautiful country.  It is you new home! However, before you get to “Pura Vida” there is one thing you need to do. It is time to get your Costa Rica drivers license.  So what do you do?

Costa Rica drivers License
You will need to get your Costa Rica drivers license because your foreign license is only good for the same time as your last current passport stamp (90 days is the max). Here is a list of items you will need. If you don’t have them all, you will be denied and have to go back again. I know–I went through this process.

Playa Hermosa, Passport Stamp Costa Rica
1) Your present license must be up-to-date and in good shape. Meaning it is not torn and everything can be clearly read on it.
2) You will need two copies of both sides of your license. They won’t make copies for you!
3) Medical check-up form: you can obtain this from many local area doctors that have been certified to perform the check-up. Heck, there is even a doctor’s office right across the street from the location in Liberia. But I advise doing it a day before or so.
4) Your present resident card or your work permit, that is still valid and not expired.
5) You will need two copies of your resident card or your work permit, both sides.
6) You will need to present your current valid passport showing you have been in the country legally for 91 days.
7) You will need copies of your passport that is issued from the same country as your foreign driver’s license along with copies of the last immigration stamp in your passport.
8) Have the required fee amount ready to go. Presently it is 5,000 colones.

health Check for Costa Rica drivers license
With all the proper paperwork, your photo will be taken and a new Costa Rica drivers license will be issued on the spot. Well, on the spot is a relative term–you may have to wait an hour. Remember “Pura Vida”!

When I first got my Costa Rica license I had to go to the Central Valley to the licensing department which is part of COSEVI located in La Uruca. However, it is getting easier thanks to the General Directorate of Road Safety which provides the service. There are now 13 different location throughout the country and you do not need an appointment. They are Limon, Perez Zeledon, San Carlos, Liberia, Nicoya, Puntarenas, Rico Claro, Alajuela, Sam Ramon, Guapiles, and of course La Uruca.

Costa Rica drivers licenses
You may be thinking “HMMM, I do not have a residency card yet. It hasn’t been issued yet”. Well, unfortunately to keep your current foreign license valid you will need to leave the country and come back to get a new 90 day stamp in your passport. Unfortunately, the Immigration laws and the transit law never took foreigners and this process into consideration.
Getting your Costa Rica drivers license can be frustrating, but in the long run it is just part of moving to another country and getting to know their laws and customs.

RIDING OUT A COSTA RICA EARTHQUAKE

To anyone living in Costa Rica, “shake, rattle and roll” means more than just the lyrics of a song or a saying. It describes the occasional tremor and temblor of an earthquake we feel here. Heck some you don’t even feel. A recent Costa Rica earthquake made the news in the US, prompting phone calls from some of my family. In July there was a 4.7-magnitude earthquake east of San Gabriel, Aserri, San Jose. And then in August the area near the Panamanian border was shaken by a 6.1-magnitude quake. As I had to tell my mom and brother, I was less shaken up than they were.

Costa Rica earthquake

A little shake up now and then is to be expected in Costa Rica, since the tectonic plates Nazca, Cocos and Caribbean all converge just off the Pacific Coast, part of the eastern edge of the Pacific Rim of Fire. This makes for a lot of seismic activity. When the plates shift—and they do–the country feels it. Sometimes a tremor will shake you side to side, sometimes up and down, while other times you experience more of a rolling sensation.

Earthquake Playa del Coco

Will a Costa Rica earthquake kill you? Probably not. It has been said that earthquakes don’t kill people—buildings do. With very few exceptions, most homes are not more than 2 stories tall, making it very easy to escape outside when the tremor starts.

Let me give you an example, compare the 7.0-magnitude 2010 Haiti earthquake to a 7.6-magnitude earthquake that occurred along the Pacific Coast of the Nicoya Peninsula in 2012. In Haiti, the government reported that the death toll reached 230,000. In Costa Rica, there was one death due to a heart attack caused by fright. What’s the difference? Experts say Haitian homes were brittle and had no flexibility; thus, they broke apart catastrophically when the earthquake struck, killing their occupants.

Haitian earthquake

On the other hand, Costa Rica has strict building codes that requires structures be engineered so that they don’t collapse. Have you seen the amount of rebar and concrete that goes into building a house here? Its mind boggling. The few deaths that have occurred over the years after an earthquake are often the result of being caught in a landslide. When most people that ask me this question, I ask them if they heard of this event in Guanacaste. All say no. Why not? That’s because there was no devastation like occurred in Haiti.

Costa Rica Construction

Perhaps you are concerned about warnings of an impending major quake that could rock Guanacaste, the province where many expats are moving to Costa Rica. Many thought the 7.6 magnitude earthquake that shook the Nicoya Peninsula was the “big one.” Although the quake was one of the strongest in the country’s history, there was not as much damage as the magnitude might warrant.

There was some structural damage to buildings and roads and one death as mentioned earlier. Due to most likely not following the building codes, but that’s another topic. The power went out for a couple of hours as well as cell line communications, but they were both restored quickly. Hardly a disaster of epic proportions! The day after it happened you would never had known if you just arrived.

Playa Hermosa Sunset

Just in case you Nervous Nellies are wondering, “What about tsunamis? Maybe the earthquake won’t kill you, but the tsunami will!” You can relax. The shape of the seabed off the shores of Costa Rica is not particularly suited to the formation of tsunami waves. There has never been a significant tsunami recorded as a result of a Costa Rica earthquake.

no Tsunami in Costa Rica

So, please come visit us! If the earth decides to make an adjustment while you are here, run outside and away from structures and power lines, and enjoy the ride! And then call your families and tell them you are fine.