Costa Rica Real Estate in your IRA – 12 Steps

Costa Rica Real Estate in your IRA – 12 Steps

1. Select the property in Costa Rica you which to purchase.
2. Complete a purchase agreement for the property showing your IRA as having legal title.
3. Have your IRA Administrator issue a check for a good faith deposit (you can in some instances make the deposit yourself and then have that replaced with a check or wire transfer from your IRA Administrator).
4. You send your IRA Administrator a ‘Buy Direction Letter” in this case for Real Estate.
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5. You then find the title and escrow company, a real estate lawyer and anyone else needed to effect the transaction. You have these people contact the plan Administrator.
6. Your Administrator will tell you, the lawyer and the escrow company what forms will be needed by the IRA prior to closing. Have these filled out in a timely manner and sent back to the Administrator. A copy of the contract should be sent to your Administrator as soon as possible.
7. The replacement check or wire transfer is sent to replace the deposit check given to the seller or seller’s attorney.
8. After you read, understand and approve all the documentation required the seller(s), lawyers, escrow and title companies you have all documentation sent to your Administrator to sign on behalf of your IRA.
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9. Your Administrator reviews all the documentation sent against the information in your Buy Direction Letter. If they agree, your Administrator signs all the necessary documents to affect the purchase.
10. Your Administrator sends a wire transfer to the escrow account for the purchase price of the property and your IRA now owns the building.
11. If this is an income-producing property, you may not collect the checks and pay the expenses directly yourself. The most logical thing to do is to have the IRA hire a property management company.

    Research the local property management companies and instruct your Administrator to sign the agreement with the management company you have selected. If you do not want to use a local property management company, you could utilize the services of your Administrator if they are local. You will have to ask them what the fees related to this service would be.

12. Any profits and/or income generated by the property are now cash in your IRA. You can have this money invested into any other asset permitted by your IRA plan through the use of your “Buy Direction Letter.”

Please note that the rules and regulations regarding ownership of real estate in your IRA are complicated and things may have changed since this article was written so make sure you consult with a qualified tax professional to help you with this process.

Dean Demos is a CPA with 20+ years of experience in US taxation. He specializes in the areas of Expatriate and High Net Worth Individual issues. He is currently a partner with Global Tax Network and runs their Stamford, CT office. Prior to setting up an office for GTN, he worked for Price Waterhouse, PricewaterhouseCoopers and KPMG.

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.