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Hmmm . . . Well, if you say your friends are paying the Mass. tax, then I guess they are. What I don’t understand is how Mass. continues to impose residency in Mass. upon someone who doesn’t live there. What keeps them from imposing that same residency status on me?
If you don’t live someplace, if you don’t vote there, if you don’t have that state’s driver’s license, if you don’t work there, then what about your life defines you as their resident? We, at least, have notified North Carolina that we’re no longer its residents, and we certainly won’t be paying them any taxes after the 2005 tax year.
What would happen to your friends if they just quit paying Mass.?
Once you have legal residency, which does not entail a physical examination but does have income requirements, then you can enroll in the Costa Rican Social Security system’s CAJA medical program. CAJA does cover pre-existing conditions and it provides the drugs it provides as part of the benefit. CAJA, however, does not cover every drug. I take one for my diabetes which is not provided.
If you e-mail me at daveandmarcia@racsa.co.cr, I will ask my local pharmacist about the availability and cost of the $1,000 per month drug you take. Please be sure to give me the name, generic name, strength and frequency of administration. I’m assuming this is orally administered, right? And maybe he’ll know if the CAJA program provides it.
Well, there’s no shortage of oil RIGHT NOW, but let that third of the world’s population that lives in China buy as many vehicles per capita as (say) the population of Bulgaria and it’ll be a very different picture. The oil reserves that are being tapped today are the degraded remains of dinosaurs and other prehistoric life. The only dinosaurs around today are those who behave like the world’s supply of oil is inexhaustible.
While we did not move to Costa Rica to avoid the high cost of living in the U.S., we certainly know folks who did. And there’ll be more and more of them as the economic noose tightens around the financial necks of the American middle class. That’ll be especially true for those retiring on modest fixed incomes.
Marvella, you complain about $1,000 in property taxes on your home in the U.S. For most U.S. residents, that would be what you call property tax heaven. Worse still, however, will be the impact of homeowners’ insurance premiums. With the costs of Huricanes Katrina, Rita and whatever’s on its way this hurricane season to pay, plus the recent tornadoes in the midwest, homeowners’ insurance is going to go off the chart. And, unlike property taxes, you don’t get a vote on the cost. And since most homes in the U.S., even those occupied long-term by retirees, still have mortgages, going without homeowners’ insurance is not an option; it’s a requirement of the mortgage contract.
Tia7, you don’t need to understand all about wiring and plumbing, soil types, foundations and drainage, etc. That’s why you engage an architect (who will design a house that conforms to the building code and consult a structural engineer) and a builder. THEY are the experts. You tell ’em what your needs are, let them develop a construction budget, take the contract they propose to an attorney who’s on your side for review, and ultimately pay the bills. The architect can also supervise the building process to be sure that the house that’s actually built conforms to the plan.
What you do need to do is participate actively in the planning process from the perspective of the owner/occupant. That is, you need to carefully consider the sizes and orientations of rooms, locations of electrical outlets, layout of the kitchen, etc, etc. It’s a lot of detail work, but it is well worth it.
You’ve mentioned “studio space” in a couple of replies. Just what does that mean? Are you a portrait photographer? A ceramicist? A painter? A jeweler? I have to believe that the needs of those types of artists are significantly different, so the studio space you aspire to should be what your requirements dictate. I’d be surprised if you found what you need in an existing house.
You can surely find a two-bedroom house in town in Grecia in the $140,000 price range, but I’d begin looking in the $50,000 range and move up. It’s always easier to move up than down.
You should also be aware that neighborhoods not far outside Grecia could be very attractive alternatives. Costa Rica has excellent local and inter-city bus service, and taxis are cheap and everywhere. It would be entirely feasible to do as friends of ours have – take the bus or walk into town, shop, and take a taxi home. That would give you ready access to Grecia’s amenities, save you the cost of owning a car, and give you many more options of homes for sale or building sites.
The attorney who got our residency applications processed explained that, once residency is granted, you must spend a total of seven years (not necessarily continuous) in Costa Rica before you can apply for citizenship. In the meantime, a legal resident enjoys almost all the benefits of citizenship except the rights to vote or run for public office.
I can discern no circumstance in which women are treated as less than first class citizens in Costa Rica. Certainly my wife gets treatment in public and private settings equal to what I receive — the same benefits, the same courtesies. Women in Costa Rica retain their “maiden” names and identities.
Women are well represented among the professionals in the community. My guess is that there are as many female attorneys, accountants, physicians and dentists as there are male. If not, it’s close.
There is in Costa Rica, as everywhere else, some incidence of domestic violence, and I’m sure that it is disproportionately directed at women by men. I suppose that’s one facet of the nature of the society, but deplorable as it is, it’s hardly unique to Costa Rica.
On balance I could hardly characterize women as being second class citizens.
I can see the high price of oil being good for the Costa Rican economy in a couple of ways.
First, it could increase tourism traffic here, as tourists look for bargains. Air travel is a relatively energy efficient way to get around, and Costa Rica is a bargain destination. Those already overstressed by high oil prices, and there are many of them, will simply stay at home, but those with a little more discretionary income and still looking for an inexpensive vacation destination may turn to Costa Rica.
Similarly, middle class retirees (and there are legions of them) may begin to rethink remaining in the United States and Canada where the cost of living is very high. So many things here in Costa Rica are much more reasonably priced that people on fixed incomes will likely flock here in the next few years. That flood of North American immigrants will surely cause real estate prices in Costa Rica to rise. It will also cause other prices to go up, unless controlled by the government, but Costa Rica should remain relatively inexpensive for a very long time.
The only certain advantages that I can see to buying an existing house are that you can move in right away and you’ll know exactly what you’re getting. And you’ll have a fair idea of what it will cost. Hidden problems may be . . . hidden. The disadvantages are that you’re buying someone else’s idea of what the house should be and you’re living with their taste. I’ve built most of the houses I’ve lived in because I never felt the need for a fourth bedroom and a family room. We never had kids. Who would we put there?
If you build, it’ll take longer and you must be careful to control costs. But you can get a design that fits your needs, select all the components (cabinetry and countertops, electrical and plumbing fixtures, tile, paint, windows and doors, etc) to fit your tastes. And the house will be where you want it to be. If studio space is a consideration, then you’ll want to make extra provision for natural light, maybe a place to make a mess, etc. Those things are difficult to retrofit.
Our guest house cost $52 per square foot to build.
To begin with, the house itself is over 800 square feet and the garage is almost 700. Then, we found poor subsoil conditions despite having had a soil survey done, and had to put part of the foundation down almost four meters. We also encountered some drainage problems that couldn’t be ignored.
We upgraded a few things like the windows, and we excavated more than necessary on the upslope side so that it wouldn’t feel so “closed in”. And we did not use the very cheapest components, like floor tile, cabinetry, countertops, etc. We could have saved some money on those items and some others, but we’d probably have ended up replacing them when they didn’t hold up. Sometimes, it pays to spend the long dollar at the beginning but to only spend it once.
Our cost included all the costs for the architect (who supervised the project through to completion), permits, final grading, enough sod to hold the soil, drainage that would have to be done eventually, gravel for the driveway, etc, etc. Also in the costs I’ve cited were appliances — stove, refrigerator, washer and dryer, but no dishwasher.
We also put our trust in a local gringo to manage the project while we were still living in the U.S. In retrospect, we’re not sure that trust was well placed. Certainly, some decisions were made that were not in our best interest. If I had it to do over again, I would be very much more careful that the bid I accepted from the builder was a total, one hundred percent, guaranteed fixed cost bid with no provision for additions. That bid would specify all the component costs and provide that any savings come back to us.
Some important considerations: First, the U.S. IRS Code provides for taxation of income earned in the U.S. regardless of the citizenship or residency of the earner. A Japanese citizen and resident who invests in a U.S. security which pays dividends in the U.S. is subject to U.S. taxes.
Second, the IRS Code provides for universal taxation of the income of U.S. citizens. The interest you earn on your bank account at Banco Nacional de Costa Rica is taxable by the U.S. IRS. So is the rent on your home here in Costa Rica. Any income, regardless of source, is taxable, if you are a U.S. citizen.
Third, if you are a full-time resident of Costa Rica and do not maintain a home anywhere in the U.S., you do not have to be a resident of any U.S. state. Regardless of where you lived last, or what your mailing address may be, if you don’t meet the standards of residency in any state, then you aren’t a resident of any state, and (among other things) you are not liable for any state’s taxes. You also can’t vote.
I think there’s probably a house like what you want within the city, but I wouldn’t limit my search there. Bear in mind that the bus system is excellent. Many people rely on it. And taxis are omnipresent and very reasonable. You can take a bus into town from our place for about $.60 and taxi home with your groceries for less than $4.00 — maybe a lot less.
The modestly priced homes you’ll find in Grecia and elsewhere will be built to Tico standards — small, dark and airless rooms, no hot water, close to the road and likely very close to the neighbors. A budget of $140,000 ought to buy you a very nice building lot and a custom-built house that meets your expectations in every way.
Just as an example, we bought two manzanas (about 3.5 acres) at the end of a farm service road 500 meters from the paved road for $34,000. We built a one-bedroom, one bath, guest house with a one-car garage on it and had a lot of financial problems most of which could have been avoided. The house cost us $86,000. Total invested: $120,000. And we have room to build the main house on the same property. It will cost a great deal less. Point is, $140,000 could put you into a very, very nice place that would meet all your needs.
And yes, you can get a lamp rewired in most fereterias (hardware stores),
Grecia is a “town” of about 50,000, more or less. It’s at about 3,500 feet which means that it gets hot in the afternoon but not unbearable. Like the rest of the Central Valley, its rainy season runs about May through November, give or take. And it does have most of the amenities you need on a daily basis as well as a fairly robust gringo population. There are ample medical and dental providers, several pharmacies, clothing, food and hardware stores, restaurants, banks, etc, etc.
Most developed areas are served by local water utilities. In el Cajon where we live, we have a water system that draws its water from some springs higher up the mountain. The water is piped directly to your home; there is no processing. The taste is fine and we are aware of no water quality problems. Periodically, the water is tested. There is some pressure from the government to chlorinate it, but so far that’s been resisted.
Maravilla has it exactly right. The U.S. taxes its citizens’ income universally — regardless of where they live and regardless of where that income is earned. The only relief may come in that there is a credit on your U.S. return for taxes paid on that income to a foreign taxing authority, so you probably won’t be taxed doubly.
I think I know that the IRS Code permits U.S. residents of foreign countries some freedom to file later than April 15th, but I’m not sure just what’s allowed. We filed in March, so it doesn’t matter to us. But that’s about the only break one gets for living outside the U.S.
Vivian, your four months of “presence” in Costa Rica each year to maintain your pensionado residency status do not have to be continuous. It is critical, however, that you keep your airline or bus ticket receipts to prove your comings and goings.
You know, too, that you must exchange $600US into colones each month, right? You must get a receipt from the teller in the bank that shows your name and the amount converted. These will be examined when you apply for your renewal.
My wife and I pay $37US combined health insurance premium. We enrolled via ARCR. As part of the enrollment process, we went to the local Social Security office where they thought our premium should be $57 instead. They called ARCR and we walked out paying the original $37.
To maintain “pensionado” residency status (at least) you must be in Costa Rica four months a year.
Once you have residency, you can enroll in the CAJA medical care system run by the Costa Rican social security system. The monthly premium is based upon your income.
You can also purchase one of two health care policies offered by INS. The costs depend on the extent of the coverage which you opt for. The INS programs do not cover pre-existing conditions, however.
