U.S. Laws Causing Huge Delays For North Americans Investing in Costa Rica Real Estate With US Dollars.

“For the past year we have had several occasions where the banks have made it very difficult to receive funds into Costa Rica.

For example, we have clients who have an account here with Banco de Costa Rica (BCR) who were purchasing a home and transferring their U.S. dollars down to their account to make the purchase.

The banks in Costa Rica unfortunately need to comply with all the new banking rule changes, due to the Patriot Act, FATCA and to CAFTA – the “free trade” agreement with the U.S.

Our clients had to provide proof from their banking institution in the U.S. as to where the funds came from (savings, retirement, investment, etc), they had to send that written proof to the Costa Rican consulate closest to them for certification, which would then be sent to their bank here in Costa Rica for approval.

Once the Costa Rican bank had all the necessary paperwork, the funds could then be accepted into their account and the real estate transaction be finally closed.

Now, that was not all they needed. Once all the paperwork was back from the United States, they then had to have a Costa Rican accountant provide a certification of their “ingresos“, PLUS the certified copy of those “ingresos” as well as a copy of the purchase agreement for the property they were buying, which had been notarized by an attorney.

We currently have two closings delayed for this reason

In all the cases we have been dealing with, this process added and additional 6-8 weeks to the closing. For this reason, we are suggesting all closings be a minimum of 90 days.

As part of all this the same process is true of an escrow agent here in Costa Rica…

Our attorney is certified by La Superintendencia General de Entidades Financieras SUJEF to be an escrow agent as are many attorneys and title companies.

Traditionally in Costa Rica, escrows have always been 10% of the purchase price. Now with the new banking rules, if the escrow amount is $10,000 or more, then the same process applies, meaning you have to go through the process twice OR, trust your attorney to hold ALL the money for your closing.

We have been successful in convincing all our clients that we need to make escrows under $10,000 and made that part of the process easier.

Another loop hole we have found is that if both the purchaser and seller agree and the bulk of the money does not need to come into Costa Rica, then we arrange for the final payment to be made into an account outside of Costa Rica, which saves all the hassle.

Now, having said all of that, for the same reason’s as stated above, once per year you must “actualize” all your bank accounts that are open in Costa Rica, making sure your ingresos are the same, passport, etc. If you do not do this then your account will be closed.

Thanks to Foreign Account Tax Compliance Act (FATCA) starting January 2013, Costa Rican banks MUST report all banking activities of US citizens directly to the IRS. They may hold the American citizens responsible for “balancing their books” but in several audits, the IRS cannot balance their own books which is a great example to set for your citizens.

On a personal note I have to say that this was never an issue UNTIL the rules of CAFTA were imposed in Costa Rica and we were really not affected until this year. Our big brother to the North wants to control all of its residents who are outside the country (for taxing purposes of course).

What really irritates me is that most people work hard all their lives, they have already paid taxes on this money, most likely several times over, so you should not have to explain to your own government what you are going to use your hard earned money for!

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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.