In the United States, capital gains tax is paid when some kind of investment you make appreciates in value. That profit is called capital gains and can be taxed either as it happens or when you cash out the earnings, depending on the asset. Most every common investment falls under the capital gains definition and paying taxes on that appreciation is one of the less attractive parts of American investing.
In Costa Rica, capital gains taxes are much different and in investments involving real estate or most banking accounts, no capital gains tax is taken when the investment appreciates in value. This is obviously a great benefit of investment in Costa Rican opportunities and Meléndez & Bonilla is extensively experienced in managing wealth in this way.
One important distinction in Costa Rica to keep in mind is that capital gains taxes are exempt for a business only if the money is derived from an activity that is not the normal course of business for the company. So, if your business derives cash solely from real estate investments, that money is not seen as a capital gain but is instead seen as profit on the business. That profit is then taxable.
This has less bearing on a personal capital gains environment where there is no customary business practice to make a profit from. Instead, personal investments rarely entail any capital gains tax, one of the most attractive aspects of investing in Costa Rica and one reason why so much foreign investment targets the country.
Meléndez & Bonilla is able to review all documents on investments, both for personal and corporate use, to ensure that your capital gains situation is not taxable. In addition, other analysis can be done on whether some of your investment activities should relocate to Costa Rica to take advantage of this substantial tax-saving aspect of Costa Rican tax law.
Because property taxes in Costa Rica are so low and because no capital gains tax is collected within the country, real estate investment is a popular activity for foreign investors looking at Costa Rica as an opportunity. Meléndez & Bonilla has experience dealing with these types of investment opportunity and would be glad to help you achieve your dream of the perfect foreign investment to complement your portfolio.
Having a local firm available to you at all times to review the tax situation of your investment property or second home can benefit you greatly over time as the Costa Rican tax system undergoes change of any kind. Meléndez & Bonilla has a team full of specialists that can expertly monitor your real estate investment properties over time to look out for your interests.
Contact Meléndez & Bonilla directly to evaluate your personal situation and advise you on the legal ramifications of owning property in Costa Rica and your tax liabilities. Many investors have made the plunge into the Costa Rican economy and with inviting tax laws such as Costa Rica’s stance on capital gains, Meléndez & Bonilla would love to help you do the same thing.