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Did you know that you can get a foot in the door by investing in Costa Rica using your retirement funds?
Of course, there are some rules. But most think their IRA or 401(k) can only be used to invest in stocks and bonds or in real estate in the US.
Wrong!
By rolling over your retirement funds, you can roll them back again when you retire. Then, you can use this investment in Costa Rica to obtain residency as an investor. Now, by rolling over. Using your IRA or 401(k) can be the solution.
Unfortunately, many retirement fund administrators don’t like it when you take your funds in Costa Rica real estate. They will try to tell you it’s not legal. Learn more about using these funds to obtain residency when buying a property in Costa Rica.
Investor Status
Costa Rican law specifically excluded personal investments in the past, such as purchasing a home in Costa Rica, lots, or buildings to qualify for the investor category. Still, on August 28, 2009, the Director of Immigration issued Circular UPI-239-2009-LAS which modified the types of investment that could be made to qualify for this category.
“The investment amount must be of US$200,000 or more according to the official exchange rate which is established by the Central Bank of Costa Rica. The investment can be made intangible property, shares, negotiable instruments, productive projects or projects which are deemed of national interest”
The Senate just approved the change of $200,000 to $150,000. Nonetheless, $150,000 doesn’t buy much of a house or condo. This would function as a land investment and rent a home you can live in when you retire to Costa Rica.
IRA and 401(k)
A Real Estate IRA is a self-directed IRA that holds real estate. With a self-directed IRA, you are not limited to the investment offerings of an IRA custodian or trustee.
You are not limited to investing in stocks, bonds, or mutual fund investments set up by the custodian. It’s possible to legally invest those retirement funds in Costa Rica real estate.
By using an administrator for your self-directed IRA account, you have much greater flexibility in the number of investment choices. A 401(k) has the same options as an IRA.
A better ROI
You can either purchase a building lot or a small farm and wait for the property values to go up. But you can get a much better ROI by purchasing a vacation home and renting it out on Airbnb or HomeAway.
It’s important to be aware of local tax laws, but that’s one of the reasons you want to do business with a GoDutch Realty agent.
IRA partnerships
You are allowed to form a partnership in an IRA real estate purchase. You can partner with someone else’s IRA or even yourself or your spouse. There are many combinations possible. You follow the self-directed IRA and 401(k) rules and understand the limitations. The rental income will go to your IRA account, so your funds can grow faster.
Your Residence
Retirement fund rules indicate that you cannot live on the property owned by the fund. That’s why the property you purchase with your IRA or 401(k) cannot be used by you as your residence. Once you decide to retire and live on that property, check what you can do and whatnot. Be aware that Costa Rica now has capital gain taxes, so your profit will not be tax-free once you sell.
We specialize in retirement fund real estate
GoDutch Realty’s agents can guide you through the requirements for a retirement fund investment in Costa Rica. We also have the right connections to take care of the legal side to make a smooth transaction possible. Several agents have used their IRAs for their Costa Rica real estate investments. Contact us now for more information.
