Costa Rica is known as the Switzerland of Latin America. It is stable, democratic, invests a lot in social development and nature preservation, and has a tax system favourable to expats. It’s no wonder it is becoming more and more popular with expats from all over the world.
- What is living in Costa Rica like?
- Is it safe to live in Costa Rica?
- The pros and cons of living in Costa Rica
- Cost of living in Costa Rica
- Schools in Costa Rica
- How to get residency in Costa Rica
- Buying property in Costa Rica
- Healthcare in Costa Rica
- Banking & bank accounts for expats in Costa Rica
- What taxes you will pay in Costa Rica
- Living in Costa Rica – summary
What is living in Costa Rica like?
Costa Rica always seems to rank quite highly on many “the first”, “the best” and “the only” lists: the New Economics Foundation ranked Costa Rica as the happiest nation in the world both in 2009 and 2012. It was also named the “greenest” country in the world by the same organisation.
It is the only country in Latin America that can be found on the list of the 22 oldest democracies in the world. It is the top Latin American country on the Human Development Index. And in 2011 and 2012, Costa Rica featured on the list of the Developing World’s 10 Best Ethical Destinations of the Ethical Traveler Magazine.
This relatively small country dazzles thousands of tourists every year. Many of them succumb to its charms for life, and later come back to Costa Rica to find a new home for their family or to retire.
Is it safe to live in Costa Rica?
Costa Rica is a pretty safe country. It’s clean, doesn’t have regular extreme weather events, and the people are really friendly.
In recent years Costa Rica’s reputation as one of the safest destinations has been somewhat shaken as the crime has been on the rise. However, it’s still a very safe country when compared to its Central American neighbours.
Costa Rica’s main problem is drug trafficking and money laundering. So what residents are worried about is opportunistic theft and drug related crimes.
Common sense advice is to avoid isolated areas, not to demonstrate your valuables, not to travel alone at night, to use authorised taxi services. This way you will be able to avoid the most common dangerous situations.
Like in any other country, cities in Costa Rica can be riskier for residents, particularly after dark. If you plan to live in San Jose, for example, it is advised that you avoid any of the parks in at night, as they are considered dangerous.
Moving away from crimes, be aware of the currents along the Pacific and Atlantic shores are often very strong and dangerous; always read signs before entering the water to make sure you are in a safe area.
The pros and cons of living in Costa Rica
There are indeed many good reasons why Costa Rica stands out as an expat destination: it’s a true democratic country, which year after year ranks in the top three happiest nations in the world. However, there are some disadvantages, too.
Let’s start with good things this country has to offer.
The pros of moving to Costa Rica
High standard of living
Costa Rica doesn’t have an army and consequently doesn’t need to foot huge military bills. It has more than enough money to invest into social development and nature preservation programs.
As a result, out of all Latin American countries, Costa Rica can boast the best standard of living.
No income tax on foreign incomes
Expats who derive their income from foreign sources (foreign pensions and investments, for example) do not have to pay income tax while living in Costa Rica.
Costa Rica is known for its splendid beaches along both the Pacific and Caribbean coastlines, with steaming volcanoes and immense biodiversity.
It is also one of the favourite destinations for biologists and scientists studying jungle species, as the country’s strict nature protection laws have resulted in it having the best-preserved rainforest in the world.
Costa Rica’s coastlines are stunningly beautiful, but very different in feel and appearance.
The Caribbean beaches are soft and gentle, with white sand and emerald waters, framed by the green lushness of palm forests, while the Pacific coastline is typically oceanic – rugged in the north and smoother and more forested to the south.
The country’s climate is diverse. Although it is known as a tropical paradise, in reality Costa Rica has several climate zones. In general, areas on the Pacific coast are dry, while those closer to the Caribbean coast are more humid.
With average annual temperatures ranging between 21-27º C, Costa Rica doesn’t have pronounced winters and summers. There is a rainy season, however, from May to November.
Great for healthy and active lifestyles
In Costa Rica you might not be able to always find the greatest degree of sophistication that usually comes with a highly urban lifestyle, but if you like beaches, friendly communities and town life centred on a church, then you will enjoy the country.
And you can always go to San Jose for an urban fix.
In general, there is no shortage of entertainment: there are enough theatres and galleries, and fine dining in literally any cuisine imaginable. Plus Costa Rica has an excellent infrastructure: high-speed internet and good mobile connection (including 3G and 4G), reliable electrical services and clean water (tap water is clean enough to drink).
Costa Rica’s healthcare is outstanding.
As a resident you can choose either public or private healthcare, or a mixture of both.
The cons of moving to Costa Rica
Learning the language can help a lot
Although English is widely spoken in Costa Rica – and in many service oriented businesses, especially in hospitality, entertainment and health industries, staff are required to have a good command of English – learning Spanish will never be a waste of your time.
Gaining residency will test your resolve and patience. As will many other types of paperwork. The best way to deal with it is to hire local help, sit back and relax.
Main roads are generally not too bad. However, even they suffer from potholes caused by heavy rains in the wet season.
Landslides in the wet season are common. They often block the road between San Jose and Guapiles on the way to Limon and can cause delays.
Usually the blockages are dealt with quite quickly. There are also longer alternative routes that you can take.
Just remember that smaller roads are usually in much worse condition. They feature so many potholes, dips and cracks that it’s impossible to avoid damaging your car.
The local driving style might be shocking at first. Drivers speed and manoeuvre dangerously, passing where it is not safe to do so and do not usually respect the right of way.
Pedestrians suffer most from dangerous driving; on average, road accidents claim the lives of two pedestrians a day.
Cost of living in Costa Rica
On the whole, Costa Rica is not an expensive country. According to Numbeo its cost of living index excluding rent is 53.98 relative to New York City’s 100, rent excluded). It’s also lower than the UK’s which stands at 71.05.
How much money do you need to live comfortably in Costa Rica?
A budget-conscious couple can live very comfortably in Costa Rica for about $2000 rent included.
On average, 1-bed apartment in a popular expat area, utilities, a car + petrol, food (mostly local), little extras and a mobile phone will come up to $1,400.
The budget between $2000 and $4000 a month can buy you a really comfortable life in Costa Rica when you don’t have to worry about your AC unit being on when you want it.
When it comes to food, the best advice is “do what local do”. There are open-air farmers’ markets (the feria) that happen every week in just about every Costa Rican town or village.
The feria are brilliant for buying fresh fruit, vegetables, spices, seafood, beef and chicken, eggs, dairy products, bread, coffee, and more. And they are cheap.
Keep in mind that popular tourist destinations are more expensive when it comes to groceries or dining out.
If you live in a city or a big town and don’t need a car, this will bring your spending down considerably. Most expat city dwellers find public transport is a good option when they need to travel and the prices are more than satisfactory.
Housing expenses in Costa Rica
If you owe your apartment or house, your housing expenses will be very low and will include utilities, maintenance, internet, and cable.
Many expats live in apartment complexes that come with some utilities provided. Many of them have a swimming pool and sometimes even a gym.
If you are looking to rent, proximity to the coast will influence the price as well as the size, the amenities and the interiors.
There are apartments and houses to rent for various budgets starting from as low as $400 per month.
For example, in Jaco, you can rent a small, two-bedroom apartment for $400 or a luxury apartment for $2,500 a month and up and every price range in between.
Houses are also available for rent or for purchase. You can buy a house starting from $75,000 depending on what you need.
Schools in Costa Rica
Costa Rica was the first country in Central America to make education free and mandatory for all citizens.
Costa Rica has one of the best school systems in Central or South America and the literacy rate is 95 percent for everyone over the age of 15.
What is the education system like in Costa Rica?
Primary education is for ages 6 to 13 and lasts six years. Secondary education is voluntary and lasts five to six years. The first three years of secondary school concentrate on general education, while the remaining two to three years are for specialised training.
Secondary education allows pupils to choose between academic (5 years) and technical (6 years) schools.
Schools in Costa Rica are open from February to December. The end of the academic year marks the beginning of the traditional coffee picking season, the year end festivals and the arrival of summer.
In addition to state schools, there are private schools in the country. Some schools follow the American or British curriculums with English speaking programmes while others are regulated under the French or German education system.
If your children are officially resident in Costa Rica, you can send them to a state school. However, you need to make sure your children speak good Spanish as state-run schools are Spanish-language only.
For this reason, many expats prefer international schools, especially for older kids, to make the transition easier. Sending your child to an International school also means more choice when it comes to higher education.
Some international schools run on the U.S./UK August- June calendar.Tuition fees range from $5,000-$25,000 and there are various payment plans available for families.
How to get residency in Costa Rica
You can apply for one of the three categories of residency: Pensionado, Rentista or Inversionista.
Pensionado residency is actually designed for those who are in receipt of any type of lifetime pension or social benefits, including state retirement benefits, a military pension or a guaranteed income from a lifetime annuity of no less than $1,000 US per month.
The Pensionado residency visa doesn’t set any age limit, as long as you have a pension you may retire as young as you wish.
To qualify, you need to do the following:
- provide proof of your pension income, which must be a minimum of $1,000 per month. Qualified pensions are: social security, a state retirement pension, military pension, lifetime annuity or someone who has purchased or owns a lifetime annuity guaranteeing an income (for life) of no less than $1,000 US per month;
- live in Costa Rica for at least four months out of the year; and
- join and contribute monthly to the state healthcare programme Caja Costarricense de Seguro Social (Costa Rican Department of Social Security), or CAJA as it is known universally, which will be your comprehensive health cover.
Rentista residency for non pensioners
If you are not in receipt of a pension, the Rentista type of residency is a perfect solution for you. To qualify, you will need to show proof of a non-locally earned income of at least $2,500 per month, which is guaranteed by a banking institution for at least two years, or put down a deposit of $60,000 in an approved Costa Rican bank.
The money that you deposit in the chosen bank stays in your possession, and $2,500 is paid to you out of your deposit every month during the next two years. After that you will need to renew your residency and put down another $60,000.
You will also need to live in Costa Rica for at least four months out of the year and join and contribute to CAJA to provide yourself with health cover.
Both Pensionado and Rentista residencies are given for two years, and need to be renewed.
In both cases, if one spouse applies and meets the requirements then the other is covered as a dependent.
After three years of living in the country, as either a Pensionado or Rentista, you can apply for permanent residence. This is especially useful for Rentista because doing so means that after three years you can avoid having to find another $60,000 to put down as a deposit.
Inversionista for investors
This type of visa is a typical Investor’s visa, and to be eligible you will be required to make a direct investment in Costa Rica of a registered and verifiable value of $200,000 minimum.
You can invest in a business (tourism, hospitality, manufacturing, transportation, amusement, etc.) or in property – both commercial and non-commercial. Non-commercial property is not limited to just buying a home or a plot for personal use, purchasing land for nature preservation of any kind also counts.
There is the further requirement of living in the country at least 6 months a year. Under this type of residency the application for your spouse or partner will have to be a separate process.
Just like with Pensionado and Rentista, after three years of Inversionista residency you can apply for permanent residency.
Don’t be misled by the word “permanent”. You will still have to renew your permanent Costa Rican residency on a regular basis.
Whatever type of residency you apply for, when and if you are granted it, you will be issued with a DIMEX card (Documento de Identidad Migratorio para Extranjeros). DIMEX is an identity card given to all foreigners living in Costa Rica. Your DIMEX will get renewed together with your residency when you apply for renewal.
Buying property in Costa Rica
There are no limitations for foreigners wishing to buy homes or land in Costa Rica. Foreign buyers have the same rights and legal protection as Costa Rican citizens.
You should start your property search by finding a solid and reputable estate agency to work with.
It is wise to ask around for advice. The communities in the country are quite small as a rule, everybody knows everybody and you will certainly be recommended a trustworthy agency.
Use the same route to hire a lawyer to help you with transactions and legalities.
When you have found the property you wish to buy, ask your agent to make an offer to purchase (a Letter of Intent) to the seller’s agent or the seller personally. This usually leads to negotiations concerning price, timeline, conditions and terms.
When everything is agreed between you and the seller, your lawyer will draft a formal Sale and Purchase Agreement, which will include all the terms and conditions you and the seller have set out previously.
As soon as you sign it, it is a legally binding document, and clearly states what needs to be achieved on both sides in order for the transfer of the deed to take place.
A deposit up to 10% of the purchase price is usually required and a final closing date will be set within 30 to 60 days.
During this time your lawyer does due diligence on the property, making sure that there are no legal issues or debts connected with it. It is usually a straightforward process; all the information about land and property is consolidated in the central land registry, which allows your lawyer to confirm that there is a clear title for your property.
This information is open to anyone, and if you are fluent enough in Spanish, you can go to the National Registry, check the status of the property you wish to buy, and obtain a certified property report including a Plano Catastro (a survey plan). Plano Catastro details the boundaries of the property, the total size, ownership, the Folio Real number, and the date it was registered.
The Folio Real Number reflects such vital information as the province where the property is located (the first number), specific property number (the second group of digits) and the number of owners (the third group of digits).
You will need the Folio Real number of the property you are planning to purchase if you wish to obtain a certified property report from the National Registry.
Also, if necessary, surveys, soil tests and home inspections are carried out during this period.
At this point, if you feel you need it, you can get title insurance to make sure your property is protected no matter what.
The deal is closed before a Costa Rican Notary Public, who will register the property under the owner.
The last step is registering your property in the local Municipality for property tax purposes. Your lawyer can do it for you by filling out a form and presenting it along with some other documents to the Municipality office.
Costs and fees
Usually total property transaction costs can add up to 4% of the value of the property, and the costs are split evenly between buyer and seller. They include:
- Transfer tax – around 1.5%
- Legal fees – 1-2%
- And a few lesser fees such as a registry fee, municipal fee, fiscal fee, bar association fee, archive costs, etc.
Property tax in Costa Rica is one of the lowest in the world – it is 0.25% of the registered value per year. To illustrate, if you buy a property worth £150,000, your annual property tax will be just £375.
However, there is a luxury tax levied against properties worth $250,000 or more. The tax starts at $2,500 and goes up depending on the registered value of the property.
Buying land in Costa Rica
If you are buying a plot of land in Costa Rica with or without a property on it, pay attention to the type of property rights you have been offered. There are two types of rights: ownership rights – “derecho de propiedad”, and occupation rights – “derechos de ocupación”.
Occupation rights mean that land hasn’t been registered in the National Registry, and consequently cannot be checked for title. And although it is possible to register it properly, the process might take a long time.
Ownership rights are therefore preferable. They mean that the land is registered and title-searchable.
When it comes to buying land on the beachfront, you will be dealing with a concession property. Concession properties are in fact government leased properties. Any transactions on this kind of land or properties are subject to specific rules and regulations.
Having a concession property means you have a lease with the government for a certain period of time. It is usually 20 years, and as long as the annual concession fees are paid and no violation of the lease agreement has been made, the government renews the lease for another 20 years.
As it happens, concession properties are the most attractive ones, because they come with a sea view and a piece of beach right next to your door. So naturally they are very sought-after.
Make sure you fully understand the limitations of having a concession property before committing to the deal: you pay higher tax (from 2.5% and up per year), there are very strict rules as to the size of the building and zoning, there is no title and thus no title insurance, no mortgage can be obtained on concession land, etc.
As long as you are aware of all the limitations that a concession property comes with, you may go for it if you really want a beautiful house literally metres away from the sea.
All beach properties in the concession zones are located within a 150 metre wide strip of beach, which starts right after a 50 metre wide public beach zone. So really you cannot be closer to the sea than this.
Healthcare in Costa Rica
Costa Rica’s public healthcare system is continuously ranked by the United Nations in the top 20 in the world, and the best in Latin America.
Costa Rican healthcare is rapidly becoming famous for its exceptional quality and low cost. The country is very cleverly using its proximity to the USA, where medical care is notorious for horrendous prices, and successfully markets its health services to Americans and those across the world.
So in a way it is becoming self-fulfilling – the better Costa Rican hospitals are, the more health tourists it attracts, the more money they bring into the country, the more investment Costa Rican healthcare gets and the better it becomes!
There are several options available to expats in Costa Rica to make sure their health is protected.
Costa Rica has a publicly funded national healthcare system – CCSS or CAJA (the Costa Rican Department of Social Insurance or Caja Costarricense de Seguro Social), on which the government spends approximately 8% of GDP.
Joining the national healthcare system in Costa Rica is obligatory. To obtain residency, you must enrol and contribute to the CAJA.
It might cost you anywhere between $75 and $455 a month to enrol in the CAJA. For this, you and your immediate family will get low cost access to the national health care system and neighbourhood clinics, hospitals and pharmacies.
Your payments to CAJA will be determined based on the size of your income that you disclose to the authorities when applying for residency. If you declare a high income, you might end up paying more than $300 per month.
On the plus side, CAJA cover is comprehensive: it includes doctor’s visits, medications, examinations and hospitalization. Pre-existing conditions are covered and so are dental treatments and ophthalmic care.
There are options to take out a health insurance policy from other sources, but because participation in CAJA is compulsory for expats, you will still have to pay into it.
The Governmental insurance INS
INS is a state insurance company. It offers a health plan that covers about 80% of the cost of doctor’s visits, prescriptions, tests, examinations and hospitalisation. An INS plan also fully covers most surgical procedures and the policyholder can choose a doctor.
If you use medical services not affiliated with the INS, you will be asked to pay up front and the INS will reimburse it.
On buying an INS policy, you will be given an identification card and a booklet with the names of affiliated groups such as hospitals, doctors, labs and pharmacies.
The disadvantages are that it does not cover any pre-existing medical conditions, most dental, eye exams treatments or preventive medical check-ups.
It has also quite a low limit per year – about $17,500. If you take into consideration that a day in intensive care can cost you $3,000, it becomes clear that if something serious happens this limit won’t take you far.
International health cover
You can also buy an international health plan through INS.
Some of the plans from big international insurers have limits up to $2,000,000 a year, and will cost just a bit more than an INS health plan. Shop around to get the one that suits you best. Some providers will knock the price down if the coverage needed is just for Latin America or one particular country in the region.
Using public healthcare with a private health plan
It might be a good idea to take out a private health plan on top of your CAJA cover.
Using private facilities can save you time: you can have the necessary tests done privately within a day instead of waiting for a couple of weeks if you go with a CAJA hospital, which you can then bring back to your CAJA doctor. Many of the doctors working in private healthcare also work in public hospitals, so they can often refer their patients to CAJA pharmacies for medication to save the costs.
Banking & bank accounts for expats in Costa Rica
Opening a bank account in a foreign country is not an easy thing to do. Costa Rica is not an exception, however the good news is that, since 2016, expats have been able to open a non-resident bank account that they can use while going through the residency application process.
Non-resident bank account
There’s only one bank that allows non-residential bank accounts – Banco de Costa Rica (BCR), which is a state-owned bank.
You will need a valid form of identification and a mobile number. As a non-resident you will only be able to deposit up to an equivalent of $1,000 USD into your account each month.
Resident bank account
Opening a bank account in Costa Rica as a resident involves a huge amount of paperwork. Requirements may differ from bank to bank, but generally you will need the following:
- Valid ID in the form of your DIMEX ID card, which is issued to you by the immigration department.
- Minimum deposit. The sum depends on the type of account.
- Proof of residency: a utility bill or lease agreement with your local residential address.
- Additional forms for US citizens: various tax forms may also be required to inform the (IRS) of your Costa Rican bank accounts.
- Proof of income: your payslip, a letter from your accountant, a letter from your pension provider, etc.
What taxes you will pay in Costa Rica
Under the Costa Rica tax system, residents and corporations are taxed only on income earned in Costa Rica.
So if you are planning to fund your life in Costa Rica using your pension, investments, dividends or other funds not derived from within the Costa Rica territory and from Costa Rica sources, you will be paying no income tax to the Costa Rican government.
Make sure that you comply with your home country’s tax regulations though, as they might differ.
Living in Costa Rica – summary
To sum up, Costa Rica is successful, democratic, socially oriented and ecologically minded.
It has everything you need for a happy life: beautiful landscapes and nature, gentle and soft beaches, a dramatic ocean coastline, lush forests and sweet valleys, mild weather all year round, a relatively low cost of living, and an outstanding healthcare system that won’t bankrupt you.
Plus, the Costa Rican taxation system is very favourable towards expats, property costs are moderate, and immigration procedures are not too tricky if you use the help of a lawyer.