The Fiscal Cliff Deal and Costa Rica Real Estate
Costa Rica News – Well a piece of legislation has been passed to “avoid” the fiscal cliff. No offense but has anyone actually gone through and see what this piece of legislation does? It taxes the ultra-rich and does not really make the spending cuts needed in government. The 1 January deadline triggered tax increases of about $536 Billion and spending cuts of $109 Billion from domestic and military programs. The tax cuts were only on those making below $400,000.
It also include the following:
- Rises in inheritance taxes from 35% to 40% after the first $5m for an individual and $10m for a couple
- Rises in capital taxes – affecting some investment income – of up to 20%, but less than the 39.6% that would prevail without a deal
- A one-year extension for unemployment benefits, affecting two million people
- A five-year extension for tax credits that help poorer and middle-class families
The question that people have in Costa Rica is how does this effect the real estate market. Get ready to to see a temporary boom for the next few months. These tax increases and Obama’s terrible plans and leadership are moving rich Americans out of the country. However, the boom will only be temporary as the ultra-rich that this is supposed to generate tax revenues from use tax loopholes to pretty much not pay anything. That coupled with the limited governmental spending cuts are going to push the USA completely over the fiscal cliff next year.
Honestly, those rich people are the only ones that can afford to purchase the real estate in Costa Rica and live down here with the increase in cost of living and the cost of real estate at its peak. They are going to be pushed by the different forms of media to purchase a home or condo in Costa Rica before realizing they still do not have to pay these taxes with the large number of tax breaks they always receive.
You may have seen TV shows or read articles claiming that Costa Rican real estate prices are out of control with how overpriced it has gotten. People claiming to be experts state that there are simply no bargains left anymore in this country. They will tell you that prices for homes on the Pacific coast are ten times their actual value and will soon equal prices found in the States.
Remember that old principle of supply and demand? Publications make it seem that there are only few homes available in favorable areas and claim that they cost $500,000. Is this true? Are the homes really worth that or is it just because of high demand due to high publicity in select areas? Affordable housing may still be available. Let’s look at Jaco Beach for an example. Just 15 minutes away from the high priced area are beautiful homes which share the same drinking water and the same views for 20% less cost.
Very few people actually check comparables. This may be because prices seem good in comparison to in the States so people jump at the “good deal,” without bothering to consider building costs and similar homes in the area.
However the rich in the USA are not looking to really find a deal they heard in the media that the prices are cheap down here so they look, do not do much homework, and buy.
Real Estate brokers are going to make a killing in the next few months as people are wanting to escape the cold Winter weather in the USA and purchase a piece of bargain property in Costa Rica.
Although prices are high right now in Costa Rica this temporary rush will only keep them that way for about another 8 to 12 months. Also If you do your homework and take caution you can still find bargains in Costa Rican real estate!