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About GreciaBound

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  1. No expert in economics here, but a few observations: 1. Having seen indicators that tourism is actually going up, with more full airplanes landing in CR, and the season of Semana Santa spending is upon us with many folks spending a wad of local currency these next weeks, it will be interesting to see what impact this will have on the colon dollar exchange rate. 2. Another question is what will become the impact of China trade with Costa Rica and which currency is being exchanged for that increase in trade. Not just talking about building a stadium here, but the availability of Chinese ceramic tile is a real example, since in the past you could only find Guatemalan, Mexican, Italian, and Costa Rican tile here. Now you can buy ceramic tile made in China, and by the way it is cheaper. Just saying...
  2. "This new luxury property tax is unreasonable, ill thought, and its implementation very poorly planned. I agree that the economy in CR certainly can use some infusion of funds, but it appears that the infusion rests on the backs of those who made long term investments based on one set of rules and the rules are a moving target now." I agree 100% and have been told to ignore this law since many believe it will be challenged as unconstitutional. As another writer puts it, Open letter by: Bob Klenz, Dominical, Costa Rica. vistadelcano@hotmail.com I have lived for over 16 years full time in Costa Rica with 15 years of permanent residency. I understand how things work here and also how things don’t work here. Laws are written by politicians with good intent but with very little understanding of how difficult or impossible it is to comply with them. Most laws passed in Costa Rica are eventually challenged in the Supreme Court and ruled unconstitutional. I would hope that this will happen in this case. The end result should be a better and fairer law and a means of helping the poor and the housing problems. To start off with, I am not against the intent of this law, i.e. to help eliminate slums within Costa Rica. That being said, I am against a truly ridiculous method of trying to collect this tax using intimidation and threats against common everyday citizens and residents. I can’t believe that to date, nobody has challenged this questionable law and that there aren’t more people (especially Tico’s) in an uproar, screaming bloody murder over this misuse of power. We have large groups of friends in both Dominical and in San Jose. These friends are from all over the world and many are Ticos. At every gathering the only topic of conversation is this problem tax and the inability of all of us to figure out how to comply with it. Many people are very upset with it and even though they may want to comply, do not know how or cannot do so legally. The high degree of frustration is evident with everyone we speak to about this tax. The Costa Rican Government should only know the amount of pain they have caused so many people who want to do their part but can’t. As to the problems of this tax. Even a blind person can see the inequities that are so blaring in this law: 1) Pay on line via computer! Although in this day and age, many people are computer literate, I find it highly questionable as to the legality of requiring people to own or use a computer to file a hard to understand tax form. Is it part of the Costa Rica Constitution to own a computer? 2) As a foreign resident, WITH OR WITHOUT A RESIDENT CEDULA, you cannot access the DIRECT TRIBU NET site. The only access can be by a Costa Rican using their cedula and its expiration date. Try it and if you can get online, please correct me and explain how you did it. In my years of experience with laws in general, I find it quite difficult to believe that you can be found guilty of not filing when you cannot access the site to do so. The Ministry of Hacienda knows about this problem but refuses to rectify it. 3) The law requires a person to submit to Tributacion, a Costa Rica Bank Account number with which the Government can automatically withdraw this tax from. I don’t know how many of you out there trust the Costa Rica Government, or any Government, with the ability to freely withdraw funds from your bank account. If you do, you may want to seek some psychiatric help! It should be up to the Government to give you their account to deposit funds to, not the way it is unconstitutionally proposed. 4) Many people are talking about hiring an Attorney, an Appraiser or a Title Company to assist them in this process. The law should not and does not require you to do this but suggests it and most people feel compelled to do so because they just don’t understand what to do. Most of the firms advertising their services do not understand the law and how to complete the forms. They are just looking for business, a business that will help them out for the next 10 years or more. I have seen several letters from various firms that show, by their own description of services, that they will most likely do a very poor job for you and should not be hired. When a law is so complicated that it almost forces people to spend between $400 and $1000 just to complete an appraisal and a form, this leads me to think the law is unconstitutional once again. 5) The initial tax and filing of forms is due on Dec. 31, 2009 with a 2nd tax due on January 15th. For those of you who live in Costa Rica, you understand what happens on holiday periods such as Christmas and Easter. In the case of Christmas this year, the Government offices will shut down on December 18th and reopen on January 4th 2010. When the Government shuts down, so do most Attorneys’, Accountant’s and Appraiser’s. So, in reality you don’t have until Dec. 31st to complete your filing, you have until Dec. 18th which by the way is a little over 1 week away. Also, once the Government offices reopen on the 4th, they will need at least one week to get up to speed and back to work again, especially on a reduced work force as usually is the case after long holiday periods. Once again, GOOD LUCK!!!!! 6) Are you an Appraiser? Have you gone through your years of schooling to be one? Do you understand how to measure your structures, the walls of your house, your outbuildings, fences, driveways and swimming pools? Can you determine the value of your land, determine slopes and grades? If you are very good at all of this you should have fewer problems than most people in completing this process. I have been involved in the real estate business for well over 30 years and I am having problems completing these forms. Once again, good luck to all of you that have the overwhelming experience you will need for this process. 7) Fines of 5 and 10 times the unpaid tax! How stupid is this! When penalties are usurious and unreasonable, they cannot be legal. Do you really believe they have the power to fine you 5 times the unpaid tax if you underestimate your property value by 10%? They can say this but enforcing it will be almost impossible. Again, are you an appraiser? Are you a computer expert? Can you comply with this law in the short time span given? The Government itself doesn’t even know how to collect taxes efficiently but they want to charge you a high penalty for you not being in compliance. How about the foreigner property owners who live out of the country and can’t comply for many of the above reasons. Are you going to tell me that they must pay a penalty of 10 times the unpaid tax? This is so ridiculous it is hard to believe. 8) What does the Government think this type of law is going to do to foreign investment? How many foreigners are going to invest knowing that they will have at least 10 years of double taxation? How many hotel and cabina owners will not be able to pay these excessive taxes due to lack of business and tourism? With this type of law, it will be difficult to sell any upper end condos, apartments or homes. Is this really what the Government is looking for? In closing, I would suggest that the Costa Rica Government revisit this law and make it something that can be used simply by all taxpayers and or homeowners. Perhaps a simple flat tax on all Corporations or some other method could be a friendlier way of implementing this. The end result and the amount of money obtained could be the same or possibly better. I know and truly believe the Costa Rican Government will wake up to the fact that they passed a bad law and in the end will revise it to make it legal, constitutional and in the best interests of the people. Should we let our views be known to the lawmakers, ARCR and others who are confused and negatively affected by this law as written?
  3. I wanted to create a name to identify where I was headed...also remind me to work hard and get there with family and friends! GreciaBound
  4. ticotomasino, Thanks for the useful information about painting inside and outside, especially the types of fungus and waterproofing protection. The idea about the elastic crack filler is especially helpful. Doing it right the first time can balance out extra money spent on quality paints. Where is El Lagar located? GreciaBound
  5. ticotomasino, Tell us about indoor surfaces compared to outdoor surfaces...what have you found best for interior: painted block, painted drywall, or colored plaster? For the outdoor surfaces, is the preparation different, such as using a moisture barrier type of primer coat? Then followed by custom mix of SUR? Also...where is El Lagar located? Thanks! GreciaBound
  6. I was also appalled at the method CRFirst proposes as the way Realtors make money. It just does not work that way, in the US or CR. As a new buyer in the CR market, lots of research is required to prevent mistakes. The seller (not the buyer) pays commission to the realtor for finding the buyer and obtaining an offer, with percentages lower than what CRFirst promotes, at least in my experience. If the buyer believes the "listing price" is padded, then a lower offer can be made. I believe the main reasons a buyer may need a realtor is to help locate a product the client is interested in, and narrow down the areas (location) the client is interested in, perhaps recommend an attorney to complete the transaction. A title company may or may not be utilized, but a trustworthy attorney is essential. A "RECIPROCAL PROMISE TO BUY AND SELL" contract can be used, with the minimum information for example: Description of the Parties may include passport or cedula numbers: Between us, ____________ the "Buyer(s)", and ________the “Seller(s)” have agreed to enter into the following Reciprocal Promise to Buy and Sell which shall be governed by the legislation of the Republic of Costa Rica and in particular according to the following clauses. FIRST: Legal Description of the Property. The SELLER is the owner of property which is recorded in the National Public Registry as follows: Description of the property: __________________________ (Name of Finca or Lot Number and possibly a Cedula Number) Province: ________ Canton: ______ District: _______ Registered Property Number: A-123456-2002 Matricula 987654-000 Folio Real 7878787-000 Additional Property: (if applicable) SECOND: Size and Property Survey Map. SELLER manifests that the property measurement is _____m2. SELLER agrees to provide to the BUYER a copy of the property survey map within ___ days from the signature of this agreement. THIRD: The Reciprocal Promise. The SELLER hereby agrees to sell and the BUYER agrees to buy the PROPERTY described above, free from any liens, encumbrances, annotations and with municipal and property taxes paid to date. FOURTH: The Sales Price. The sales price for the property is [$ ________ U.S.] FIFTH: Earnest Money Deposit and Payment Schedule. The BUYER tenders a non-refundable earnest money deposit of $_____U.S. on or before (date). Deposit will be held in escrow with seller’s attorney until closing. SIXTH: Closing. The balance of the purchase price of [$________U.S.] shall be disbursed to the SELLER at closing when the property transfer deed is signed. The closing shall take place on or before (date). SEVENTH: Conditions: Liens and Encumbrances. At the time of closing the property shall be free from any liens, encumbrances, and annotations of any kind. The property title report must show no annotations or liens (gravamenes) of any kind. It shall be the responsibility of the SELLER to clean and or lift off the title report any and all annotations. EIGHTH: Transfer of the Property. The BUYER shall disburse the funds and remaining balance of the purchase price indicated above to the SELLER simultaneously upon the signing of the property transfer deed (escritura de traspaso) transferring title from the SELLER to the BUYER or their corporation. NINTH: Property Taxes and Utilities. The SELLER must provide the following documentation at the time of closing: (a) Certification issued by the Municipal authorities indicating that the SELLER is current in any municipal and property tax payments. ( Copy of any filings with the Municipal government related to property valuation for property tax purposes (Declaración de Bienes Inmuebles). TENTH: Assignment to a Corporation. (if applicable) ELEVENTH: Association Dues. Monthly association dues (if applicable) will be $___ per month, payable to ____________. TWELFTH: Closing Costs. All closing costs related to the property sale are to be split 50% - 50% between the seller and the buyer. THIRTEENTH: Real Estate Commission. (can be dollars, or percentage of sales price, and separate from the closing costs above) FOURTEENTH: Modifications. Any modifications to the terms and conditions set forth in this contract must be in writing and signed by both parties. FIFTEENTH: Jurisdiction. The parties agree that the laws of Costa Rica shall be applicable to all matters related to this contract and they waive their domicile and submit to the laws of Costa Rica. SIXTEENTH: Estimation. The parties estimate the value of this contract in the sum of $__________ U.S. SEVENTEENTH: Contractual Address for the Parties. Any notices and communication regarding this contract shall be in writing and delivered to the following address: SELLER: _______________________ BUYER: ______________________________ EIGHTEENTH: Public Instrument and Translation. Both parties have requested that the following contract be drafted in the (English) language since this is the language they read and understand. Either party may have this agreement elevated to a Public Instrument by having it translated into Spanish by either an official translator of the Ministry of Foreign Relations or a Notary Public of their choice pursuant to the regulations of the Costa Rican Notary Code. In agreement with each and every clause of this Reciprocal Promise to Buy and Sell we sign in duplicate. At ____ hours, on this ___ day of _____ month, OF TWO THOUSAND AND SEVEN. SIGNATURES OF BUYERS ____________________________ SIGNATURES OF SELLERS ____________________________ Unfortunately, buyers from outside CR may have limited time to get all of this done on one or two trips. People tend to get in a hurry so they don't *Miss* a good *Deal*. The advise from Kahuna is golden... "Take baby steps; build a network of people that you trust first before making ANY major purchases". Obviously, it is important to get all of these details right, double check all the numbers, and verify the translation to Spanish is correct. Then Pura Vida. GreciaBound
  7. Wendell, there are no books written about this, and I am not aware of any useful links about your application. Realtors can be a good source of information, but always get second or third opinions to confirm your assumptions. My advice is to find a good architect in that area that speaks English, and he can guide you for restrictions and permit process. Do not be surprised about not getting a call back too soon from the SE VENDE sign, if at all, if you spoke in English. Also realize that the building process will take more than a year to get going. You may want to purchase the property as a corporation, for a number of reasons, and this will require getting an attorney as well. Everything legal...purchase contracts, construction contracts, are all done in Spanish, so you will need translations. Land cost per square meter is all over the map, based on the access, view, noise, proximity to job centers, other properties in the neighborhood, etc. $30-40 per square meter is becoming common close-in, whereas you can still get $8-12 per square meter further out. I assume you have water and electricity on site, if not, that will add more to your overall cost to get connected. Construction cost per square meter is another variable all over the map...a good builder will only quote you a labor price, based on square meters of construction and other factors such as access, slope, utilities. This does not include materials, which can vary, based on the quality of materials, finish style, and your ability to get tico prices even for materials. A rule of thumb for good quality materials and style is 20% labor and 80% materials. Builders can charge anywhere from $100 per square meter for labor, on up, depending if you are at the beach or in the central valley. $100 per square meter may be good for East San Jose, I do not know, but the architect can provide guidance. The architect also charges 10.5% of the finish square meter estimate, so if you are thinking $500 per square meter total, and say your plan ends up at 300 square meters, the architect will need $15k+. Then there is insurance and social security for the builder, local municipality fees, and other incidental costs. The architect can give you more information about this so you can start to get more of a real picture of what this involves. Be aware that your questions will take weeks to get answers instead of days. If you are going back and forth to your home country, visiting when you can, calling and emailing for answers that you need, it may take you 12 months from when you think you found a great deal until when you can break ground. To really get what you want built, you should also plan on being on site daily or weekly to make sure you get what you need, even if you have a good contract. Yes it can get complicated, so take time to figure all this out before you commit to buying. GreciaBound
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