Why an LLC?
By law, any individual, national or foreign, may legally own land in Costa Rica. Nonetheless, for legal and economical reasons, it is recommended that the purchase of real estate be performed through a Costa Rican anonymous LLC. Advantages of having land registered under an anonymous LLC rather than in an individual's name are as follows. An anonymous LLC, as the name indicates, provides a measure of privacy to its owner(s), making it difficult for others to obtain information about who owns the membership units of the LLC and, thus, the land.
This provides anonymity which many foreign investors desire. Also, by having your assets registered under a Costa Rican LLC, it protects you from personal liability under current Costa Rican law. All landowners pay land transfer taxes every time the property is sold. However, once a Costa Rican LLC owns the land, there is no more land transfer tax to be paid since it is the membership units of the LLC that change hands. Currently, no capital gains taxes are paid in Costa Rica when you sell an LLC that owns property, since the sale is a private transaction. Moreover, because any income generated under a Costa Rican LLC will pass through to its owners, United States residents will not be subject to possible double taxation when they sell the property. Inheritance taxes in Costa Rica are high, but an anonymous LLC has a life of 99 years, which can be renewed for another 99 years.
You can be assured that your spouse and your children can enjoy the fruits of your labor without having to worry about such taxes, as long as you leave them the membership units of the LLC in your will. They can then name themselves as Managers of the LLC and carry on the tradition.
Ownership of recordable assets, such as real estate and cars, has become the primary reason for most of the registered corporations and LLCs in the country. These "indirect" methods of ownership are, under current Costa Rican law, the most highly recommended means of managing recordable assets.
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