Costa Rica Real Estate Investing With Your IRA…
The Basics

It is estimated that 85% to 90% of the American public (including your trusted CPA), do not realize that it is perfectly acceptable and legal to use your IRA funds to invest directly in real estate.

The rules for IRA investing are developed and regulated by the Internal Revenue Service (IRS). And companies that are approved by the IRS to administer your IRA funds must comply with these rules. These companies are referred to as Third Party Administrators, Trustees, or Custodians.

Many of the well known companies that administer self-directed IRA accounts, like Fidelity and Schwab, do not allow you to directly invest in real estate.  Not because it is not allowed but because it is their company policy.  They make commissions handling your stock, bond and mutual fund investments.

So, you have to work with a company that does allow direct investment in real estate. At Catalina Cove Real Estate, we work with well established, national companies that expertly handle and guide your investment decisions in Costa Rica real estate.

The IRS has established some basic rules for self-directed IRA investments. For the most part, these rules outline investments that are NOT allowed in contrast to listing what IS allowed (go figure!). For example, the following are types of investments that are NOT allowed:

• Life insurance
• Collectibles i.e. artwork, antiques, metals (gold, silver), gems, coins
• Subchapter S corporations

Any form of real estate is permitted, however there are certain limitations that you need to be aware of. Specifically,

• The real estate must be an investment property, not a personal residence for you or family members
• You are not allowed to personally guarantee a loan for your IRA and your IRA funds cannot be used a collateral for a loan. You can use a commercial loan or “non-recourse” loan on your IRA property
• When you buy real estate, the seller cannot be a “disqualified person”

Who exactly, is a “disqualified person”?

	you, the IRA owner! So, you can’t buy real estate from yourself!
	your spouse, your children, or your parents
	a corporation in which you or you and your spouse or any of the people identified above own at least 50% of the beneficial interest

Remember, the above discussion regarding a “disqualified person” highlights the rules about the seller of the property your IRA is buying from.

Working with our U.S. based IRA custodians, the process we have worked out typically involves the formation of a Costa Rican corporation similar to the LLC (called a Limitada or LTDA) which is owned by your IRA account, with you as the General Manager. This corporation is then used to buy and sell Costa Rica real estate or Costa Rica corporations that have real estate as their only asset.

The Costa Rican LTDA corporation can also be partially owned by other parties thus allowing you to do joint ventures with your friends and associates.

Easy!

At Catalina Cove Real Estate, we have helped many of our clients purchase choice investment properties with their IRA accounts. We’d be happy to assist you, too!

For more information on this important topic, request our special report, Using Your IRA For Costa Rica Real Estate. Simply provide your first name and email address below, and the report will be instantly available:

Would you like us to call you? No pressure, just a friendly call from our cheerful assistant Beth to discuss your questions about Costa Rica, vacation planning or a specific real estate listing.