Invest in Costa Rica Real Estate with a Self-Directed IRA

Costa Rica Real Estate Law: Equitable Ownership and Public Property Records

At Lawyers of Costa Rica by GLC, we specialize in guiding investors through the process of purchasing real estate in Costa Rica using Self-Directed IRAs (SDIRAs). With our extensive experience in both real estate transactions and U.S. retirement account regulations, we help clients maximize their investment potential while ensuring full compliance with IRS and Costa Rican laws.

Why Invest in Costa Rica Real Estate with a Self-Directed IRA?

Investing in foreign real estate through an SDIRA offers numerous advantages, including portfolio diversification, tax-deferred or tax-free growth, and the opportunity to own income-generating properties in a prime international market.

Costa Rica is a particularly attractive destination due to its stable economy, high tourism demand, and favorable investment climate.

Key Benefits of Using a Self-Directed IRA for Real Estate Investment in Costa Rica:

• Tax Advantages – Depending on your IRA type (Traditional vs. Roth), your investment can grow tax-deferred or tax-free.
• Diversification – Real estate provides a hedge against stock market volatility.
• Passive Income – Rental properties can generate steady cash flow within the IRA.
• High Growth Potential – Costa Rica’s real estate market, particularly in tourist hotspots like Guanacaste, Jaco, and the Central Valley, has shown consistent appreciation.

For more details, visit our Real Estate Investment Guide.

How Does an SDIRA Work for Real Estate in Costa Rica?

Unlike traditional IRAs that limit investments to stocks, bonds, and mutual funds, a Self-Directed IRA (SDIRA) allows alternative investments such as real estate, private placements, and precious metals. Here’s how the process works:

1. Set Up a Self-Directed IRA – Open an account with an IRS-approved custodian that allows real estate investments.
2. Fund Your IRA – Transfer or roll over funds from an existing retirement account (401(k), Traditional IRA, Roth IRA) into your new SDIRA.
3. Identify a Property in Costa Rica – Work with our experienced real estate attorneys to find properties that meet your investment goals and comply with IRA regulations.
4. Structure the Purchase Correctly – The property must be titled in the name of the IRA, not the individual investor, to ensure compliance with U.S. tax regulations.
5. Manage the Investment – Income and expenses (e.g., property taxes, maintenance, rental income) must flow through the IRA account to maintain tax advantages.

Sell or Transfer When Ready – Upon selling the property, profits go back into the SDIRA and continue to grow tax-deferred or tax-free.

Key Considerations and IRS Compliance

While SDIRA real estate investments offer unique benefits, there are strict IRS rules that must be followed:

• Prohibited Transactions – The IRA owner cannot personally use the property (no vacation stays, family use, or personal renovations).
• Arms-Length Transactions – The IRA owner and related parties cannot provide direct services (e.g., acting as property manager or handling repairs themselves).
• Custodian Oversight – All financial transactions must be handled through the SDIRA custodian to ensure compliance.
• UDFI Tax Implications – If the property is financed with a loan, it may be subject to Unrelated Debt-Financed Income (UDFI) tax.

For more information on compliance, visit our IRS Compliance Guide.

How Lawyers of Costa Rica by GLC Can Help

With over 20 years of experience in Costa Rican real estate law, we provide end-to-end support for U.S. investors looking to acquire property through Self-Directed IRAs. Our services include:

• ✔ Legal Structuring & Compliance – We ensure your IRA purchase follows both U.S. and Costa Rican laws. 
• ✔ Due Diligence & Title Searches – We conduct thorough legal reviews to verify the property’s status and protect your investment. 
• ✔ Property Acquisition Assistance – From negotiations to contract drafting, we facilitate a smooth transaction process. 
• ✔ IRA Custodian Coordination – We liaise with SDIRA custodians to streamline the purchase. 
• ✔ Tax & Financial Guidance – We work with CPAs to advise on tax implications related to IRA real estate investments.

Get Started with Your Costa Rica IRA Real Estate Investment

If you’re considering investing in Costa Rica real estate through a Self-Directed IRA, our team is here to help you make informed, strategic decisions.

📩 Contact Lawyers of Costa Rica by GLC today to schedule a consultation with one of our real estate attorneys.