Mismatches / Dumb Machines / Financial Ignorance

ISSUE #724: Aug. 19-25, 2018


Brian Timmons, Newsletter Author
Brian Timmons

Dear friends,

When I started Residencias Los Jardines, I started writing a weekly newsletter -determined to tell all the good, bad, and the ugly. I knew some readers would be interested in the construction process. I expected others might be interested in the lifestyle of two people who had decided to live outside the box. For others, the adventures of Lita, the parrot and the cat took on an entertainment saga all its own.

Residencias Los Jardines is finished. We periodically have re-sales and rental availability. Some readers may be interested in this information.

Brian Timmons
Developer / Property manager
Residencias Los Jardines

Web: https://www.residenciaslosjardines.com
Emails: info@residenciaslosjardines.com

rentals & sales

Paradisus Condos / Rohrmoser
Visit our website

Paradisus Condos - click to visit

Each of the units consists of two bedrooms / two bathrooms, and a large living/dining/kitchen area. The floor plan of each of these units has eliminated the optional "den / office" divider. The result is a larger area offering more flexible furniture arrangements while still maintaining the option of including an office area. At 105m2 plus two parking spots each and storage locker, they offer a great opportunity for someone seeking views, security, central location, and first class, all round living...

Semi furnished unit: For sale: $235,000
Fully furnished unit: For sale: $245,000
Floor 12 -west view

Distrito Cuatro / Guachipelín / Escazú
Price reduced: $ 125,000 to $ 99,000

about Distrito Cuatro

Rendering proposed
Distrito Cuatro - click to Download full PDF

Real de Santa María / Borreal de Heredia
$ 185,000
Private financing available

See location on Google Maps

Real de Santa María / Borreal de Heredia

Download more pictures (8.35 Mb)

Hyundai Santa Fe 2008
$13,500 $11,000

Hyundai Santa Fe 2008, Turbo Diesel, automatic, excellent family vehicle, safe, comfortable, interior with leather seats. Good tires, engine, turbo, suspension, and AC. Marchamo 2018 and Retive. It now has been road tested for 5 weeks and performed flawlessly. I can now sell with confidence...

  • 5-door / 5 passenger
  • Power steering, windows, mirrors, brakes and locks
  • A/C front and rear
  • Cruise control
  • audio/radio control
  • Air bags - driver / pass
  • Security system
  • Fog lamps
  • Tinted windows
  • Roof rack
  • CD player / radio USB/AUX
  • Hydraulic lift
  • Leather seats
Market activity
sales & rentals

Sales: Los Jardines: Units #114 and #124


Paradisus: Nothing available

Los Jardines: Unit #106C available September 1st

Residencias Los Jardines
property management, rentals & re-sales

Unit #114: $ 199,000 / See Unit
Unit #124: $ 135,000 / See Unit

Unit #106C: $ 950 mo. / Available September 1st / See Unit

For sale

UNIT #114
$ 199,000

Total Area (Sq Ft): 1290
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: Semi-Attached
Furnished: Yes

This 2 bedroom/2bathroom,1,290 sf single floor end unit home includes a 150 sf front terrace plus parking for one car. This house is fully air conditioned and has recently been professionally decorated by international decorator Alcides Graffe and has undergone a complete renovation—new modern furniture, finishings, window coverings, and art work by Carlos Gambino. It is arguably the nicest furnished unit at Residencias Los Jardines and only steps from the pool

UNIT #124
$ 135,000

Total Area (Sq Ft): 662
Total area (Sq M): 61
Bedrooms: 1
Bathrooms: 1
Floor(s): 2nd Floor
Type: Semi-Detached
Furnished: Yes

This 662 sf, + covered parking for one car, is a one bedroom home on the 2nd floor overlooking the large pool. It is ideal for a single person or couple.

For rent

UNIT #106C
$ 950 mo.
Available September 1st

Total Area (Sq Ft): 1250
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: 4-plex
Furnished: Yes

This is a fully furnished 2-bedroom unit situated in a 2-story building, which has two units on the ground floor and two units on the 2nd. floor. Each unit is the same size (1,250sf) divided into 800 sf of interior space and 450 sf of covered front and back terraces. Units 106A and B are on the ground floor; Units 106 C and D are on the 2nd. Floor. The solid masonry demising wall (common wall) as well as the 5” concrete slab prevent sound transference.

Our Lives

Weather: Normal rainy season weather... wonderful...

What Happened This Week:

Is "Maybe" Coming?:

(Part 2) The would-be buyer said he had a CD. Just needed to cash it... we are now 2 1/2 weeks later and -guess who --Scotiabank-- needs a bit more time... perhaps another week. Supposedly they need more paperwork from the client?

Mismatchs: Type "A" personalities don't survive CR. Anyone not able to accept gliches, chaos, uncertainty, unreliability, who are inflexible (must have a certain brand of oatmeal / peanut butter / yogurt, etc, need not come here. they won't last, will be miserable, and will cause those around them to be miserable as well. We have a recent tenant who, after 6 weeks, has decided (rightly so) that CR is not for him. Know thyself / do your research... for some the green grass on the other side of the fence is a mirage...

Santa Fe: One caller who had to see it right away... it was night time... would check with her husband / guess he was unimpressed... I haven't heard back. But I do have some one else looking today... perhaps it will be sold today... if so, one thing down... many to go...

Clueless in CR: Distritocuatro: several showings... another in an hour. Had a half-hearted offer... again the client and their agent have no clue. They were going to borrow $60K from the bank, and wanted $39K VTB. They had no idea how to calculate simple interest nor what the total monthly nut would be. And under this scheme, they had no money in the deal and I would have no security... they are used to CC monthly interest payments and do not seem to have a clue beyond that. Meanwhile, I wait for Scotiabank to release CD funds...

Heredia House: Looking good / looking lonely -no calls.

News Items of the Week


1. New Tax Package: it continues to work its way through the government processes. A number of changes are proposed... some of which will be incorporate / some will be dropped. Eventually, something will come out at the end. It will be a game changer for many.

By A.M. Costa Rica analysis

The new fiscal plan, which is under consideration in legislature, aims to increase the state's income with modifications to the current taxes and the creation of new taxes.

The draft text of the fiscal plan, known as the Law for Strengthening Public Finances, has been approved with modifications by a committee and now goes to the full legislature. It is composed of five main themes:

a. Creation of a value-added tax (VAT) to replace the current sales tax;

b. Changes in the current income tax;

c. Changes in salary and benefit payments to public employees;

d. Changes in the form of fiscal operation of the country and administration of state resources, called the tax rule; and

e. Tax on the transfers of assets.

The legislators are in the process of analyzing, rejecting, approving or making changes in the new tax plan. When the legislators are satisfied with the changes, a general vote will be taken for the final approval.

The objective of governments is to obtain revenues of 1.5 percent of gross domestic product in the first year of the plan’s approval.

With these fresh revenues, the government says it will be able to pay the expenses and reduce the fiscal deficit.

a. Value-added tax (VAT)

The first of the project proposals is to eliminate the current sales tax, and replace it with a value-added tax, or VAT. The rate is the same as the current sales tax, 13 percent, but the tax would cover more economic activities.

For example, in the past, fees for hiring a lawyer, were not subject to the 13 percent sales tax. With the new plan, the lawyer must charge the 13 percent value-added tax.

That is, professional services providers who previously did not collect the tax, must charge 13 percent if the new tax package is approved.

This tax would also be applied in commercial activities that are developed with new technology. The purchase of services on the internet, such as Netflix, Spotify, Amazon, etc. would be taxed as long as the service is paid from Costa Rica.

The project contemplates the collection of a 4 percent, not the 13 percent, in basic services, such as the purchase of medicines and private medical services. Lawmakers decided to assess a 2 percent tax on private education, but as the bill stands now, this is not included. The executive branch is unhappy that the private education tax has been taken out, and it said it will fight to restore it during the discussion by the full legislature.

The following activities are exempt from tax:

- State medical services, such as those offered by the social security, know as CAJA, trade unions and charities.

- Exports

- Companies that operate within the free zone regime;

- Loans and credits;

- Transfers between banks;

- Supplies for those with physical disabilities;

- Housing rental payments whose monthly cost does not exceed a base salary (¢431,000);

- Electricity services not exceeding 250 kwh per month (¢37,750 per month);

- Water service when they are less than 30 cubic meters (¢16,695, per month);

- Rent by religious organizations, provided that the rent is not greater than ¢ 862,000.

b. The income tax

Tax would be imposed on wages per productive activity to each person, including salaries, fees, allowances, etc., as follow:

The tax would be 20 percent for monthly salaries greater than ¢2.1 million and 25 percent for salaries greater than ¢4.2 million.

Tax on cooperatives would be between 5 percent and 20 percent of their profits

Small and medium enterprises would be taxed if annual profits exceed ¢5 million.

A tax of 5 percent would be levied on capital gains except gains that come from pension funds.

It is also planned to apply a tax on the securities issued by the Banco Popular, the National Financial System for Housing and the cooperatives.

This tax will depend on a percentage scale in relation to the amount of the investment.

Also in the plan is for individuals to make an income report in the same way that the income report is made by professionals. That is, report the economic activity from January to December and not from Oct. 1 to Sept. 30 the following year, as has been done.

The tax on capital gains will be applied for transactions in the National Stock Exchange of Costa Rica.

Finally, there are rules against tax avoidance, that is, including operating expenses in the financial statements which are originated in countries known as tax havens.

c. Public employment

The Ministry of Finance is working on a comprehensive reform, which will be proposed in 2019. However, in the text of the tax plan, which is now being studied by the legislature, there is a chapter called "ordering of the remunerative system." This is a chapter that seeks to generalize the conditions for all employees in the public sector.

Among the most important changes are:

Reduction of 50 percent to the amounts paid for exclusive dedication;

The maximum payment of eight to 12 years for dismissal;

The maximum limit to salaries, including those of the board of directors, such as those that operate in banks;

The proposal prohibits the creation of new salary incentives with the exception of those being approved by a new law;

The bill also limits the capital of annuities or the financial incentive for each year working on the same institution, from 1.94 percent for professionals and 2.54 percent for non-professionals.

d. Tax rule

Finally, the text provides limits to the approval of projects without the funds to finance these projects. It also limits the growth of the government expenses, which must be proportionally related to gross domestic product growth.

In addition, the use of state funds is defined but with the option of making the use of these funds more flexible. In other words, the minister of Finance may allocate funds to specific activities, such as in cases of emergency declarations or economic recessions. This new norm put the decision on priority social programs in the hands of the state.

The proposal includes a section for public entities stating that, if they have a surplus, they must use it, to amortize their own debts.

e. Tax on the assets or properties transfers

The text of the new fiscal plan includes a final chapter on property taxes. This applies a tax between 0.5 percent to 0.15 percent, to all contracts, public or private of transfer of property or assets, as for example the transfer of houses or vehicles.

The last release from the legislature announced that the tax of from 1 to 2 percent on the basic food basket was eliminated, something the central government opposes.

The basic basket is a list of consumer products which are considered to be the minimum products that a family should be able to buy for their sustenance. Among these products are: milk, rice, sugar, eggs, beans, coffee, and bread, among others.

The decision not to apply the tax on these products has been regretted by the Ministry of Finance. According to the ministry, this decision the government will stop collecting between 60 and 65 billion colones per year.

The project of law, of the new taxes, continues being studied by the legislature. There is no definite date for the approval or rejection of all or part of this new law.


Brian C. Timmons
Property Manager RLJ and Newsletter Author

Costa Rica:
Cell: (+506) 8-455-59-35
Land line: (+506) 2282-4142 Ext. 101

VOIP: (+416) 461-2203

Web: https://www.residenciaslosjardines.com
Emails: info@residenciaslosjardines.com

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