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Lower or higher? Are you thinking of moving to, and living or retiring in Costa Rica to save money? You will be surprised at the savings in some areas, but added costs in other areas.

Costa Rica attracts a large number of North American, Canadian and European retirees due to both real and perceived reductions in the cost of living. The cost of living in Costa Rica is lower than the United States, Canada and Europe. On the other hand it is not CHEAP. The most obvious measure of value is the exchange rate of the local currency relative to the US Dollar and the Euro.

Those seeking to relocate to Costa Rica can still find property, in just about any category, to be affordable and often a good value. Are there cheaper places to buy in Central America. Yes, but at what risk?

Anyone moving to Costa Rica to live or retire immediately recognizes significant savings for all labor costs, both skilled and unskilled. From domestic workers, mechanics, technicians, particularly doctors and attorney’s, all fees for professional services are considerably less than in the countries of origin of most retirees.

Property taxes are very reasonable, in some cases, almost non-existent. Property insurance is significantly less expensive, especially if coming from an area where taxes represent a large part of the county, state or provinces revenue, or from a Sunbelt state, where hurricanes have substantially raised premiums. There are no heating bills in most areas of Costa Rica, except in some of the higher elevations, where it can get quite cold. Even then, it is doubtful that people have high bills and probably use a fireplace or small electric heater to use in specific rooms. No house has a furnace for the entire home. Also, most of the popular residential areas are comfortable without air conditioning. This is not true at the beaches however, but depending on were you live, if the temperature rises above an acceptable degree, you can turn on a fan, and find the air is quite pleasant if, simply circulated. Many living in Costa Rica also use demand hot water heaters vs. the standard hot water tank. This not only saves money, but helps in creating an energy efficient household.

Most ticos, and people who live and retire here, have all electric homes, and this includes the cooking area. However, you can have a gas stove, but you will need to buy the tank of gas from a local hardware store, that sells and services these tanks. You can also arrange to have them delivered. A tank of natural gas for range or dryer runs about $18 per re-fill. Water is usually purchased from the local municipality or local water company, depending on the services that are available in each area. Large cities have several water companies that take care of a group of urban areas. If a property has a well or spring fed water supply, then the cost of city water is eliminated. Internet and cable TV cost about the same. These costs would be dependent on what kind of package you buy. Most of the time, a basic home package, including TV, phone and internet, is sufficient. If a satellite dish (for phone, TV and internet) is necessary in a remote area, it can be more costly and the service packages are often based on the number of boxes being used in the home. Land-line and cell phone fees are very reasonable and almost everyone has both a land line and at least one cell phone. Land lines can be hard to come by in some areas, so sometimes a cell phone is all that is available.

Auto fuel (diesel or gasoline) is more as of October 2008, around $6 per gallon, however diesel is less expensive, but now that the price of oil is falling again, gas prices are lowering, too. Generally grocery staples are slightly less, depending on where you shop. Fruits and vegetable are a great value, if purchased in a farmers market type of atmosphere, but often cost the same in the supermarket. If you plan on retiring here on a fixed income, find out where the Saturday morning street markets are to save money.

Costa Rican beer is good and it is cheap. Eating out at a local restaurant is very affordable, if you order the typical fare, but as in most places, if you go for the lobster and some prime cuts of beef in an upscale restaurant, you will find the prices much higher.

Housing, taxes and entertainment tend to be more expensive for those living in or around the city and along the Pacific coastline. The beach, anywhere in the world, tends to be higher priced, because of the limited amount of land available and the tourist factor. The countryside is, in many ways, less expensive simply because needs differ and the lack of higher priced activities and expensive restaurants are less accessible or unavailable. Another factor is that the more rural the property, the price is going to be lower. A surprising fact is that the cost of some supplies in the country or beach can be even more than in the city due to a lack of availability caused by a lack of demand and transportation costs. Utilities and insurance, still both government monopolies, remain consistent throughout the country.

The sales tax in Costa Rica is 13%. This applies to goods, some services, but most grocery items are exempt. If you have to add import taxes, when applicable the result is that most imported goods carry a total tax (sales plus import) of 26%. Anything that is imported, such as wine, cheese, USDA meat, name brand US products, are more expensive than in the U.S. and often sold in smaller quantities. Most popular brands are available, yet at a cost. Taco Bell, McDonald’s or any US name brand restaurants (Outback, Tony Roma’s, etc.) are as much or more than in the U.S. Higher-end, Costa Rican-owned restaurants serving international or gourmet cuisine must reflect the cost of imported products on their menu prices.

Costa Rica recently adapted CAFTA (Central American Free Trade Agreement – with the US). Within the next two years it is hoped there will be a reduction on import taxation of products from the U.S.

Many goods are imported from China, and tend to be on the low end of Chinese exports, specifically, clothing, shoes, linens and household goods. They lack in quality and longevity. Appliances, tools, equipment and machinery follow along the same lines. Most retiring to Costa Rica can shop for familiar brands imported from the US and Europe. These are readily available in a variety of outlets. You will naturally pay more for the higher quality imported items, but they will serve you better in the long run, due to the fact that they will last and not need to be replaced as frequently as an inferior substitute. Always, shop with the idea in mind that you may pay more for the product than you had hoped, but the item will be around for the duration.

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