Buying Property in Costa Rica: Tax Traps US Expats Must Avoid

Buying real estate abroad can be an exciting step for US expats and globally minded investors, but the tax mistakes can be costly without proper planning.

In this episode of Passport To Wealth™, Arielle Tucker, EA, CFP, is joined by Alex McGowin, CPA, an international tax expert with deep experience advising US expats and Americans investing abroad. Together, they break down the most common tax traps US citizens face when purchasing property in countries like Costa Rica, Panama, and across Latin America.

Alex explains why foreign LLCs rarely work the way Americans expect, how missed elections can turn capital gains into ordinary income, and why many expats unknowingly create controlled foreign corporations that lead to compliance headaches and unnecessary taxes. They also discuss rental properties, Airbnb income, personal use rules, and what happens when investors wait too long to get proper advice.

If you are considering buying property abroad or already own foreign real estate, this episode will help you understand the hidden risks, planning opportunities, and why getting advice on the front end can protect your long term wealth.

Takeaways

1. Specialization in international tax is crucial for providing value.
2. Many clients are unaware of the complexities of foreign tax laws.
3. Building a network of trusted professionals is essential.
4. Real estate investments in Latin America come with unique challenges.
5. Understanding local laws is key to successful property ownership.
6. Tax compliance is a continuous process, not just a yearly task.
7. Engaging with clients early can prevent costly mistakes.
8. The US tax system often conflicts with foreign tax systems.
9. Proper structuring of foreign investments can save taxes.
10. Visiting potential investment locations is important before purchasing.

Mentioned in this episode:

www.passporttowealth.com

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