5 Things You should Know About Buying Property in Costa Rica
For many people, owning a property in Costa Rica is a dream come true. The weather is warm, the scenery is tranquil and beautiful, and the vibe is laid-back. Plus, there are endless things to do and see.
Unfortunately, paradise doesn’t come without some less-than-exciting red tape and paperwork. It’s important to know what to expect when it comes to the logistics of property ownership in Costa Rica. Here are the top 5 things to be aware of.
Foreigners have the same rights as Costa Ricans when it comes to owning property. Private property is a protected constitutional right, and foreigners can own free and clear title with no restrictions, just as they can in the Unites States.
Property taxes are .25 percent of the property’s assessed value which, by law, is the contract amount. There is also a 3 percent property transfer tax, which is usually the responsibility of the buyer, but can be negotiated during the sale. A luxury tax will be applied to properties worth $250,000 or more.
It is very, very important to research the title on a property and ensure that it is clear before you purchase. There are untitled properties in Costa Rica – some inhabited, some not – and purchasing one can get very murky, as there is no clear owner who can legally transfer the property.
Many of Costa Rica’s properties are fee simple, which means that they can be privately purchased and owned, and owners have the absolute right to lease, sell, or improve their property, within Costa Rican law.
Beachfront property is practically unavailable for private purchase in Costa Rica. The first 50 meters of beach front are considered public property. Building and development of any kind is prohibited by law, unless it has been sanctioned by the government.
The next 150 meters of beach front can be developed, but cannot be owned outright. Instead, the government grants concessions, which operate similar to leases, and typically granted for 20 years’ time. A concession owners can develop and subdivide the property, provided he or she has the proper permits.
Unlike simple fee properties, there are restrictions on how much of a concession a non-Costa Rican can own. Foreigners cannot own more than half of a concession, so in order to have rights to the property, they will have to have a Costa Rican partner.
It is advisable to purchase homeowner’s insurance. Insurance is typically sold in classes, and can cover everything from earthquakes, to theft, to riots and other disturbances. You can insure just your home, or just your belongings. Average full-coverage homeowner’s insurance premiums run $200 to $300 a year, but go up along with the property value.