The basics of closing costs on real estate in Costa Rica
Congratulations, you’ve found your dream home at Los Sueños Resort and Marina, made an offer and the seller has accepted it. Before you call the moving company, you have some footwork to do which can be complicated if you don’t have someone to guide you through the process.
Make sure you understand all of the transactions you are participating in. Ask for a translator if you feel you need one so you know what to expect and what’s expected from you.
In Costa Rica, notaries are highly trained lawyers with additional legal duties; your real estate lawyer should also be a notary.
While you have the same rights as a Costa Rican citizens, it’s common to buy property as a limited liability corporation or sociedad anonima (S.A.) to protect your purchase and separate it from all your other assets. Should you decide to go this route, there would be a cost involved to set up that entity. Your real estate lawyer can likely assist you with this, as well.
Title searches or title insurance (1% – 2% of the purchase price) to guarantee clear title are becoming a common practice in Costa Rica.
Strictly speaking, closing costs include registration, notary and attorney fees, documentary stamps and transfer taxes. The basis for these costs amount to no more than 6% of the purchase price. In most cases, as the buyer you are responsible for these costs, which are calculated as follows:
- The fee for the transfer deed, by law, is 2% on the first 10 million colones, 1.50% on the five million colones thereafter, 1.25% on the 15 million colones thereafter and 1% on the balance of the sales price.
- Property Transfer Taxes: 3.1% of the declared property value, which is always lower than market value. Registering the declared value means lower property transfer fees up front, which valuation to use is up to you.
- Government Taxes and Fees: Your notary pays a 0.5% registration fee (0.5%) and buys a combination of fiscal stamps (0.55%) to affix to the property documents.
- Mortgage Registration Fees: The borrower pay sale mortgage drafting and registration fees. The assessed cost is approximately 0.25% of the sale price, plus 0.53% of the sales price in documentary stamps. An additional 0.5-1.25% of the mortgage amount is due in notary fees.
- Attorney fees are phased: 1.5% of the first $1,750 (one million colones) and 1.25% of the remaining sale price.
Of course, there may be other costs and fees involved in your new Costa Rica home purchase, such as appraisal fees or real estate agent commissions; though these are normally paid by the seller, they are sometimes split between the two parties.
Los Sueños is a carefully designed and master-planned resort community, you can be sure that your new home reflects the luxury standards set for a unique residential community set in a brilliant and vibrant tropical landscape. The experts at HRG are professionals who can provide a wide range of real estate services, and advice, which will meet all your needs.