If you plan to buy a home in Costa Rica, a popular choice for many expats because of its exotic natural beauty, there are several things to consider before you buy. Costa Rica permits non-residents to buy and sell property on an equal footing with its residents and citizens. Although foreigners, regardless of residency status, share the same property rights enjoyed by Costa Ricans, or Ticos.
While you have the same rights to buy and sell as Costa Rican nationals, real estate transactions can be complicated. In Costa Rica, the emphasis is on doing things the prescribed way and in the correct order. The best advice is to obtain expert legal advice and a good real estate agent. Unless you have experience and a complete understanding of property transactions and processes in Costa Rica, do not go it alone.
A good real estate agent is invaluable but the government does not require licensure for real estate agents or impose much in the way of regulation. Ask local ex pats for their recommendations, be sure to ask for and check references. Costa Rican agents typically represent buyer and seller, as well as work with the lawyers, notaries and surveyors. Formal escrow companies and mortgage companies or brokers are rare, requiring the agent to attend to a long laundry list of required details. Typically, the seller pays the agent’s commission.
You will also need an attorney or a notary: All notaries are attorneys, but not all attorneys are notaries. A notary is required to authenticate real estate transactions. Again, it’s common practice for the notary/attorney to represent both parties; ask around for recommendations.
Although you may be the exception, ex pats tend to settle within loose communities or in larger developments. Because of that tendency, there are usually well-respected, national-level real estate agents and developers at hand who are well versed in Costa Rica’s property laws, especially if you plan to buy within a dedicated development. It’s their business to facilitate your purchase and guide you through what can be a complicated process. Because their successful business relies on customer satisfaction, you can rely on these experts to work with your best interests in mind because it’s also in their best interests.
Most ownership in Costa Rica is fee simple: Once purchased, you have the right to use and dispose of the property as you wish. Such ownership includes single-family houses, as well as condominiums, which encompasses a variety of development types.
Beachfront property is more complicated, requiring a government concession that works along the lines of a leasehold. Property within the Shoreline Zone (Zona Maritima Terestre), 200 meters from the mean high tide line, is public land, especially the first 50 meters of shoreline. Concessions are strictly regulated and only available to Costa Rican nationals or residents of five years or more.
Financing and costs
Technically, ex pats and Ticos have equal access to credit. In practice, it’s more difficult for ex pats because banks and other lenders usually do not to accept out-of-country collateral and income. Sometimes a co-signer will be required and interest rates will be higher. In addition, beachfront property is not eligible for financing because it is a concession. It is easier all around to have funding from abroad.
Buyer and seller customarily split transaction costs, which run between 8 and 14.5 percent. Fees are based on the sales price, not declared value. Taxes may also be due at the time of closing.
If you plan to live in Costa Rica for an extended period, you will need to establish legal residency. There are several visa choices:
- Family member of a Costa Rican resident
- Foreign government or NGO employee
Pensionados and rentistas
A pensionado visa is exactly what it sounds like: a residency visa for ex pat retirees. To qualify for this visa, you must have income from a qualified pension or retirement account of at least $600 per month and change the same amount into colones (local currency), as well as live in Costa Rica at least four months of the year. To qualify for a rentista, requirements are similar: income and currency requirements are $1,000 a month and you must live in CR at least six months a year.
There are no taxes on income earned outside of Costa Rica and pensionados and rentistas may own and operate a business. In CR, you must apply for permanent residency after five years before you can obtain a work permit.
Investors, family members and employees
Investor visas, as implied, are available to those persons investing at least $50,000 in special projects: reforestation, tourism and exports or those who invest plan to invest at least $200,000 in any other business. As with a rentista visa, you must live in Costa Rica at least six months of the year. You will usually be eligible for permanent residency after two years.
Visas for family members and government or NGO employees are dependent on the circumstances of the applicant.
Regardless of what you buy and how you buy it, Costa Rica is a beautiful country of friendly people who espouse the national motto: Pura Vida.