10 Mar 2022
For years Costa Rica has been a popular destination for expats looking to relocate, buy a second home or even an investment property. It’s easy to understand why, considering the affordable healthcare, strong expat communities, year round temperate climate, and general safety within the country. While buying real estate in Costa Rica is a fairly transparent process, with the real estate market heating up again in Costa Rica, it’s helpful to understand the in’s and out’s of the buying process. While there are many things to consider, below is our guide to help outline some of the most important steps for buying your own slice of paradise in the land of Pura Vida!
Can Foreigners Buy and Own Property in Costa Rica ?
The good news is, yes! The great part about Costa Rica is that foreigners and locals have the same ownership rights when it comes to buying property. Foreigners can buy property on a tourist visa without ever needing to apply for residency or citizenship. Most properties have fee simple title, exactly as you find it in most of the U.S. and Canada.
Finding Your Ideal Property
Unlike the United States, there is no MLS database In Costa Rica. This can make the process a little more tricky than opening up a webpage and searching all the available properties on the market all at once, making the need for a knowledgable agent all the more necessary. If you’re in need of a reputable agent, contact our team and we would be happy to guide you through the process.
Hiring a Real Estate Attorney
Citizens, residents and non-residents alike should hire an attorney for their real estate purchases. If you don’t speak fluent Spanish, it’s recommended that you hire a reputable bilingual real estate attorney who is also a Costa Rican public notary, so you are well represented. Only a public notary can record a purchase in the National Registry which is one of the most important final steps in the purchase process.
The Purchase Process in Costa Rica
There are only some slight differences between buying a property in Costa Rica versus the US/Canada.
Similar to the US and Canada, once you have decided on a property that you would like to purchase, have your agent draw up a written offer and send it to the seller. After negotiations have been finalized and the final price has been agreed upon, your real estate attorney will write up a formal purchase-sale agreement. Once everyone signs on the dotted line, then comes time for the deposit. Deposits in Costa Rica are typically around 10% of the sale price, unless agreed upon otherwise. It’s important to note, the purchase sale agreement will not be legal until the deposit arrives in escrow.
Closing usually falls 30-60 days from date of signing the purchase-sale agreement. It’s helpful to make sure you wire or transfer the money well in advance of your closing date, as Costa Rican banks have a long holding period.
Closing Costs & Commission
Closing costs are negotiable between buyer and seller but are typically paid by the buyer since the buyer picks the attorney who would also be the public notary to close the transaction and register the change of ownership in the public registry or properties. Closing costs are estimated at 3.6% of the total sales price, depending on the value.
When it comes to commission, typically the seller pays this and can range anywhere from 5-8%. As the buyer, you will not have to pay this commission unless you hire a buyer’s agent. In most cases, the buyer’s agent will split the commission with the listing agent
Registering Your Property
As mentioned above, the last step in the purchase process is to register your property either in your name or as a corporation. Similar to an LLC in North America, many people buy property in Costa Rica through a Sociedad Anónima (SA) or Sociedad Limitada (SRL) corporation. Buying property through a corporation can actually simplify the purchase process. Ask your attorney for advice on what is the best option for you.
Property Tax and Luxury Tax
The property tax rate in Costa Rica in minimal compared to other countries, coming in at a mere 0.25% of the property’s value and paid yearly.
In addition to property taxes, Costa Rica charges an additional tax for homes valued over $214,000, called Luxury Tax. Luxury homes are subject to a sliding scale luxury tax, but it is capped at an estimated 0.55%.
Something to be aware of when purchasing property in Costa Rica, is any property located within the first 50 meters of the high tide line is considered public land. This means it is protected and cannot be titled. The next 150 meters up from this zone is called the Maritime Zone or Concession Land. While foreigners can readily buy property in Costa Rica, a non-citizen can only own up to 49% of Maritime Zone land. Have your real estate attorney check to be sure there is a clear title for any prospective property you are interested in.
There are exceptions to this rule of concession property. About 5% of Costa Rica’s beaches actually have titled land up to the 50 meter line. Jaco Beach and Los Suenos Beach front are two places in the country where property is titled up to that 50 meter line. It’s an incredibly unique situation to find property that has title so close to the beach.
Buying Property with HRG in Los Sueños Resort & Marina
We hope you found this guide helpful and informative. If you have any additional questions, our seasoned expert team is here to help! Bringing a wealth of knowledge and professionalism to the table we can help guide you through the entire process to help make buying your new property in paradise, a breeze!