Costa Rica’s laid-back lifestyle and gorgeous weather attracts many people from all over the world like a magnet. Real estate is more affordable in Costa Rica than it is in most other parts of North America and the fact that Costa Rica might be defined as paradise, makes the deal even better. In this blogpost we’ll talk about all the things you need to know to buy a property in Costa Rica.
Buying as a foreigner
What’s great in Costa Rica is that foreigners have the same ownership rights as locals do when it comes to buying a property! Foreigners can buy a property on a tourist visa without needing to become a citizen or having residency.
No multiple listing service
There are no certified real estate agents or no multiple listing service in Costa Rica, and the industry is not regulated very tightly. So, shopping for properties is not as easy as logging onto a multiple listing service and viewing everything that’s for sale and comparing prices. The fact that the industry is not tightly regulated leads to potential for fake real estate agents and fraud so be careful!
Property taxes
In Costa Rica, the property tax rate is 0.25% of the property’s value. Homes that are valued over around 214,000 EUR are termed luxury homes and they are subject to a sliding scale luxury tax, but there is a cap of 0.55%. However, keep in mind that, if you are planning on buying a property in a gated community, there are also condo fees that will apply. These fees can range from 20-100 EUR per month. These condo fees cover maintenance, cleaning and security.
Titled property
Properties that are within the first 50 meters of the high tide line is considered public land and therefore is protected and can’t be titled. The Maritime Zone or Concession Land is the next 150 meters up from previously mentioned zone. A person who is not a citizen of Costa Rica, can only own up to 49% of Maritime Zone Land, usually this means that a directly ocean front property is off the table.
In order to make sure there is a clear title on the property you’re interested in buying, make sure to hire a real estate attorney. It is best to have them do the property title search through Costa Rica’s public registry. There is also a numbering system in Costa Rica, called the Folio Real. Most properties have their own numbers that identify them in the public registry and your attorney can gather all the available information on the properties in the market.
Title insurance
Title insurance is not commonly used in Costa Rica and it can be quite expensive. Check with your real estate agent to see if it is something you might need in your situation.
The purchasing process
When you’ve found a property that you want to invest in, ask your agent to write up an offer. You can negotiate the purchase price and keep in mind that this process usually moves fairly slow in Costa Rica. Once you’ve agreed upon the price, ask your real estate attorney to write up a formal agreement on the purchase/sale. You’ll have to transfer a deposit once the agreement has been signed, usually the deposits are around 10%. The closing period can be between 30-60 days once the agreement has been signed. Then your real estate agent will officially close the deal. Buyers will usually have to pay closing costs, which are based on the sale price of the home and transfer of the ownership process. Transfer taxes, stamps and duties usually total up to be around 3.5% of the buying price. Furthermore, there are also notary fees that increases the closing costs to between 5-10% of the buying price.
