What are the costs of selling property in Costa Rica?
What are the costs of selling property in Costa Rica?
As explained in the previous FAQ, Buyers generally pay all the closing costs associated with buying the property. Sellers must pay the real estate commission and any legal fees to their attorney associated with representing them at closing. There is also now a Capital Gains Tax.
Most people own a property here in a Costa Rican corporation, similar to a US LLC. The corporation must call a shareholders meeting, to legally sell the property out of the corporation and into a new corporation that the buyer has created. Most Sellers do not come for the closing, so a legal Proxy must be created so someone can represent the corporation at closing with a Power of Attorney. Then after closing the corporation must be dissolved, if there are no other assets held by that entity. Attorneys usually charge between .5 % and 1% of the sale price for these services plus the 13% VAT sales tax on the legal fees. It is in a Sellers best interest to confirm with the attorney ahead of time what these fees will be.
The real estate commission in Costa Rica is very similar to North America. It is 6% and is split 3/3 between the Listing agent and the Buyer’s agent. Also, by law, there is a VAT sales tax of 13% on the whole commission. That brings the total cost of selling property in Costa Rica to 6.78%.
As of July 1 2019, there is a capital gains tax in Costa Rica. If you purchased prior to July 1, then you have the option of paying EITHER 15% of the gain, OR 2.5% of the sale price, whichever is less. After July 1, 2019 you must pay 15% of the gain. If it is your personal home, and you can prove it, you are allowed to sell it with NO Capital Gains tax. You can do this once every year.
If your property was held in a Costa Rican corporation, and you are not going to use this entity again to purchase another property and as long as the corporation does not have another asset, like a car or bank account, you should close this corporation after the sale. There is a small fee for the attorney to handle this. It is your responsibility, to follow up a month or two later, to make sure the corporation has been closed, as you will still be obligated for all filings, taxes, corporate share holder agreements etc until it is final. There are big penalties with interest that can accumulate if the corporation is not dissolved.
All of these fees will be deducted by the escrow agent at closing.
