Buying a home in Costa Rica – The decision to purchase real estate in a foreign country can at first be a daunting proposition. However, it is possible to safely buy property in Costa Rica with the assistance of a reputable realtor and attorney. Your realtor should be able to help you to locate property suitable to your needs, educate you as to property values and investment opportunities in your chosen area, and assist you with negotiating a fair price. It is important to choose an experienced attorney with a solid reputation who can handle the financial aspects of the transaction and ensure that your property has legal title and is purchased free of any liens or encumbrances.
Escrow Services – All Real Estate Transactions are now required to run through a government sanctioned Escrow Account. This ensures that your money is protected while your property is in escrow and that the closing goes according to the contract.
Ownership – Foreign Citizens and Costa Ricans have equal rights under the Costa Rican Constitution to own property here. Property can be purchased in your personal name or in the name of a corporation that you represent. Many foreigners own their properties inside corporations as it allows for ease of ownership by multiple partners or within a family group and in the event of a passing of one of the owners the probate process can be avoided. The process of setting up a corporation is not complicated nor expensive, but requires the expertise of your attorney to ensure it is set up according to your wishes.
The Public Registry of Properties – Buying a home in Costa Rica requires it be registered in the Public Registry of Properties, whether the property is fee simple titled or a maritime concession. By means of a detailed title search in the Public Registry of Properties your Attorney will be able to confirm that the property is legally fit to be purchased and the title will be purchased free and clear of any claims, liens or encumbrances. There is a portion of Costa Rican property that is not titled nor has a maritime concession. We strongly advise against the purchase of unregistered property.
Folio Real Number and Plano Catastro – Each property registered in the Public Registry of Properties is assigned a unique number called the Folio Real Number. The number is comprised of three parts, the first number indicates the province, the second group of six numbers is the number of the property itself, and the last group indicates how many owners the property has. The Plano Catastro is an officially registered Survey Plan prepared by a licensed Topographer based on a physical survey of the property. All properties must have a registered Plano Catastro and their own Folio Real duly recorded in the Public Registry of Properties before they can be bought or sold.
- Transfer tax – 1.5% of the purchase price or the registered value at the Municipality, whichever is higher
- Registration stamps – .84% of the purchase price or the registered value at the Municipality, whichever is higher
- Legal fees – 1.25% of the purchase price
- New Corporation $650
- Escrow services $550
If you are getting a mortgage then the fee is 1.64% to register the mortgage on the property.
In addition, the registry requires a certified declaration from the municipality stating that the seller’s property taxes and assessments are current through to the date of closing.
One advantage of buying a home in Costa Rica is that property taxes are very low, only ¼ of 1% of the registered property value. For example a property valued at $100,000 pays $250 per year in Property Tax. On larger homes, usually over $500,000 there is a Luxury tax which can bump your property tax up to .50%, still substantially less than most tropical locations. Certain standard closing costs are required in Costa Rica to transfer the title of a property from the seller to the buyer, in most cases paid by the buyer. Closing Costs include: (1) Real Estate Transfer Tax, which is 1.5% of the registered value of the property on the deed; (2) Documentary Stamps, which total approximately 1.25% of the registered value; (3) The Notary Fee, which is 1.5% of the first million colones and 1.25 % on the balance of the property sales price. Using the example of a $100,000 property, closing costs would be approximately $4,250
Financing – Suffice it to say there is no bank financing for foreigners in Costa Rica. For a detailed explanation of some potential alternatives check out this article – Financing Property in Costa Rica–What are the Options?.
The RE/MAX Team will always put the best interests of our clients first, providing the most professional, informative, loyal and dedicated service in the country. We are the most innovative, people oriented organization providing individual opportunity, personal satisfaction and rewarding challenges to all members of our organization. RE/MAX Tres Amigos and all of its Agents have a vested interest in Costa Rica’s Papagayo region and an unrivaled reputation and commitment to our community.