How much are HOA fees in Costa Rica?

Most properties are located in a gated community, with a formal and legal Home Owners Association. The HOA provides the necessary services to run the community; security, administrator, landscaping, garbage pickup, water and sewage systems, accounting, insurance and maintenance of the common areas and amenities (if applied). This of course costs money that must be shared by the property owners in the development, whether it is a condominium or residential building lot / home development.

Most of these are fixed costs. In other words, items like security are the same price per hour or price for 24 hour period in any development. The difference is, if that guard service is being divided by 12 owners or 24 owners, determines many times, the difference in fees between one development and another. Also, developments with multiple swimming pools, larger landscaping to maintain, and other amenities like gym or beach club, will also be the difference in price between one community and another.

Small condo developments with only one amenity, like a community pool, usually run about $200 per month.

Fancier condo developments, with multiple pools, gyms, beach club etc, run around $500 per month.

These fees usually cover EVERYTHING outside of your condo; maintenance of the building and roof; insurance; common areas etc and all items listed above.

Residential home subdivisions, usually run around $150-275 per month, depending again on how many properties are in the project, and what type of amenities are offered. These fees cover everything that is common in the development. In this type of project, the home owner maintains their own personal properties, paying for their owner landscaping, pool service, and maintenance of the house.

Fortunately, we have no snow removal fees.

Compared to North America, HOA FEES are very reasonable. A nice condominium building in a first class city like Toronto or Miami, can easily run $1500-2000 per month.

Many of my clients come from single family house communities in North America where there are NO HOA fees. Everything is paid for and maintained by the government. But in reality, you are paying for these services in the form of property taxes. Take Boca Raton Florida for example. My property taxes when I lived there were 2% of the house value. So a $500,000 home was $10,000 a year in taxes. For these fees, the city of Boca Raton would supply all the necessary services for the area. When the road needed to be fixed, they did it. They would pick up trees that feel down and make sure the street lights were working. So as an owner, I never had to do anything except pay my taxes.

In Costa Rica, property taxes are VERY low. They are .25% of the value. So that same home would only be $1250 per year! This also means that the local municipalities don’t have a lot of extra money. So they use it to maintain the major thoroughfares, schools, hospitals, fire trucks, police etc; the important things. Smaller roads, inside our subdivisions, we have to look after ourselves. So the HOA fees help to maintain the infrastructure within our communities.

When there is a pot hole in the road, we fill it ourselves. We maintain our own water systems, street lights and do upgrades to the internet cables ourselves. And if a cat is stuck in a tree, we just get our own ladder to help the little dude down. We don’t call the fire department.

So if my HOA fees for my house are $250 per month that equates to $3000 per year. Add that to the $1250 and my grand total for maintaining my development and my taxes are $4250. So it is best to just look at HOA fees as a portion of your property taxes. Compared to the $10,000 you would be paying, you are still substantially lower than if you stayed in North America.

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.