FAQ: Buying a Property in Costa Rica

Can foreigners own land in Costa Rica? Is financing available? What are property taxes and closing costs on a property in Costa Rica? What is the average building cost? Etc.

These are just a few of the frequently asked questions we get from clients starting their process of purchasing a property in Costa Rica. Buying a property in Costa Rica is a fairly straight-forward  process from start to finish and we at RE/MAX Pura Vida are dedicated to helping our clients have a smooth & successful transaction.

Here is our quick handy guide to helping you understand the steps and useful information to buying & owning a property in Costa Rica.

1) Can Foreigners Purchase a Property in Costa Rica?

Short Answer: Yes, absolutely!

Foreigners, whether a resident or non-resident of Costa Rica, can absolutely purchase and own property in Costa Rica. Properties can be in an individual(s) name or under a corporation, which we highly suggest to do. Owning a property in a corporation rather than your personal name can make such things as taxes and estate planning more simplified while also limiting, or removing, personal liability on the property. When it comes to purchasing land within the Maritime Zone, a.k.a. “Concession Land” there are some additional steps required. Learn more about Titled vs. Concession Land click here.

2) What are Annual Property Taxes & Closing Costs?

Short Answer: Property Tax = 0.25% of registered value – Closing Costs = 3.5% to 4.5% of total sale price

The annual property tax on titled properties is a reasonable 0.25% of the registered value with the local municipality. Since 2009, luxury homes may have to pay an “impuesto solidario” (luxury home tax) that changes almost every year. Not all homes are obliged to pay this tax so be sure to check with us, or your lawyer, if your property falls into this category. Maritime Zoned land taxes will be determined by the municipality case-by-case depending on the zoning usage, existing structures etc. Again, be sure to check with your real estate agent or lawyer to know exactly what these annual costs will be before purchasing your property.

Closing costs are typically paid by the buyer in Costa Rica. On average the cost is between 3.5% – 4.5% of the total sales price which includes transfer taxes, a National Registry Stamp, as well as various documentary stamps & duties. Additional costs may include setting up a buying company for a transaction, topography, promissory notes, option & escrow contracts and additional due diligence. If the seller opts to have their personal lawyer involved as well that cost will be covered by seller.  Learn more about Closing Costs in Costa Rica here.

3) Is Financing Available for Foreigners in Costa Rica?

Short Answer: Typically, no.

Unfortunately, at this time most financial institutions in Costa Rica do not offer foreigners financing. Over the years we have successfully structured some deals with sellers for owner-financing on properties. There is no “normal” term structure when it comes to owner-financing, down payments can range from 20-50% (or more, or less) and last anywhere from 2-5 years (or more, or less). These deal terms are completely dependent on what the seller and buyer decide upon.

4) What is the Average Building Cost in Costa Rica?

Short Answer: Approximately $1200 USD/Sq. Meter

Of course, this cost could vary depending on what materials and finishes you chose, while importing Italian marble slabs will increase this cost using local, sustainable materials may drive the cost down a bit. We have found that to build a solid, attractive and livable home(s) the average cost per square meter is around $1200 USD, not including landscaping and/or a swimming pool. Our RE/MAX team work with reliable & trustworthy builders in the area we are happy to recommend to our clients, just ask us!

5) Should You Use a Real Estate Agent in Costa Rica?

Short Answer: Yes, definitely.

Purchasing property, especially internationally, can be a trying process. Hiring a reputable, knowledgeable and local real estate agent will enable you to have a smooth & successful transaction. Since May 2019 all agents must be registered with SUGEF, the public entity ensuring & overseeing the Costa Rican national financial system, giving agents & clients a stronger and more stable control over transactions. To find out more benefits on hiring a RE/MAX Pura Vida agent to help you, click here.

6) Does Purchasing a Property in Costa Rica Entitle you to Residency? 

Short Answer: Yes, it can! 

Purchasing a property in Costa Rica is an easy route to apply for residency in Costa Rica. To qualify as an “Investor” one must invest minimum of $200,000 USD (Two Hundred Thousand US Dollars) in a business and/or property and required to enter the country at least 1 time a year. Investor resident status allows you to own & profit from a company within Costa Rica. To learn more on How to Become a Costa Rican Resident, click here.

We hope this helps answer some of the preliminary questions you may have about how to buy property in Costa Rica. With any investment or purchase we highly recommend to do the proper due diligence and always ask questions. Our team is ready & willing to help guide you through the process of purchasing your next dream home in Santa Teresa! Contact us today to help find you, or your client, the perfect place in paradise.

**Bonus**: Learn the Top Real Estate Terms by clicking here!

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