This is a good question and is often asked after buying property in Costa Rica. If you have not bought a property within a complex like a condominium or gated community with administration on site, we recommend that you hire a caretaker, especially if it is a larger piece of vacant land and in more remote areas.

ABC Real Estate can recommend to you reliable people or services. We can also give you tips and hints depending on your individual situation and the type of the property.

ABC Real Estate can assist you in finding a reputable architect, engineer, or contractor. Based on our experience, you will easily find the right company or person. You will make the final decision on the examples we have shown you, depending on the style you like and the one you would like to work with.

The building costs are estimated per square meter and range between US$800-1500 (US$75-140 per sqft) (and up) for a closed, good quality construction. This will include the walls, floors, windows, doors, roof, electric, and plumbing; excluding furniture, appliances, pool, and landscaping. These costs depend on the type and price of material you use, construction style, the contractor you are using, and the soil, the location, and the area.

Well, building is not easy, no matter where you are in the world. It is much easier to buy property already established; you know what you are buying. Costa Rica changed a lot within the past few years in terms of availability of good, quality construction materials, reputable contractors, and construction companies, especially in more remote areas like on the beaches.

An existing structure or an older home might not provide what is possible today. Let’s put it this way, if you can’t find what you are looking for out of the existing possibilities or you have to make too many compromises, we recommend that you think about building.

Fortunately, in Costa Rica there is a defined process through which an intelligent Buyer and builder should proceed. In addition, there is a licensing body for architects and engineers, which also sets standards for fees should you decide to build.

An exception to the concession properties located inside the Maritime Zone is when the property was registered prior to 1973, in which case it has full title and can be transferred as such. This is a rare opportunity because of 100% ownership, like any other properties outside the Maritime zone. No concession property can be converted to titled property.

Concession, which is in effect a lease from the government and local municipality, must be approved by the I.C.T. (Tourism Institute) and normally run for a period of 20 years. At the moment of expiration, concessions can be renewed for a similar period of time.

When buying property located on Costa Rica’s beaches, you should be aware of the following: building a home adjoining beach areas falls under a category known as the Maritime Zone Law, the first 200 meters of land measured from the high tide line.

The first 50 meters from the mean high tide mark cannot legally be built on by anybody, as it is public beach. From that point, the next 150 meters is subject to the Maritime Zone Law (Concession), unless the property is registered prior to 1973, in which case it has full title and can be transferred as such and called titled to the 50 meter line.

There are several ways to get residency with a different status like Pensionado, Rentista, or Inversionista. It depends on your individual situation; we recommend consulting a lawyer regarding the residency.

No, it is not necessary to have residency to be able to buy property in Costa Rica. You can buy with your tourist status. Living here is another matter. As a foreigner and tourist you have to leave the country for 72 hours once every 3 months in order to renew your legal status in Costa Rica. Some of the foreigners without residency enjoy traveling and are visiting Nicaragua or Panama or discovering more of Central America in order to renew their visas.

There are many forms of residency available, we can help you to contact an attorney who can assist you in determining what residency status would work for you. If you plan on living here year round, you will find it easier if you have legal residency.

It is important that you or your attorney take the necessary steps in order to properly register the property and, more importantly, be assured that the property in question is free of all liens and encumbrances before buying property in Costa Rica.

The Registro de la Propiedad (Property Registry) is located in San Jose – Zapote, where all property documents are recorded. A title search at the Registry would confirm good title and proper ownership.

In the event that adjustments were made to any given title, these alterations must be recorded at the Registry. The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title. Based on this information a title insurance can be obtained.

The decision to have the property that you are buying in Costa Rica in your own personal name or in the name of a corporation is strictly up to the investor.

To put it in the name of a corporation is very common and easy; it can offer benefits of asset protection and anonymity for the actual owner. A valid passport for three representatives (president, vice president, and treasurer-all can be foreigners) is the only requirement for a foreigner to form a corporation in Costa Rica; the cost is between US$600 -1500.

The most common way is that the Vendor, Seller or Owner pays the commission to the realtor or broker at closing.

The Buyer or Purchaser does not have to pay any commission when buying property in Costa Rica, unless they specifically agreed to do so.

The Costa Rican government introduced on July 1st 2019 this new capital gain tax of 15% based on the difference between purchase and sales price. Properties who had been bought before that date can choose to pay 2.25% based on the sales price.
Owners who used the property as their primary residence are able to be exempt of the capital gain tax.

Property taxes (Municipal Tax) throughout Costa Rica are very low when compared to the United States, Canada, or Europe. They are 0.25% out of the declared value.

It is the property owner’s responsibility to update the value every 5 years at the local Municipality.

This tax is administered at the municipal level and varies throughout the country. Paid quarterly or yearly, the type of property, location, and other factors contribute to the calculation of this tax.

The general custom is for the Buyer and Seller to share equally in the closing costs. This can be modified by agreement and usually depends upon the particular transaction like motivations and negotiations. As a quick calculation, you can assume that the closing fees are about 4% total so the purchaser and seller will each pay 2% based on the purchase price.

There are 3 basic fees, here are more details:

1.) Notary fees
Closing costs containing the notary fees are, based on the real sales price, 1.5% from the first one million Colones, the local currency, and 1.25% on the balance. If you simply calculate 1.25% based on the purchase price for the notary fees you have a good estimate.

2.) Transfer Tax
Each transfer for a property requires paying a one-time transfer tax which is about 2.5% of the price. This includes several minor fees and stamps required.

3.) Escrow Service
Escrow or Fideicomiso helps you as an independent third-party entity to hold the money till closing. They also can help the purchaser to provide all the documents required by the new money laundering laws and also to the seller for the proof of funds when he receives the money out of Escrow into his account. Such Escrow services starting at about US$500 depending on the amount of the transaction and which company will be used. Make sure the Escrow is reliable and registered by SUGEF the Governmental controlling institution when Escrow is done in Costa Rica.

Of course, there might be some additional fees for the Seller like capital gain tax and the sales commissions.
The ABC team can help and give you a quick estimate based on the property you have in mind buying or the one you are selling.

If the purchase price is financed, there are generally three alternatives for selecting the notary/attorney.

If the Seller is financing a large percentage of the purchase price and a mortgage needs to be drafted to guarantee payment, then the Seller may request that her or his notary/attorney draft the transfer deed.

Financing for a non resident through a bank is still kind of complicated because of the bureaucracy. The interest rate is between 8.5% and 12% in a US$ loan. Most of the deals in real estate are cash deals or financed by the Owner or Seller, usually very short- term from 6 months up to 3 years with high down payments (like 30%-50%).

Sometimes the buyer can get better rates and faster approval (or easier approval) using a first or second mortgage in their home country on property they have there, then the cash can be used for buying property in Costa Rica.

Once in a while we have private lenders offering their services. We will be glad to introduce you to them.

ABC Real Estate has served as a Buyer’s agent many times and will be glad to assist you. We can offer you professional service during the whole purchase process.

This service is free to you without any costs. Like in the US, the commissions are included in the purchase price and agreed with the seller and the listing agent. When we represent you as the purchaser we will split such commission with him.

When buying property in Costa Rica, property is transferred from Seller to Buyer by executing a transfer deed (escritura) before a public notary.

Unlike common law countries, such as the United States and Canada, where the role of the notary is limited to authenticating signatures, in Costa Rica the public notary has extensive power to act on behalf of the state.

The public notary must be an attorney and she or he may draft and interpret legal documents, as well as authenticate and certify the authenticity of documents.

Ask to see an official Costa Rican Registry Survey of the property. If one has not been completed, which can be common when purchasing a section of a larger parcel, request that any deposit be held by the attorney until an official survey has been provided.

If this is the case, ask to review the official Registery Survey of the mother parcel.

Having selected your ideal property in Costa Rica, you will want to be absolutely certain of the legalities of the purchasing process, and particularly your rights in a foreign country.

This is where ABC Real Estate will ensure that you have expert assistance and will guide you through each step of the buying process.

When you have decided on a certain property, the first step is to make a written offer or letter of intent to purchase to be presented to the Seller. After the price terms and conditions are negotiated, accepted and signed by both parties, you as the purchaser make a so-called down payment in an escrow account. Usually 10% of the purchase price. The property will be taken off the market and reserved until the remaining steps have been completed by your attorney.

Within the next 2-3 weeks the so-called DD (Due Diligence) Period will happen where your attorney will do legal research and recommend more consultants like accountants, surveyors, home inspectors if desired.

In case this DD is not satisfactory, you can require to get it resolved or get your down payment back in full. In case everything is fine, the deposit will become non-refundable and considered part of the purchase price.

Your attorney will become the notary and help to draft the closing statement for you to make the final balance payment. This closing statement will be circulated between everybody involved and has to be signed by the purchaser and seller to close the deal as previously agreed.

ABC Real Estate will help you to establish this agreement, including all the necessary paragraphs and follow up till the closing in order to have a smooth and secure transaction.

Always be sure to meet with an attorney who can speak your language and answer your questions.
ABC Real Estate will refer the services of a reputable attorney in the area who speaks your language and knows the specific needs of foreign property purchasers who wish to buy property in Costa Rica.

If you are buying property in Costa Rica, you should always solicit the services of a reputable and well-respected real estate company.

There are many “Street Realtors,” as well as taxi drivers, bar-tenders, receptionists, tour operators, etc., who are more than willing to show properties seeking a sales commission, yet lack the resources and knowledge necessary to provide you with information critical to complete a legal and successful transaction.

Do not think you will get it cheaper by using anybody else who is helping you with the purchase. It is like an unwritten law in Costa Rica that everybody has the right to ask a commission by just bringing Buyer and Seller together.

The services of a professional real estate company can be invaluable when you are buying property in Costa Rica, both during and after the purchase. Choosing the right agent will help you to build your knowledge of the area and compare values of properties.
ABC Real Estate will provide the experience and expertise to answer all your questions.

Like in other global markets, Costa Rica also has its share of annual taxes. Not all taxes are applicable to everyone.

Capital Gain Tax.

Due: At closing the sale of the property.

Since July 1st, 2019 the government applied the capital gain tax of 15%. If the property was acquired before that date the property owner has the one-time option to sell the property and pay a 2.25% tax on the sales price of the property.

If the property was your habitual residence, it will be exempt from paying the capital gains. Also exempt are businesses.
The law requires the BUYER to hold back 2.5% of the sales prices of the property to ensure that any capital gains tax is paid. This is to avoid a foreign property owner that does not have a domicile in Costa Rica from selling their property and not paying the capital gain tax.

Luxury Tax

Due: January 15th of each year.

The Luxury Tax (Solidarity Tax for the Strengthening of Housing Programs) only applies to houses, condos, or apartments over a certain construction value of (133,000,000.00 colones in 2021, approx. US$216,000 – this amount is adjusted each year).

Annual Corporation Tax

Due: January 31st of each year.

All corporations, subsidiaries, and limited liability companies that are currently registered before the National Registry will be subject to pay an annual tax. (Law # 9428: “Tax over legal entities”)

NOTE: The “annual corporate tax” is aside from the VAT Tax, or Income Tax, the corporation is subject to those indicated in the event the corporation is active and is registered as a taxpayer.

Property Tax & Garbage Collection

Due: March 31st of each year.

Property owners must pay Property Tax (Impuestos Bienes Inmuebles) and garbage collection fee (recolección basura) to the Municipal Government where the property is located.

The Property tax is 0.25% based on the inscribed value at the Municipality. It is the property owners responsibility to update the value every 5 years at the local Municipality.

The garbage collection is 3 times per week and the fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and on whether the property is used for residential or commercial purposes. The fee can be paid quarterly or yearly and in 2021 the fee started at US$74 for residential and US$221 for commercial property for the entire year.

To ensure you do not incur any penalties or fines, it is important all applicable annual taxes are paid on time.