Here is some information on Costa Rica's real estate market to guide you if you are planning to buy a property there.
When moving to Costa Rica, whether alone or with your family, you will probably have some plans. Buying a property may be some of these, especially if you are planning to stay there for a long term. This crucial decision will be successful once you have gathered enough information about proceedings and required documents and fees. But in general, buying a real estate property in Costa Rica is deemed to be a good investment.
Good to know:
Foreigners are allowed to purchase a property in Costa Rica since the country's laws grant them same rights as locals in terms of ownership. However, some professionals advocate the purchase of a property through a limited company for example (Sociedad Anónima) in order to simplify the title transfer process.
Once you have selected a property you wish to buy, you have to make an offer through a letter of intent. This letter will be sent to the property owner's or to the real estate agent and will serve as base for an agreement on the sale price, as well as other basic conditions for the transaction.
If your offer is accepted, you have to hire a local lawyer, who will draft the purchase and the sale agreement. This agreement is a legal document which clearly indicates all the necessary conditions for the deed transfer.
Thereafter, a legal research will be conducted so as to make sure than the property has not been mortgaged and is not subject to inheritance, etc. The soil and the property's general condition will also be analyzed. Remember to inquire about these procedures with the real estate agent.
The deed transfer is carried out before a public notary and the property will be registered in its new owner's name. The latter must declare his property at the nearest municipality for tax registration. You simply have to fill and sign the form. In case you are not able to do so, your lawyer can do it on your behalf.
Buying a property from abroad
In general, it is best to be on the spot to take part in the real estate transaction. However, you can give a notarized power of attorney to your representative in case you cannot travel to Costa Rica. You can as well sign the purchase documents before a public notary at the Costa Rican consulate in your home country and send these by mail to the real estate agency or your lawyer.
As it is the case anywhere else in the world, several costs apply to the purchase of a real estate property in Costa Rica.
First of all, you will pay a tax amounting to 1.5% of the purchase price for the title transfer. It should be paid to the National Register by your lawyer. Note that this fee is often divided between the buyer and the seller.
Legal fees, for their part, amount to 1% to 2% of the sale price, depending on the transaction's complexity and on the time spent by the lawyer on the case. If you are purchasing a real estate property through a company in Costa Rica, you will pay an additional US$ 600 for the drafting of additional contracts or agreements, their registration, their translation in your language, translations if the seller speaks Spanish.
Closing costs include the intervention of surveyors so as to obtain the property's exact boundaries (optional), soil testing, inspection of the property, etc. These fees will be your responsibility.
The total cost of title transfer amounts to approximately 4% of the property's value and is shared by the buyer and the seller.
Transfer of funds from abroad
The easiest way to transfer funds from abroad is to go through a specialized company in Costa Rica. Indeed, these companies are dedicated to the protection of funds. Otherwise, it can be made from your bank account to that of the seller.
Your new property has to be registered at the Registro Nacional which is found in Zapote, in San Jose). The Registro Nacional also has branches in major cities. Once the property has been registered, you are required to produce the documents before a public notary.
The Plano Catastro
Properties registered and having a title also have a Plano Catastro. This document contains details regarding the property's limits, its total size, the owner's identity, the Folio Real number and the date on which it was registered. This document is available at Registro Nacional or at the nearest municipality to the property's address.
The Folio Real
Registered properties also get a Folio Real number. The number's first digit represents the province where it is located, the second number refers to the property's Folio number while the third refers to the number of owners (for example, 000 means that there is only one owner).
Checking a property's status
You can check a property's status on the Registro Nacional website in the section "Sistema de Certificaciones y Consultas Gratuitas/Registrarse por Primera Vez". To register, click on the section “Usuarios Registrados par Ingreso” once you have received the e-mail containing your user name and password. Thereafter, click on “Consultas Gratuitas”.
Finally, you are required to pay different types of taxes on the purchase of the property.
The property tax, for instance, must be paid in advance, either once or every three months, at the nearest municipality. It amounts to 0.25% of the property value.
The corporate tax, introduced in 2012, amounts to US$ 180 for inactive companies and US$ 360 for active companies. It has to be paid to the Ministerio de Hacienda. Note that most properties are held by inactive companies.
Finally, the “Luxury Tax” is deducted by the Ministerio de Hacienda whereby the property's value amounts to at least US$ 250,000. Calculated according to the property's value, this tax usually starts as from US$ 2,500 dollars and is calculated based on the value of the property.