Buying property in Costa Rica can have its challenges, but when you know the answers to your questions, and have a qualified realtor and attorney, it can be a relatively smooth and stress-free process. For the most part, the process is easier and faster than purchasing a home in most other parts of the world.
Buying Property in Costa Rica Questions
Can Foreigners own Property in Costa Rica?
Yes. Foreigners in Costa Rica can own property in their own names with the same rights as residents and citizens. It is part of what makes purchasing property here so popular. Most properties we have for sale are owned in a corporation for liability purposes. Beach front is a little different. For titled Costa Rica beachfront property (available in less than 10% of the country), foreigners can own property outright/fee simple. The only time special rules apply for foreigners is if they are purchasing concession property in Maritime Zones.
How much are property taxes?
Property taxes in Costa Rica are pretty low – only .25% of the registered property value, and they are reassessed every 5 years. We have a client who forgot to pay his taxes for over year, and went all worried about the fines, and late fees – but his bill was still only $14.00USD! Yes, that’s fourteen dollars, no typo. Granted, he only has a little casita for a single couple on his large lot, but its in a gated community with a gorgeous river through his property! Go the complete polar opposite and you get a luxury tax – a handful of very large and luxurious properties are subject to this Tax but honestly, we have nothing for sale that would fall into that category. But just as an fyi, it’s based on a calculation that includes, but is not limited to, structure size and finishes, like imported tiling from around the globe and thousand dollar gold plate faucets. Our attorney would arrange for a luxury tax assessment if you owned a very large condo or home that was subject to it, and if you already own a home like this, we are happy to help you with the assessment, but presently we are not selling inventory in this range.
Is Paradise Management part of the Costa Rican MLS?
No. Because currently, there is no nationally sanctioned Multiple Listing Service, and although there are a few listing ‘services’, nothing is complete or sanctioned by a governing agency. For the best deals in the local markets, find a good agent that will show you their own listings, as well as other agency’s listings if they need to broaden their search to help you find the right property.
How do I know if a property is titled?
All property in Costa Rica should be registered in the Public Registry, or the Registro as it is known here in Costa Rica. This includes Concessioned and Titled properties as well (beach). While we have stringent listing requirements at Paradise Management, and do a preliminary check of all our properties with the Registro, your attorney will be able to confirm the title chain and see if there are any restrictions, encumbrances or liens since the time of our initial listing. Avoiding the purchase of unregistered property is strongly advised, and we will not take part in listing it if our search shows a problem.
How much are closing costs?
Compared to several countries where closing costs can be astronomical, here in Costa Rica you will find they are quite low. And they are usually split between the buyer and the seller. The same attorney is normally used by both parties – again saving on costs and time. They are required to make sure the property is legally able to be sold, matches all the correct information, and they register the sale and taxes, etc. They do not work for the buyer or seller, they work to make the deal correct, registered, and filed.
1.25% – Notary – registers the property in the National Property Registrar and is needed to complete closing duties (typically Buyer is expected to pay this since it is all their work)
1.5% – Government stamps and fees – For share transfers if you assume the shares of an already established corporation that holds/owns said property (shared between Buyer/Seller)
2.4% – Government stamps and fees – For the purchase of a property in your own name or in the name of your own corporation. (Shared between Buyer/Seller)
Escrow fees would apply if you use a third-party escrow, but we handle all escrow ourselves, as agreed to by our Listing Agreements. This saves our client’s money and to ensures funds are held and released in a timely manner.
Do I need my own attorney?
Not necessarily. The closings here are pretty straightforward, and only a small percentage of closings use more than one attorney. Some folks choose to use an attorney from their home country to review the documents – but they know nothing of the laws here and what is needed. Also, they cannot register the sale and the Documents need to be in Spanish. Really, the attorney who is going to aid you best is one from Costa Rica, who knows how to handle a real estate closing here with all the details required by the national laws here. Paradise Management attends every closing, to double check everyone’s work, and aid you in the process as well. All our attorneys are bilingual and offer you the contracts in English as well as Spanish.
Can I borrow money from a Costa Rican bank?
Not easily, and not cheaply, and only if you are a resident or a citizen. Interest rates are high and reading through the requirements (in Spanish) could make you dizzy. Some homeowners offer owner financing for select buyers with great credentials, and this option is growing in the expat markets due to the lack of funding here. Most folks, however, finance their purchase through a mortgage or line of credit on their primary residence – a majority of sales here are cash.
What about squatters rights?
While Costa Rica does have laws to protect locals who have lived and cared for a property for many years, it is not typical in the more developed areas of the country. Even so, if you plan on leaving your property for long periods of time, we suggest you hire a management team, such as ourselves, to check on it from time to time and take action if necessary. Many folks are happy hiring a local caretaker to check on it – but sometimes the language barrier can be difficult if you or they do not speak Spanish, and sometimes it is hard to know who to trust.
So you like Paradise Management, but you saw some properties on other websites you want to see? Or can’t quite find what your looking for?
Lets go see those other properties! We work with all legitimate agencies and agents. We represent you and your interests and we are looking to help you find your own slice of Paradise. And if you don’t see what you are looking for on our site, let us know – things can come and go quickly and sometimes we know of properties that are not even listed. If we know what you are searching for, you can be the first to know when we find it! Pura vida!