Real Estate: Frequently Asked Questions

Most Foreign Investors and Property Purchasing Individual ask these questions. We focused on the top ten questions asked by Foreigners looking to purchase Real Estate in Costa Rica

1. As a foreigner or tourist am I allowed to own property in Costa Rica?

Any individual over the age of 18, Costa Rican, foreign national, or tourist can hold land in Costa Rica based on fact that the Costa Rican Political Constitution makes no differentiation based on country of origin. Therefore your nationality is not a factor in the purchase process except for the fact that you will have to revise your home countries tax laws to see how they deal with foreign land ownership.  Corporations can also hold land.

2. Is it safe to buy in Costa Rica?

In general yes, but please read the avoid real estate scams section.

3. What does a normal purchase process look like?

Read the purchase process section.

4. What are some helpful terms to know when making a real estate transaction?

Read the real estate terminology section to get acquainted with the lingo.

5. What factors help determine the price of a property?

Usually there are 5 main factors that determine the value of a property.

a) Location: As always in real estate location is one of the most important determining factors in the price of a property. The more desirable, developed, convenient, and safe the location the more it is worth. If the location gives the property an amazing ocean view or a stunning mountain view or a city lights scape then this also adds to the value of the property.

b) Size: The size of the property is key as well. When it comes to lots smaller lots will be sold at higher per meter prices than large quantities of land. For example, in the same area you can see a 200 meter squared lot being sold for $100 a square meter, but if you were to buy next door the 14 hectares they have they are selling at $10 a square meter.

c) Topography: Flat lots are usually worth more than sloped lots. If your lot is flat it is much more likely that you will be able to build without having to alter the topography; therefore, these lots are worth more. On sloped lots you may need to do serious movements of the land, have retention walls put in etc. making the overall construction more expensive.

d) Shape: Properties with large fronts are worth more. Following that same line of thought, corner lots are worth more since they have basically 2 fronts, and pay slightly higher property taxes. Long skinny properties are worth less.

e) Available services: If your property does not have access to basic services such as water and electricity their value could be cut in half.

6. How much are property taxes in Costa Rica?

Property taxes may be paid annually, by semester or by quarter depending on the procedures established by each Local Government. For the next five years, the property tax payment will be 60% of the appraised value of the property. Starting on year six, the municipality may set its own rate not to exceed 1%. Luxury homes with declared values over $200,000 will require an additional tax.

7. What can I do to protect my investment?

First squatter risks are high and finding a trusted person to look over your land investments is key on a regular basis, in general there are title insurance companies that insure your property ownership just as in the United States for instance.

8. What purchasing expenses and ongoing expenses will I face?

Purchasing a property in Costa Rica does require some taxes and fees to be paid, at the time of the sale.   Mainly, there is a fee of 1.5% of the registered value, as a tax on any transfer of real estate.  Then, there are some stamp fees and registration fees, that bring the total to around 5.5%.  Many properties are purchased via a corporation, and therefore they get around paying these transfer fees. When the property is sold, merely the shares of the company that owns the property are sold to the new buyer, so, there is no transfer, being the corporation continues to own the property.  An attorney is required to complete a real estate transaction, and most lawyers charge approximately 2%.  If a property is purchased in a means other than a corporation buyout (as discussed above) then the total fees come to about 5.5% above the sales price of the property.

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