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Should I use a real estate agent?
Should I use a real estate agent?
A real estate agent can help you navigate the Costa Rican real estate market and the language barrier.
Why buying in Costa Rica rather than any other Central American country?
Costa Rica is, by far, the best place to invest in Central America. Almost 60 years of democratic tradition, a nonexistent army, 97% literacy, and a prosperous, fast developing country makes buying and investing attractive. Costa Rica is a great place to retire or raise a family. An ecologically oriented country, Costa Rica offers beautiful national parks, amazing beaches, wonderful adventure sports, and relaxation. Here you will enjoy the advantages of living in the tropics with all the conveniences of a developed country.
Can foreigners own property in Costa Rica?
Yes, foreigners are permitted to own property outright in Costa Rica. Foreigners have the same property rights as Costa Ricans. Private property is protected by the Constitution of Costa Rica. It is no different than owning real estate in the US or Europe. Costa Rica is definitely a beautiful country to live, invest and retire.
How much are closing costs?
Typically, the buyer and seller share the closing costs, which are calculated as a percentage of the property’s value; registration fees, notary and attorney fees, documentary stamps and transfer taxes will amount to no more than 6% of the property’s declared value. Though it used to be common practice to artificially lower the property’s declared value, this is a dangerous game that could cause future repercussions.
What are the restrictions for a foreigner to buy property in Costa Rica?
There are no restrictions that specifically apply to foreigners when purchasing property in Costa Rica. A Costa Rican partner is not required to buy land in Costa Rica.
How much is the agent commission, and who pays it?
Per Costa Rican law, real estate commissions may range from 3-10% of a property sale price. Unless the buyer agrees to split the costs, the seller is legally responsible for paying the entire real estate commission.
Can I acquire a property under my personal name, even being a foreigner?
Yes, however, it is more common and recommended to acquire the property through a corporation in order to separate potential personal liabilities, facilitate the closing procedure, and allow for easier transfer to relatives in case of casualty. The Costa Rica holding company will also make it easier to obtain services such as electricity and cell phones, as well as, opening a bank account.
Exception: A foreigner can only own up to 49% of the concession rights for a Concession Property within the Maritime Terrestrial Zone (MTZ). Without getting too technical, the MTZ is limited to the area 200 meters from the median high tide line. All other property outside of the 200-meter zone can be owned free and clear.
Should I list the property in my name, or under a corporation?
The benefits to purchasing a property in a company name include greater options regarding taxes and liability.
If I live outside of Costa Rica, do I need to be present to sign for the transfer of the deed at closing?
Although recommended, the answer is no. The closing can be executed through a Power of Attorney with a third party in Costa Rica that you trust. This Power of Attorney can be specifically for the sole purchase and signing the closing document. Another option is to DHL or FedEx the documents after signing them in front of a licensed Notary Public at your nearest Costa Rica Consulate. Considering the cost of the shipping and the distance to the nearest Costa Rica Consulate, many buyers fly down and sign in person.
What is the luxury home tax and to whom does it apply?
The luxury home tax is collected by the Finance Ministry and is not related to existing property tax. The tax applies to anyone with homes valued at more than 106 million CRC (about $212,000 at the current exchange rate). The tax is based on a sliding scale and depends on the property value. A home valued at $212,000 is taxed at .25% percent of the property value, and a $1.5 million dollar home is taxed at .40%.