Property Ownership in Costa Rica

The Costa Rican government is committed to the growth of its country and has taken steps to ensure growth is steady. One of the most important aspects of Costa Rican growth is the ability for anyone to own property in Costa Rica; this means any person, citizen or not can easily and safely purchase property in the country with a minimum of restrictions. These restrictions are in place to ensure each transaction is completed legally and apply to citizens as well as foreigners, so you see; owning property is just as easy for the foreigner expatriate retiree or citizen of Costa Rica.

The first step in the purchase of a Costa Rican property will be to find a reputable real estate agent. Contact the Chamber of Costa Rican Real Estate Agents for a referral to a qualified agent to help you locate you real estate purchase Your real estate agent will help you locate a property to purchase and can guide you to the best areas and deals. Your agent can steer you from the riskier purchases and ensure your investment property is well located and will meet your needs. Once you’ve located your property you will need the services of an attorney/notary to supervise the purchase process.

When negotiating a property purchase one of the hurdles will revolve around the price. Because Costa Rica’s monetary system is based on the Colon and it is often wise to base your negotiating on the Colon rather than the U.S. Dollar or other foreign currency. This will ensure the best and easiest negotiating. Be aware of the conversion rates between the Colon and your own currency so you now how much money you are offering for the property.

Many of the best real estate deals may not be advertised in local papers and sometimes just asking the locals what properties are for sale can provide many good prospects. If you take this route be aware that many sellers may raise the price once they realize a foreigner is interested in their property. For this reason it’s best to have a local do the initial inquiring as to price. This person can be your real estate agent or even just a friend or acquaintance.

The most important person to contact for a real estate transaction in Costa Rica is an attorney/notary. The notary/attorney is the person who will make your purchase a smooth transaction with a favorable end result and the property transaction cannot be completed without one. Your real estate agent can refer a competent attorney/notary or you can contact one on your own.

Your attorney/notary will ensure the title is clear and the person selling the property is the owner and has the authority to sell. Costa Rica guarantees the right of property ownership for citizens and foreigners and for this reason all property is registered in a national registry with each property having a registration number known as Folio Real. The registry will provide information regarding ownership including liens, boundaries, mortgages and easements. Your attorney/notary will research the title to ensure a safe and legal transfer. At the conclusion of the transaction your attorney/notary will register you as the new owner of the property.

For most real estate transactions in Costa Rica, both the buyer and the seller will have an attorney and will share the closing costs, though this can be negotiated. Closing costs generally run approximately .53% of the declared value. The declared value is often much less than the actual purchase price. The attorney fees however will be based on the actual purchase price and the higher the actual price the more negotiating room the buyer will have as the same amount of work is required regardless of the price. Buyers and sellers will pay for their own attorney/notary and when a mortgage is used to purchase a property the buyer will pay those costs as well.

Mortgages are available in Costa Rica. With the stability of the country and the relatively safe and easy purchase process many U.S. companies offer mortgages for Costa Rican property. Consult with a U.S. mortgage broker for the application process as well as the required documentation, interest rates, terms and fees.

Taxes for Costa Rican property are relatively low and this is one of the reasons investors and retirees look at Costa Rica as their investment destination. The tax rate on properties in Costa Rica is 0.25% on the declared value of the property. This means that a property with a declared value of $200,000 has an annual tax of $500. This rate is much lower than comparable areas in other foreign countries. Another tax benefit of Costa Rican real estate is the absence of capital gains on sales of real estate. Buying and selling property at will with no tax ramifications is a great incentive and really frees the investor to make as many excellent purchases and sales as he wishes.