How to Buy Property in Costa Rica for Foreigners

Costa Rica is an appealing destination for international property acquisition, known for its natural beauty and stable democratic system. This guide outlines the process for foreign nationals to purchase property, covering legal aspects, property identification, acquisition procedures, and post-purchase responsibilities.

Legal Frameworks for Property Ownership

Foreign nationals have the same property ownership rights as citizens in Costa Rica, allowing direct purchase of titled land without residency or citizenship requirements. This includes residential, commercial, or agricultural parcels.

Property can be held in an individual’s name, which offers a straightforward approach to ownership. This method avoids the additional complexities and recurring costs associated with corporate structures. However, it does not provide the same level of asset protection or flexibility for estate planning that corporate ownership can offer.

Many foreign buyers purchase property through a Costa Rican corporation, such as a Sociedad Anónima (S.A.) or a Sociedad de Responsabilidad Limitada (S.R.L.). This offers advantages like enhanced asset protection, simpler estate planning and ownership transfer, and potential tax management benefits. Corporations also provide convenience for managing property from abroad and setting up utilities or bank accounts.

Concession property applies to beachfront land within the maritime zone, extending 200 meters inland from the high tide line. The first 50 meters are public property, prohibiting private ownership. The subsequent 150 meters can be leased from the government under a concession, which grants a right to use the land for a predetermined period, not full ownership. Foreigners cannot hold more than 49% ownership of concession property unless they have resided in Costa Rica for at least five years, requiring a Costa Rican partner to hold the majority share.

Identifying and Evaluating Properties

Identifying suitable properties and conducting preliminary evaluations is the initial phase of acquisition. Licensed real estate agents provide access to listings and local market knowledge. Online property portals and local classifieds are also common avenues for finding available properties.

When searching for property, consider its characteristics. Location factors like proximity to amenities, infrastructure, and access to utilities and internet are key. The property type, whether raw land, residential, or commercial, influences its suitability.

Before making an offer, conduct initial due diligence. This includes understanding basic municipal zoning regulations, which categorize land for uses like residential, commercial, industrial, or agricultural, and impose development restrictions. Also, check for obvious physical issues and verify basic access routes.

The Acquisition Process and Associated Costs

Once a suitable property is identified, the acquisition process begins with an offer. This involves a written offer and a preliminary “Option to Buy/Sell” agreement or “arras.” This agreement includes a deposit, typically 10% of the sales price, securing the property for a specified due diligence period.

A notary public plays a central role in Costa Rican real estate transactions. Unlike other legal systems, a Costa Rican notary public is also an attorney with extensive authority to act on behalf of the state. The notary drafts the transfer deed, ensures legal compliance, authenticates documents, and registers the new title at the National Registry. Their involvement provides security and helps prevent fraud.

The notary or attorney conducts comprehensive legal due diligence during the option period. This involves a thorough title search at the National Registry (Registro Nacional) to verify ownership and identify liens or legal issues. They also verify property boundaries against a registered survey plan (Plano Catastro). Due diligence includes checking for necessary construction or environmental permits, confirming adherence to local zoning laws, and verifying utility connection status and outstanding balances.

Cash purchases are prevalent for property in Costa Rica. While local banks offer mortgages, obtaining one can be challenging for non-residents, often requiring higher down payments (25% to 50%) and interest rates. Extensive documentation, including proof of stable income and a strong credit history, is required. Alternative financing includes developer financing (20% to 40% down, 5-15 year terms) and owner financing (25% to 50% down, shorter repayment periods). International lenders also provide options.

Closing involves signing the transfer deed before the notary public. Funds are processed, often through an escrow service for secure transfer. The notary then registers the new title at the National Registry, establishing legal ownership.

Associated costs and taxes, typically 4% to 6% of the purchase price, are usually covered by the buyer. These include:
Transfer tax (Impuesto de Traspaso): 1.5% of the property’s registered fiscal value or sales price, whichever is higher.
National Registry fees: 0.5% of the property value for registration.
Additional documentary stamps: Agrarian fees (0.15%) and municipal fees (0.2%), plus smaller fixed fees for fiscal stamps, national archives, and the Bar Association.
Notary public fees: Regulated, typically 1.25% to 1.5% of the property’s value, or calculated on a tiered scale.
Value Added Tax (VAT or IVA): 13% applied to legal and escrow services.

Managing Your Property After Purchase

After acquiring and registering property in Costa Rica, owners have ongoing responsibilities. A primary obligation is annual property taxes (Impuesto de Bienes Inmuebles), calculated at 0.25% of the property’s registered value.

If the property was purchased through a corporation, annual corporate fees and compliance requirements apply. Proper record-keeping and regulatory adherence are necessary.

Setting up or transferring utility accounts (electricity, water, internet) into the new owner’s name ensures continuous service. For non-resident owners, a property management company can handle maintenance, rental management, and other responsibilities.

Properties within condominium regimes or gated communities entail Homeowners Association (HOA) fees. These fees contribute to the upkeep of shared amenities, common areas, and community services, with amounts determined by the association.