Why Buying Property in Costa Rica is Easier Than You Think (and Smarter Than You Realize)
Here is a summary for owning and purchasing as a foreigner in Costa Rica and for a more detailed explanation, you can also download this PDF.
Can foreigners really own property in Costa Rica?
Absolutely. The Costa Rican Constitution grants foreigners the same property rights as nationals. That means you can own titled property—known as “fee simple”—just like you would in North America. The only exception involves certain beachfront concession properties, which we’ll explain later.
If you’re considering buying in a gated community or condominium, there may be specific bylaws—like pet restrictions or HOA fee responsibilities—that vary by development. But when it comes to legal ownership, you’re on equal footing with Costa Rican citizens.
Navigating the Buying Process: What to Expect
Purchasing real estate in Costa Rica can be straightforward—with the right team. Since there’s no official MLS or mandatory licensing for agents, it’s crucial to work with a seasoned real estate professional and a reputable attorney.
Here’s a quick look at the journey:
- Find your property with the help of a local REMAX agent.
- Submit an offer through a formal purchase agreement.
- Negotiate terms with the seller until both parties are aligned.
- Enter escrow and begin due diligence through your attorney.
- Receive a legal property report verifying title, boundaries, and any liens.
- Finalize the deal—sign the deed and record it at the National Registry.
Why Escrow is Non-Negotiable
Escrow accounts are essential for protecting both buyers and sellers. We recommend using Secure Title Costa Rica, a reputable third-party with a $5 million errors and omissions insurance policy. Here’s why:
- It protects your money. Never wire funds directly to a seller.
- It ensures a smooth closing. Funds are disbursed only when the deed is signed.
- It builds trust. Sellers know the funds are secure and unbiased.
The Role of the Attorney
A Costa Rican attorney will conduct due diligence—checking ownership, legal status, boundaries, debts, and more. Typically, you get a 15-day due diligence period with a fully refundable deposit. Once cleared, your deal can close in as little as 30 days.
What You’ll Pay: Understanding Closing Costs
Buyers typically pay all closing costs unless negotiated otherwise. There are two common purchase methods:
1. Share Transfer Agreement: You buy the corporation that owns the property.
- Legal Fees: 1.25% + 13% VAT
- Transfer Tax: 1.5%
- Escrow Service: ~$678 (for transactions < $500k)
- Recording: ~$200
2. Property Transfer: The property is transferred directly into your name or corporation.
- Legal Fees: 1.25% + 13% VAT
- Transfer Tax: 1.5%
- Escrow Service: ~$678
- Recording: ~0.87% of purchase price
Example for $200,000 Sale:
- Share Transfer: ~$6,703
- Property Transfer: ~$8,243
Should You Buy as an Individual or Through a Corporation?
Owning in a Costa Rican corporation (S.A. or S.R.L.) gives you:
- Limited liability protection
- Flexibility to act via power of attorney
- Potential tax advantages
Downsides?
- Set-up costs (~$650)
- Annual corporate taxes ($115–$220)
- Required shareholder declarations ($200–$400 annually)
Your REMAX agent and attorney can help determine the best route for your situation.
What About Beachfront Property?
Most of Costa Rica’s first 200 meters from the ocean is considered concession land. The first 50 meters is public. The next 150 meters may be leased from the municipality for up to 20 years at a time.
Good news: Jaco Beach and much of Hermosa and Herradura—including Los Sueños—are titled up to the 50-meter line. These are some of the rare exceptions in Costa Rica.
Financing Options: What You Need to Know
Bank financing is available to foreigners, but not always ideal. Expect:
- 25%–30% down
- 8.5%+ interest rates
- Terms up to 25 years
- Heavy documentation requirements
- Prepayment penalties
Better alternatives include:
- Seller financing (common, often negotiable)
- Home equity loans from your home country
- Private lenders like Second Street Mortgage or Volo Loans
HOA Rules and Fees
If you’re buying in a gated community, expect:
- Shared ownership of common areas
- Bylaws on pets, rentals, and design
- Monthly fees from $50 to $1,000+
Fees often include:
- Insurance
- 24/7 security
- Landscaping
- Trash, fumigation, and sometimes internet or water
Always review the HOA’s reserve fund and budget before buying.
Taxes: What You’ll Owe
- Property Tax: 0.25% annually of registered value
- Luxury Tax: Additional 0.25–0.55% for high-end homes
- Capital Gains: 15% (or 2.25% of sale price for properties bought before July 1, 2019)
- Hotel Tax: 13% VAT on vacation rentals
- Income Tax: Only applies to Costa Rica-sourced income. Foreign retirement income is tax-exempt.
Rental Management: Turnkey Solutions
Don’t live in Costa Rica full-time? No problem. Local property managers can:
- Handle maintenance and cleaning
- Pay bills on your behalf
- Market your home on Airbnb and more
- Charge 25–35% on short-term rentals; 20% on long-term
Some offer flat-rate “check-in” services if you bring your own bookings.
Utility Costs: What to Expect
- Electricity: $30–$400/month depending on AC usage
- Water: ~$20/month or included in HOA
- Cable & Internet: $55–$85/month, often bundled
Residency: Do You Need It?
You don’t need residency to buy property. But if you want to live here long-term, apply for temporary residency via:
- Investor ($150,000+ in real estate)
- Retiree ($1,000/mo pension)
- Rentista ($2,500/mo unearned income for 2 years)
- Marriage to a Costa Rican citizen
Benefits include tax exemptions on importing household goods and vehicles.
Can You Use Retirement Funds to Buy?
Yes! If you have a Self-Directed IRA, you can invest in Costa Rica real estate. Restrictions apply (no personal use of the property), but this is a great option for long-term investors.
Download the full “Guidelines to Purchasing Property in Costa Rica” report here.
Looking to take the next step? Let our experienced REMAX Oceanside team walk you through every part of the process. Start your journey here.
