Navigating Real Estate Purchases in Costa Rica: A Resource for Expats and Investors
Are foreigners permitted to buy and own property in Costa Rica?
Is it necessary to collaborate with a local citizen?
Is it advisable to acquire property via a legal entity such as an LLC?
Costa Rica Insights
Recognizing the challenges many foreigners face when embarking on the journey of purchasing property in this stunning nation, I’ve crafted this comprehensive guide for Portafolio to serve as a valuable resource, helping readers avoid common pitfalls.
- Can Non-Citizens Buy Property in Costa Rica?
Foreigners, whether residents or non-residents, enjoy nearly the same property ownership rights as Costa Rican citizens, with the exception of voting in national or local elections. This means foreigners can legally purchase and own real estate in Costa Rica.
There are, however, two key restrictions:
Foreigners are prohibited from owning 100% of property located within the Maritime Zone.
Foreigners cannot own land distributed by IDA (now INDER) to underprivileged farmers. - Understanding Titled Property
The majority of real estate in Costa Rica is titled. Properties within 50 meters of the high tide line are considered public and protected. The adjacent 150-meter area, known as the Maritime Zone (ZMT), is managed under a municipal concession system, where non-citizens may own up to 49% of the concession. Titled properties in the ZMT are rare, and concessions should be verified with the local municipality. (Always consult a real estate attorney regarding legal considerations outlined in this guide before finalizing any purchase.)
Agricultural land allocated to farmers through the former IDA (now INDER) program cannot be sold until the farmer has held ownership for at least 15 years.
While untitled land is scarce in Costa Rica, some properties may be held under “possession” by occupants (distinct from squatter invasions), who may apply for a title after 10 years of continuous use. - Title Insurance Options
Although title insurance is available in Costa Rica, it is rarely utilized by locals during property transactions. If you’re interested in obtaining title insurance, a quick online search will help you identify title companies operating in the country. - Zoning and Restrictions
Costa Rica’s commitment to environmental conservation means many areas have protected zones, with setbacks from rivers, forests, and other natural features, all of which are documented in the National Registry. Before purchasing land, review the zoning regulations of the area to determine whether it is designated for agricultural, residential, or other uses, and to understand any applicable restrictions. Always request the cadaster plan (survey or plot map) to identify any limitations, and consult INVU for details on river setbacks. - The National Registry
All titled properties, INDER lands, and ZMT concessions are recorded in the National Registry, with registered surveys stored in the National Cadaster, a division of the Registry.
The National Registry has transitioned to a largely digital platform, allowing users to access property certifications, corporate powers of attorney, and survey copies online at http://www.rnpdigital.com/index.htm after completing registration on the site. - Engaging a Real Estate Attorney
Regardless of residency status, it is highly recommended to hire a specialized real estate attorney for property transactions in Costa Rica. Opt for a bilingual attorney/notary public with expertise in real estate to ensure proper representation. Only a notary public can formalize a purchase by preparing a protocolized deed for registration in the National Registry.
Ensure your attorney has a SUGEF (Financial Institution Superintendency)-approved escrow account, or consider using a title company to securely hold earnest money during the transaction. - Launching Your Property Hunt
Begin your search online to pinpoint areas that meet your criteria. Make multiple trips to Costa Rica to personally explore the regions that interest you. If you’re unsure where to begin, consider booking a retirement tour, which can be conveniently found online. Use this guide as a reference for your property purchase decisions, and consult additional real estate insights in the Portafolio News Estate section.
If you intend to make a formal offer while in Costa Rica, contact your bank in advance to arrange a wire transfer for the earnest money. Without prior preparation, you may face delays, as many banks require in-person authorization for wire transfers, meaning you might need to finalize the offer after returning home. - Selecting a Real Estate Agent
Investigate real estate agents who specialize in the regions you’re targeting. Avoid engaging agents without expertise in your desired area, as a skilled agent can provide ongoing support for years. Commit to working with a single agent to ensure high-quality service. Contacting multiple agents may result in each showing you only their own listings, limiting your exposure to the best available properties. - Understanding Real Estate Commissions
In most cases, the seller is responsible for paying the real estate commission, which typically amounts to 5% in the Central Valley and may increase to 7% in other areas. For exclusive listings, commissions can reach 8%, depending on the marketing efforts and agency agreements.
As a buyer, you are not liable for this commission unless you hire a buyer’s agent. Generally, the buyer’s agent shares the commission with the listing agent, except in cases of for-sale-by-owner properties or foreclosures. - Submitting an Offer
Refrain from making verbal offers. Instead, instruct your real estate agent to prepare a written offer and present it to the seller. Once the offer is accepted, have your agent coordinate with your attorney to draft a formal purchase-sale agreement. Upon signing, it is standard practice to wire 10% of the purchase price (unless otherwise negotiated) into escrow with your attorney.
If you haven’t arranged this prior to your trip, you can do so upon returning home, but the agreement will not be legally binding until the escrow deposit is received. - Preparing for the Closing
If you are unable to be present in Costa Rica for the closing, consider granting a SPECIAL power of attorney to a trusted individual—such as your attorney’s assistant, real estate agent, or another representative—authorizing them to complete the purchase on your behalf, either in your personal name or through a corporate entity, as specified in the power of attorney. - Handling Escrow
To comply with Costa Rica’s anti-money laundering regulations, transfer the full purchase price and any associated legal fees into escrow well in advance of the closing date, as banks may hold funds for several days. Request the “Get to Know Your Customer” form from your attorney ahead of time to avoid delays in gathering the necessary documentation. - Registering Property Ownership
When purchasing property in Costa Rica, you can register the title in your personal name. If you wish to co-own the property with a spouse, family member, or business partner while restricting their ability to sell without your consent, you can divide ownership into equal “rights” or “derechos.” For instance, the title might be listed as 1-345678-001, -002, and so forth, depending on the number of co-owners.
Alternatively, you may acquire property through a corporate entity, such as a Sociedad Anónima (S.A.) or Sociedad Responsabilidad Limitada (SRL), similar to an LLC. Seek your attorney’s guidance on the legal aspects of such transactions.
Another option is to purchase property through a retirement fund or its representing corporation, such as an IRA or 401(k). Be aware that not all Costa Rican attorneys are familiar with this process, so thorough research is essential. - Costs of Title Transfer
You can buy a property within its existing holding company or transfer the title to another company or your personal name. Title transfer costs typically range from 5% to 6% of the purchase price, with expenses customarily split between buyer and seller unless otherwise agreed. Additional fees include legal stamps (approximately 1.1%, on a sliding scale), transfer taxes (1.5%), and notary fees (around 3%, also on a sliding scale). Consult your attorney for advice on these matters. - Annual Property Taxes
In addition to transfer taxes paid at closing, property owners are required to pay an annual property tax of 0.25% of the property’s registered value, payable to the local municipality. By law, property owners must reassess their property’s value every five years; failure to do so will result in the municipality conducting the reassessment. At closing, the seller must provide a municipal certification confirming that property taxes are paid up to date—last paid receipts alone are insufficient.
Since 2009, luxury homes are subject to an annual “impuesto solidario” or luxury home tax, calculated on a sliding scale that is adjusted nearly every year. Consult your real estate agent or attorney to determine if the property you are purchasing is subject to this tax and to estimate the amount. - Corporate Tax Considerations
For those purchasing property through a corporation, note that in 2012, the Costa Rican government introduced a corporate tax, which was later declared unconstitutional by the Costa Rican Constitutional Court in 2015. As of the publication of this guide, it remains unclear when or if a new law will be enacted by Congress. Verify the current status with your closing attorney. - Condominium Fees
If you are buying property in a condominium or gated community, the seller must provide a letter from the condominium administration confirming that all HOA fees are paid up to date. - Transferring Utilities
Once the deed is registered in the National Registry, your attorney can provide an “estudio de registro” as proof of ownership. With this document and your residency ID, you can visit the power, water, and phone companies to transfer services into your name. Residency is required for this process. If you are not a resident, consider purchasing the property through a corporation and having an attorney’s assistant handle the utility transfers on your behalf. Alternatively, it is common to leave utilities in the previous owner’s name. - Addressing Squatters
While squatting is not widespread in Costa Rica, neglecting your property—failing to maintain it or pay property taxes for an extended period—can increase the risk of someone moving in.
