Frequently Asked Questions about Real Estate in Costa Rica
Is it safe to own Costa Rica Property?
Foreign citizens, under Costa Rican Law, have the same rights to own property as Costa Rican citizens. In rare cases, some aspects of owning property may be subject to exceptions regarding proximity to coastlines and other natural reserves. In these cases, Prestige Costa Rica Properties have done due diligence in protecting all potential buyers from such exceptions. Furthermore, purchasers have the opportunity to buy property either under their own personal name, a created Costa Rican/foreign corporation, or by a registered LLC-limited liability company.
How do I know if the property is legal?
All legal property in Costa Rica is registered in the National Public Registry of Properties, this includes condos, homes, lots, farms and ocean front. A legally registered property will be identified by its Folio Real number, a number that corresponds to the specific property and a Plano Catastro number, this is the register property survey.
How do the Escrow Services work?
By the laws of Costa Rica, any funds being wired into the country over $10,000 USD has to go through a legally registered “SUGEF” escrow agency. SUGEF is the Spanish Acronym for General Superintendent of Financial Entities; this is basically the Governmental Banking and Financial Regulatory Department of Costa Rica. This ensures that your money is protected while your property is in the due diligence stage of an offer contract. Your funds are fully protected by the laws of Costa Rica. We at Prestige Costa Rica Properties have worked with and know the best escrow service companies to use for these transactions.
Is there licensing for Costa Rica Agents?
Yes, there is licensing in Costa Rica for real estate agents, which all Prestige Agents are required to achieve. The professional real estate agents here in Costa Rica formed their own board over a decade ago; Costa Rica Global Associations of Realtors, a government recognized, professional organization that encourages everyone in the industry to join. All agents joining this association are required to take mandatory classes and continuing education classes. These classes are based on the same requirements as NAR (National Association of Realtors), but geared towards the laws of Costa Rica and members must adhere to the highest standards of ethical practices.
Unfortunately, not all agencies and agents on the internet representing themselves and Costa Rica are licensed. It is not a legal requirement to register as a real estate agent in Costa Rica. Put your trust in Prestige Properties and take advantage of over 100 years combined local real estate knowledge and experience. We will be looking out for your best interests.
When searching the internet for that perfect property as a second home/vacation spot, or for future retirement, it is also very important to look for the right realtor. A licensed, professional and knowledgeable agent is what you should be looking for.
Is Title Insurance available?
The simple answer is no, but do not let that scare you. Title Insurance was available in Costa Rica for quite a while through well-known international companies such as Fidelity Title. Because of the National Registry system, a good attorney will investigate the property all the way back to the original owner even if ownership has been transferred fifty times and any problems would be discovered during this search. The title Insurance companies closed shop in Costa Rica because attorneys are doing exactly the same diligence for a much lower price.
What are property taxes like?
Property taxes in Costa Rica are the same throughout the entire country and are very low. Municipal property taxes are only ¼ of 1% of the registered property value. For example, a property with a registered valued of $200,000 pays $500 per year in property tax.
Can I own Beachfront Property?
As touched upon earlier, the answer here is a yes and a no. Beachfront property, known as concession land, is actually owned by the local municipality. This land is reserved for citizens of Costa Rica and foreigners that can prove five years of legal residence in Costa Rica. You do not own the land but own a concession that grants you the rights to use the land for a twenty year period. Then the concession must be renewed. However, there are some condo developments that are right on the beach and they are structured with a Costa Rica corporation with preferred and non-preferred shares. The preferred shares are for the owners of individual units. So, yes, you can own beachfront property.
Can I get a Mortgage in Costa Rica?
Most banks and private institutions do not offer mortgages to foreigners for home purchases. A few do but the requirements are not easy for the average buyer. However, there is an option it called Owner Financing. What this consists of is a seller who will take a down payment, usually 30% of the agreed upon price, and will carry a mortgage for a typical period of between 3-7 years. The interest rate could be anywhere from 4% to 7% dependent upon the seller. At the end of the agreed-upon term, a balloon payment is made and the property is free and clear. All time frames and percentages are an estimates and each deal can be different. Contact one of our experienced Costa Rica real estate agents to learn more.
For a much more detailed discussion be sure to read our page: Financing a Property in Costa Rica.
Do I have to be a resident to Live in Costa Rica?
Legally speaking, yes you do have to be a resident to live in Costa Rica. If you plan to live in Costa Rica full time, meaning more than 90 days at any one given time, then you should be a legal resident. Citizens from most countries around the world do not need a special visa to enter Costa Rica, just a valid passport. The passport is basically the visa and is good for 90 days in the country. Many people that own homes and live here part-time, escaping the cold northern winter months, will leave Costa Rica just before their 90 days are up and travel to another country for a short vacation before their return. Their passport will be stamped again upon entering and they will have another 90 days to stay in Costa Rica.
What are closing costs?
Closing costs in Costa Rica are set by the government and are based on percentages of the value of the property being transferred. A good number to use when estimating what your closing cost will be is 4% of the cost or the registered value whichever is higher. Here is a short breakdown of the fees:
- To legally transfer a property you will need a notary/attorney to do so (in Costa Rica in order to be a notary you must be a licensed attorney first). Notary fees will be from 1 to 1.25% of either the registered value of the property or the sale price, whichever is higher.
- Real estate transfer tax is a tax paid directly to the Costa Rica Government and is 1.6% of the registered value or the agreed upon sale price, again whichever one is higher.
- Documentary stamps are basically a tax and will be 1% of the registered value or the agreed upon sale price, whichever one is higher.
Do I need to have an attorney?
As a buyer, yes you must have an attorney to represent you. The attorney will do the due diligence on the property to ensure that it is free and clear of all liens, mortgages, encumbrances and so on. The attorney will also be responsible for writing the deed and registering the property in the national property registry system under your name or the name of your corporation.
Can I own the property in my own name?
Yes, you can own the property in your own name, however, if you do not plan on living here full time it is better and safer to own the property through a Costa Rican corporation. They are neither expensive nor hard to set up. The attorney you choose to represent you can handle all of this. For more information, please contact any of the knowledgeable agents listed on the “ABOUT US” tab on this website and they will be happy to explain it detail.
Are properties expensive?
Prices are relative to each buyer, each market, and any budget. We have the ability to help you find the perfect property that fits your needs and budget; whether an ocean view lot to build your dream home for as low as $50,000 all the way up to a luxury mansion on a ridge top with expansive ocean view in the million dollar range. Our vast inventory and local insight will help to assist every buyer’s needs. From studio apartments to three bedroom condos to large tracts of land (development parcels), our connections to this region are sure to suit every preference. We work with every real estate company in the area and beyond.
What - if any - are the Home Owner Fees?
This all depends on the land or the home you purchase. Some developments have lots of amenities that are shared amongst all owners and some do not. Most developments in the area have general common costs, as in road maintenance, security, common area landscaping, communal pools and so on. Homeowners’ association fees can run as low $80.00 per month, which can be considerably less than maintaining the property on your own. Again, if you decided to purchase a property that is not in an established development, this type of expense would be of no concern.
Can I use my 401K with Self Directed IRA to purchase property?