Can a foreigner buy and sell property in Costa Rica?
Ownership of real estate in Costa Rica by foreigners is protected by the constitution. In addition, foreigners enjoy the same ownership rights as Costa Rican citizens, regardless of whether the property is placed in the name of a corporation or in the name of an individual. The only exception to this is in regards to allowance lands.
These are the basics that a purchaser follows when buying a property in Costa Rica.
How is title transferred?
When buying property in Costa Rica, property is transferred from seller to buyer by executing a transfer deed (escritura) before a public notary. Unlike common law countries, such as the United States and Canada, where the role of the notary is limited to authenticating signatures, in Costa Rica the public notary has distended power to act on behalf of the state. The public notary must be an attorney and draft and interpret legal documents, as well as authenticate and certify the authenticity of documents.
Once a transfer deed is admitted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry within 45 to 60 days after presentation.
How much are the yearly property taxes?
Property taxes (Municipal Tax) are only 25% of 1 % of the declared value. Thus for every $100,000, the property tax is only $250 YEARLY.
The municipal tax is administered at the municipal level and varies throughout the country. Paid quarterly, the type of property, location and other factors provide to the calculation of this tax and MUST be shown to be fully paid immediately prior to transferring title. Again, this tax is so low, people can maintain to buy new shocks for their cars yearly.
What about capital gains taxes or 1031 Exchanges?
A nice incentive for foreign investment is that there is no capital gain tax. The Costa Rican government will not tax you on the profit from the future sale of your property as long as this is not undertaken as a means of business. You would be obligated to pay taxes on any "declared" earnings being brought back to your country of citizenship, however there is a current annual U.S. income allowance of around $82,500-check with your advisors.
Who pays the sales commission?
The most common way is that the seller pays the commission to the Realtor or Broker at closing. The Buyer or Purchaser does not have to pay any commission when buying property in Costa Rica, unless they specifically agreed to do so. Tips are always gladly accepted, however.
Can I have the title of property in my own name?
The decision to have the property that you are buying in Costa Rica in your own personal name or in the name of a corporation is strictly up to the investor. To put it in the name of a corporation is very common; it can offer benefits of asset protection, anonymity for the actual owner, and makes title transfer easier and cheaper . A valid passport for four representatives (president, vice president, secretary, and treasurer-all can be foreigners) is the only qualification for a foreigner to form a corporation in Costa Rica; the cost ranges from $300 to $600 in most cases.
How can I ensure that I have clear title to the property?
It is important that you or your attorney take the necessary steps in order to properly register the property, and more importantly, be assured that the property in question is free of all liens and encumbrances before buying property in Costa Rica.
Of particular interest to North Americans is the additional security offered by Stewart Title and First American Title. These relatively new concepts to Costa Rican real estate transactions can further ensure that your purchase could be more fully secured, although EVERY COSTA RICAN ATTORNEY RELIES ON THE IDENTICAL INFORMATION PROVIDED BY THE NATIONAL REGISTRY. Thus most of our transactions are handled without a Title Guaranty, particularly in new condo projects, or lots within a gated community, however we will strongly recommend Title Guarantees in the case of purchasing farms.
READ THE FINE PRINT ON ANY CONTRACT.
The Registro Nacional (Property Registry) is located in San Jose - Zapote, where all property documents are recorded, thus a title search at the Registry would assure good title and proper ownership.
In the event that adjustments were made to any given title, these changes must be recorded at the Registry. The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.
Do I need to have residency to purchase a property?
No, it is not necessary to have residency to be able to buy property in Costa Rica. You can buy with your tourist status. Living here is another matter, as a foreigner and tourist you have to leave the country for 72 hours once every 3 months in order to renew your legal status in Costa Rica. Some of the foreigners without residency enjoy traveling and visiting Nicaragua or Panama for a couple of days, or go back home for a short trip, or discover more of Central America in order to renew their visa.
There are many forms of residency available, we can help you to contact an advocate who can assist you in determining what residency status would work for you. If you plan on living here year round, you will find it easier if you have legal residency.
How can I get a residency in Costa Rica?
There are several ways to get a residency here, with a different types, such as Pensionado, Rentista or Inversionista. It depends on your individual situation; we endorse consulting a lawyer regarding residency.
What are the regulations regarding "concession" beachfront properties?
When buying property located on or very close to Costa Rica's beaches, you should be aware of the following:
In ALL OF COSTA RICA, the first 50 meters from the mean tide mark cannot legally be built on by anybody, anywhere in the country, as it is considered public beach.
An estimated 95% of Costa Rican beaches falls under a category known as the Maritime Zone Law, which affects the 150 meters adjoining the first 50 meters of land measured from the median tide line. This 150 meters is subject to the Maritime Zone Law (Concession), (unless the property was registered prior to 1973, in which case it has full title and can be transferred as such and called "titled to the 50 meter line"). Concession property operates as a leasehold agreement with the Costa Rican ICT, and local Municipality and and we strongly urge caution when purchasing this type of property. Many people say that concession properties have never been confiscated, but we advise to seek other property if given an alternative.