FREQUENTLY ASKED QUESTIONS
Any individual over the age of 18, Costa Rican, foreign national, or tourist can hold land in Costa Rica based on fact that the Costa Rican Political Constitution makes no differentiation based on country of origin. Therefore your nationality is not a factor in the purchase process except for the fact that you will have to revise your home countries tax laws to see how they deal with foreign land ownership. Corporations can also hold land.
In general yes, but there is some real estate scams every year. Just remain smart, Always view the land you’re buying, ask to see relevant documents and if in doubt – talk to a professional before handing over any money. A common scam is to simply say some land has permission for a building when it doesn’t. Or to claim some land is about to be granted planning permission.
The “Registro Nacional” in Costa Rica is also a fantastic resource to avoid any issues.
1. Once a buyer has seen a property of interest, the next step is to understand what the process of acquiring the property may entail. The following are the basic steps that a purchaser follows:
- Step 1: Have a Notary Public, Lawyer, or Title Company review the property for any defects. This preliminary title search to make sure who owns the property, if the property has any mortgages, liens, encumbrances, or easements attached to the property. If this comes up clean proceed to step 2. If not look for a different property or be prepared to deal with the issues this property has. This should cost around $50.
- Step 2: Sign an Option to Purchase/Sale with seller and deposit funds into escrow (if available) in order to reserve the property.
- Step 3: In addition to the title search, make sure that your representative shows you the following documents: zonig from the municipality which dictates what the property can be used for (uso del suelo), property plan (plano catastrado), annual property taxes paid in full (impuestos municipales al dia), and letter of availability of water (carta de disponilidad de agua).
- Step 4: Have a Public Notary draw up a purchase deed which will be inserted into his/her legal protocol book.
- Step 5: Closing – Execution of Transfer Deed, Endorsement of Shares and/or Mortgage Deed and disburse fund. In most cases closing costs are spilt by the seller and the buyer 50/50 unless otherwise negotiated.
- Step 6: Register new owner with the National Public Registry.
Property taxes will be calculated as a 0.25% over the value of the property as it is shows in the public registry.
The county’s local government (Municipality) is the entity in charge of collecting the property taxes. A quick visit to the municipality with the information under which the property is registered should be enough to get you the detail on how much the property tax will be.
Property taxes can be paid a year in advance or can be paid by trimester. The information on the value of the property will need to be updated every 5 years through the municipality,using an official form the owner will need to fill out and a sworn statement; if the owner fails to present this form, the municipality will make an automatic update as per their inspections.
It is important that as a property owner in Costa Rica you stay on top of the payments, some municipalities are more efficient than others in informing and reminding owners about deadlines for the payments.
The value of the property must be electronically certified every three years before January 15th and this value remains valid for the following three years. The value includes the construction and the land. The tax is then calculated according to different brackets, the minimum is 0.25% and the maximum is 0.55% for properties which value exceeds 3.3 million USD.
North Americans and Europeans visiting Costa Rica are granted a three-month tourist visa on entering the country. After the three months have lapsed, tourists who want to extend their stay another three months can do so by hopping over the border to Nicaragua or Panama and remaining there for at least seventy-two (72) hours. On reentering, they will be issued a new three-month visa. If you plan on staying in Costa Rica for longer periods of time, then you should consider applying for a temporary residency.
There are several ways to may apply for and obtain a temporary residency. The most common are by claiming “pensioner”, “rentista” or “investor” status. Individuals who apply for these types of residency permits must prove that they receive at least US$600 per month from U.S. Social Security (or some other State Plan) or from a private pension program, in the first case, and US$1,000 on a monthly basis, in the latter. A third way to establish legal residency is to invest in the country. To become eligible for investor (inversionista) status, you must either invest US$50,000 in a tourism business (or other high priority business), US$100,000 in a reforestation project, or US$200,000 in any other kind of business venture.