Costa Rican real estate market is very favorable with amazing values

A Guide to Buying Real Estate in Costa Rica

Take advantage of superb property value at very attractive prices
Costa Rica has a very lucrative real estate market at the moment. It has always been considered a favorite choice for Americans and Europeans looking to buy a beautiful retirement property in the tropics, but there is no better time to make an investment than today. There are countless listings for gorgeous homes in prime locations all over the country, at prices that you wouldn’t believe.

Reasons Why You Should Invest in Costa Rica Real Estate

If you are planning on a Costa Rica retirement, there is no reason at all to explain your decision because anyone can see the amazing qualities and features of this Central American country. The idyllic weather and location are just the beginning. Other deciding factors are the country’s high rating as one of the happiest nations in the world, its remarkably low cost of living, the very stable government, and relatively easy travel to and from the US, Canada and Europe.

That being said, another important matter you should be thinking of is investing in affordable real estate in Costa Rica. You might be thinking that you will just rent or lease a house but before you make that decision, here are some very convincing reasons why you might want to invest in your own Costa Rica property instead.

Affordable Housing

Besides all the wonderful things that we have mentioned above, another significant reason why US and European citizens are thinking of a Costa Rica retirement is the incredibly low cost of housing in this country. A property in Costa Rica which is exactly the same size, design and style as one in the States would cost just about 30 to 40% of the US price. At that price, buying would certainly seem to be a much practical choice than renting.

It is also because of this incredibly affordable real estate in Costa Rica that many real estate investors and developers are taking an interest in this country. A high demand and low purchase prices make a good equation for great profits.

Low Cost of Living

Another reason why it is a good idea to invest in Costa Rica real estate is the immensely low cost of living in the country. Everything is so much cheaper in this country than in the US, Canada or Europe, from groceries to utilities to healthcare. You will be spending so much less than you used to, and this means that you would be more likely to afford many of the Costa Rica retirement homes in the market today.

Ideal Retirement Location

It is no secret that Costa Rica is a wonderful destination for tourists but if you haven’t realized yet, the lush surroundings and beautiful natural landscapes of this country also make it the ideal location for retirees. With its 631 miles of gorgeous beaches and endless options for outdoor relaxation like tropical forests and urban parks, one can definitely relax and enjoy away from the hustle and bustle of urban living. What could be better than having a property to call your own in such a location?

Excellent Security and Quality of Life

Compared to the rest of the countries in Latin America, Costa Rica boasts of the highest level of security and the most excellent quality of life. It is a place where residents feel safe while walking down the street and where citizens are just happy with their lives. Costa Rica is technically still considered a developing nation but it offers just about everything that you can expect of a developed country. The services offered by the government and the private sector are of world-class quality, and there is no shortage of places and activities for recreation, education, health, dining, shopping, sports and culture.

Diverse Real Estate Options

If you do decide to relocate to this country, you will be pleased to see that there is a wide variety of Costa Rica real estate that you can choose from. Aside from the standard homes and apartments in the city, there are also farm cabins located on agricultural land, or luxury villas near the Pacific coastline. No matter what kind of home you are envisioning for your retirement years, it is very likely that you will find some of them right here in Costa Rica.

Buying versus Renting: Which Is the Better Option?

Although we have just emphasized the benefits of buying real estate in Costa Rica, there is no denying that renting also does have its perks. Besides, it's really a case to case basis and the right decision is different for everyone. Costa Rica does offer an abundance of accommodations that you can rent either on a daily, weekly or even monthly basis. You can choose from luxury homes, farmhouses, modern condos, or your very own tropical paradise along the beachfront.

One of the good reasons why renting might be the better choice is if you are not yet sure of spending the rest of your life in this country. You might want to try it out for a few months and if you like it, then you can look for property to buy. Another reason is if you just want to stay in Costa Rica during summers or the holidays. Renting is also a viable option if you want to keep your income relatively high during retirement.

What You Should Know about Buying Real Estate in Costa Rica

The process of buying real estate in Costa Rica is not that difficult and is basically the same as the process elsewhere in the world. Once you have selected the property in Costa Rica that you wish to buy, you and the seller should have a lawyer prepare the legal papers for transferring the property to your name. The sale will be considered final once it has been registered in Registro Nacional or Costa Rica’s legal property registration office which is located in San Jose.

Special Considerations When Buying Costa Rica Property as a Foreigner

In Costa Rica, foreigners have essentially the same rights as locals when it comes to buying or owning property. The only exemptions are that they cannot hold full ownership of any property that is within a Maritime Zone, they cannot purchase property that has been donated by the government to indigent farmers, and they cannot purchase property that extends to within two km of the national boundaries.

Just like native Costa Ricans, you can legally purchase real estate in Costa Rica under your own name – there is nothing in Costa Rican laws that will prevent you from doing so. But the general practice in this country is that foreigners that purchase real estate do so in the name of their corporation. If they do not have a corporation but they wish to buy real estate, they will usually form a corporation first through the assistance of a lawyer, and then indicate the name of the corporation as the owner of the property they are buying. The primary reasons for doing this are easier estate planning, better protection from personal liability in case of accidents, and more efficient taxation.

In some other countries, foreigners are required to have a local partner when buying real estate. This is not mandatory for buying Costa Rica homes or other kinds of real estate, except if you are planning on purchasing beachfront properties for business purposes. In this case, there are special rules that you will have to abide by.

Property Laws That You Should Know about before Buying Real Estate in Costa Rica

As we have mentioned in the previous section, foreigners in Costa Rica have it easier than in many other countries. Here, foreigners are basically on equal footing with locals when it comes to buying property, except for just a few special circumstances. When buying property, it is entirely your decision whether you place your own name in the title deed, or the name of your corporation. Both options are legally allowed but many foreigners opt to use the name of their corporation because of several practical advantages when it comes to taxes, estate planning and liability.

Restrictions and Zoning

Costa Rica has several areas that are protected for different reasons, including nature conservation, water protection, green space and so on. Because of this, there are areas in close proximity to forests and bodies of water that may not be purchased. All these restricted areas are listed in the National Registry. Similarly, there are also zoning plans for most cities that indicate the permissible use for specific land areas. Over 90% of the land in Costa Rica is legally titled.

Starting from the high tide line up to 50 meters inward, land may not be bought because it is protected and considered to be public property. A further 150 meters inward from the high tide line is the Maritime Zone. In this area, the purchase of land is allowed but only for concession and only with a permit from the municipality. Foreigners are not allowed to have majority ownership of Maritime real estate in Costa Rica and may only own up to 49% of the property. When it comes to agricultural land donated to indigent farmers, you may purchase it only if the owner/seller has owned it for at least 15 years.

Condominium Fees

If the Costa Rica property that you intend to purchase is a condominium or located in a subdivision or other gated community, you must secure a document from the seller certifying that all homeowners’ association fees to date are duly paid. The seller must also hand you a copy of the HOA contract.

Legal Documentation for Owning Property in Costa Rica

When you own any real estate in Costa Rica that has been duly titled, it must be registered with the National Registry. This includes INVU property, INDER property and concessions that fall within the Maritime Zone. The registration includes all pertinent information about the property, including its certifications, legal owners, zoning, restrictions and the survey plot. The National Registry is nearly fully digital and any of this information can be easily accessed online.

If you wish to purchase title insurance for real estate in Costa Rica, there are several insurance companies that can help you. However, this is not mandatory.

Importance of Hiring a Real Estate Lawyer

Whenever entering any transaction that involves a legally binding contract, such as buying real estate in Costa Rica, it is strongly advised that you hire your own lawyer that specializes in the particular transaction you are entering. In property transactions, both parties need to have their own lawyers for proper representation. The most recommended real estate lawyers are those that are bilingual so you can clearly discuss with them the contents of the contract and the sale conditions. It is also advisable to choose a lawyer who is also a notary public so that they will be qualified to make the necessary registrations with the National Registry.


Just like in many other countries, it is customary in Costa Rica for the seller to shoulder the commission for the real estate sale. The exact amount will vary depending on the location and details of the property but in general, it is equivalent to about 5% of the property value for the Central Valley area, and about 7% elsewhere.

Closing Costs

The closing costs of the property sale, which are usually equivalent to about 4-5% of the sale price, are usually split equally between the buying and selling parties, unless the sale contract specifies otherwise. There is also a fee that must be paid to the notary public that executes the closing of the sale and lists it with the National Registry. This fee amounts to about 1.25% of the sale price.

In addition, there are a number of other costs that the buyer will have to settle before the title change registration is finalized with the National Registry. These costs include legal stamps that amount to about 0.33% of the sale price, registration fees that amount to 0.5% of the sale price, and transfer tax that amounts to 1.5% of the sale price. If your funds are coming from a foreign bank, the local Costa Rican bank might require you to submit details about the fund sources. If you are availing of some kind of financing plan for the purchase, you must at least settle all bank charges and fees for the mortgage registration before the closing of the sale.

Title Registration

As mentioned earlier, there are two common ways of registering the title of your new Costa Rica property. It can be under your own name or in the name of a corporation that you own. If you register the property under your name, you can add a co-owner like your spouse, a relative, or a business partner by having their name listed in the title as well.

It is customary for property owners in Costa Rica to use an S.R.L. or Sociedad de Responsabilidad Limitada instead of listing the property under their own names. This is easier for estate management and planning because all you have to do if you want to share the ownership of the property with someone else, you just need to make them shareholders of the corporation.

Still another way of buying property in Costa Rica is by using the name of your retirement fund or its representative body, like your 401(k) or an IRA. No matter how you choose to register the title though, you can easily use the registration number or Folio Real to search for it in the National Registry database, and all the registered information will be there.

Annual Property Taxes

Once you are the legal owner of a property in Costa Rica, you are obligated to pay the local municipality an annual property tax equivalent to 0.25% of the value of your property. The property value is also subject to reassessment every 5 years. Either you do this voluntarily or the municipality will take care of it for you. If your property falls under the category of luxury homes, you will also have to pay the annual Impuesto Solidario or Solidarity Tax. The percentage amount of this changes periodically so you will have to check with your municipality for the current value.

Corporation Tax

If you have registered a corporation with the National Registry in order to buy property in Costa Rica, you will have some extra obligations that you need to take care of, like paying the annual Tax on Legal Entities. The deadline for this tax is at the end of January each year and the amount depends on whether the corporation has an active or inactive status as listed in the National Registry. An active corporation will have to pay an amount equivalent to anywhere from 25 to 50% of a government employee's base salary, while an inactive corporation needs to pay 15%.

Every corporation is required to file the Declaración Patrimonial para Personas Jurídicas Inactivas, or the Assets Declaration for Inactive Legal Corporations, also known as form D-135. The deadline for this is at the end of September each year. This form contains a declaration of your assets, which includes real estate property, vehicles, and bank accounts, as well as your liabilities and share capital.

When your corporation is declared inactive, you must file the form D-140. This is the form where you will indicate the personal contact data of all the representatives of the corporation, as well as the complete legal address and email address of the corporation.