The Costa Rican real estate market is booming, which makes this an ideal time to invest and acquire a property. With an energetic scenario, there are promising opportunities in terms of growth and return on investment.

Buying a property in Costa Rica is simple but it involves following certain steps and meeting specific requirements to ensure that the process is done properly. For this, it is essential to have the guidance and advice of an experienced Real Estate Agent and trusted Real Estate Lawyer.

At Roots Realty Costa Rica, we will help you throughout the entire process, from finding the ideal property to finalizing the transaction. We will also put you in contact with the most qualified people and companies in the real estate sector such as lawyers, inspectors and Escrow services to ensure the success of your investment process.

As a foreigner or non-resident: 

It is possible to buy property in Costa Rica in your personal name or through a corporation or company, which must be created  through a lawyer.

Here is a general guide that can help you in the process:

Property Search and Choice:

Research the real estate market and determine the location and type of property you want under the given budget

Consider working with an experienced real estate agent who knows the area for advice and help in your search.

Offer:

Once the property is found, a formal signed offer is presented to the seller. (Letter of intent). It contains important and specific details such as:

• . The total amount offered.
• . The down payment amount, which is generally between 5% and 15% of the total purchase price 
• . The Due Diligence for your trusted lawyer to investigate and ensure that the title and property are suitable to be sold and transferred without problems.
• . The closing time, which will depend on whether the purchase is made with own funds, with a credit or a combination of both.

It is important to know that this initial offer does not have any legal implications. It’s just a formal way to present the offer and let the seller know that you are serious about your intentions.

Purchase-Sale Contract:

Work with a real estate attorney to draft and review the purchase and sale contract. Roots Realty Costa Rica will help you in this regard as well. Make sure you understand all terms and conditions before signing. The signing of this purchase and sale contract is the moment where the down payment is delivered to reserve the property during the course of the Due Diligence (It is recommended to use an Escrow service for the entire process) The amount is generally non-refundable but depends on the contract conditions.

Escrow Service for the Purchase and Sale process:

Escrow represents a secure mechanism for the transfer of funds between the buyer and the seller.

Using Escrow is recommended to ensure reliability and certainty in transactions, as it confirms the solvency, security and stability of payments for the parties involved. Escrow is a legal figure in which the parties agree to hand over the custody of a document or value to an impartial third party so that it can be retained and delivered to the other party against compliance with the agreed conditions. The cost of this service varies depending on the total amount of the transaction.

Due Diligence:

During this period, the lawyer performs exhaustive due diligence. This includes verification of property ownership, the existence of liens, and other legal and tax aspects.

Payment and Signing of Deeds:

Once due diligence is completed, the property deeds are signed before a notary and the transaction is fully paid. The notary will ensure that all parties comply with their obligations and will register the transaction in the National Registry. If the property has a mortgage, the representative of the bank or financial institution will also be present at the signing with the respective documents so that said mortgage is paid in full with part of the payment or transferred to the new owner if applicable.

Registration in the National Registry:

The deed must be registered in the National Registry of Costa Rica. This process ensures that the property is legally in your name or in the name of the corporation in question.

Taxes and Fees:

Be prepared to pay taxes and fees associated with the purchase and sale of the property. Some of these may include:

. Transfer tax that is around 2.5% (1.5% of the total amount of the transfer, plus registration stamps) This amount is generally paid by the buyer but can be negotiated to be paid in half by both parties. Which must be very well specified in the contract in advance.

. Profit tax: Capital gains obtained from the transfer, under any title, of real estate or personal property, are subject to the payment of a single and definitive tax of fifteen percent 15%. This is paid by the seller.

. Tax on real estate that is 0.25% and will be applied to the value of the property registered by the Tax Administration.

. Legal fees, around 1% to 1.25%

. New corporation or company to register the property: Around $650

. Solidarity Tax: Known as the luxury property tax, it ranges from 0.25% to 0.55% and applies to properties with a tax value greater than ₡137,000,000. It was created with the objective of financing the Strengthening of Housing Programs and falls on the value of real estate for residential use, which is used regularly, occasionally or for recreation; includes both fixed and permanent installations.

Insurance:

Consider obtaining insurance for your property. Although it is not a legal requirement, it can be a useful precaution.

Maintenance of Legal Residence:

If you plan to spend extended periods of time in Costa Rica, make sure you understand the residency and visa laws to maintain your legal status in the country.

It is essential to have legal and possibly financial advice throughout the process.