Buying Real Estate in Costa Rica
The actual process of buying real estate in Costa Rica is fairly similar to the one in the U.S.A. First things to do when buying property in this country is to check the “folio real” of the property. Each property is assigned a tracking number to track all real estate transactions. A property that is missing a “folio real” would be a huge red flag so it’s important to be cautious.
Secondly, most real estate transactions require a certified “escritura” (title) and “plano” (survey). For the most part, Earthquakes exist in Costa Rica, so the construction must meet rigid safety standards just like on any real estate transaction. In Costa Rica, acquiring properties through corporations is the most common method of buying properties. The investor can purchase the property through a new corporation or through an existing corporation. Normally the developer has already set the property as an individual corporation for buyers to purchase. But if he hasn’t, the transaction will require a local attorney who understands the exact protocols and procedures of setting up a corporation.
Finally, the major advantage of this system is that it allows a buyer to protect their asset anonymously. The corporation gives the buyer (shareholder) the ability to act with all the benefits of a Costa Rican citizen. The acquisition of real estate is one of the most significant investments a person can make. In Costa Rica, the stress of buying real estate can include language barriers and unfamiliarity with local laws and procedures. Our job at Costa Rica Real Estate Life is to make this process enjoyable & stress-free.
When buying property it’s important to consider a 3% tax added to the sale. The tax is based on the value of the property registered on the transfer deed. The property taxes that the buyer has to pay include 0.25% of the property’s registered value. In the end, closing costs are approximately 3.5% to 4.0% of the purchase price. In most transactions, buyers and sellers split the closing cost, but this can also be a topic of negotiation
Steps to complete once you decide to buy a property.
Negotiation of the sale price between the buyer and seller. Once the seller accepts an offer, transferring the title begins. If the property is sold it transfers from seller to buyer. When finishing the closing of the property the buyer and seller must select an attorney to draft the deed and register the sale in the Public Registry (Registro Nacional). The property can be purchased under a corporation. The corporation can be under an individual name or joint people. The decision is based on everyone’s situation and should be reviewed by an attorney. The buyer and seller share closing costs equally. The agreement can change this and typically depends on the particular transaction. Closing costs include government taxes and fees, notary fees, and mortgage costs.
Buying real estate in Costa Rica should be a fun experience. At Costa Rica Real Estate Life, it is our job to make this process simple and motivating.
