Costa Rica Real Estate Buying Guide
Where is the best place to buy a home in Costa Rica? Great question. We’ll answer that and more in our buyers’ FAQ.
Buying property in Costa Rica can be incredibly exciting. It can also be a little overwhelming because we do things a bit differently here than in the states.
If you’ve found your way to this page, it’s most likely because you have many questions about buying a home or condo in Costa Rica. Well keep reading because we’re about to answer the most common questions we’ve received over the years from buyers.
Where is Costa Rica?
Costa Rica is located in Central America it borders to the North with Nicaragua, South with Panama, West with the Pacific Ocean and East with the Caribbean Sea.
Can foreigners own property or businesses in Costa Rica?
Yes, foreigners have as much right to own business and property in Costa Rica as any native born Costa Rican. The laws here favor foreign investment because it favors economic growth for the country's development. Costa Rica has had a long history of welcoming foreigners, and the people here have long been accustomed to living beside and doing business with people from all over the world.
How much are property taxes in Costa Rica?
Property taxes in Costa Rica are very low, only 0.25% of the property value in most cases.
Why use a real estate agent when searching for a property for sale in Costa Rica?
How do you know that you're getting a good deal unless you're working with someone who studies the market and knows everything that's for sale and what comparable properties have sold for? Driving around in a foreign country possibly getting lost on bad roads could cost you a lot of time and agony that you could be spending enjoying or relaxing while you're in Costa Rica. Let Amigo Realty help you in your search for the right property, we'll help you every step of the way, to ensure an easy process, and make sure you're getting the best possible deal.
Are all properties in Costa Rica Titled?
Most properties in Costa Rica are fee simple titled. There's a very small percentage of land that is a concession, otherwise known as a government lease, which usually lasts for about 20 years and is renewable. Most concession property is beach front land, although there is also some titled beach front land.
How much are the closing costs for a property purchase in Costa Rica?
When you purchase a property in Costa Rica, it is typically the buyer who pays the closing costs, however this can be a point of negotiation and sometimes the fees are split between the buyer and the seller. The transfer taxes and stamps to register the property are standard and they all add up to about 2.5% of the purchase price. Then the lawyer charges his fee which is also standard and general 1% of the purchase price for deals valued above $56,000 (30 million colones) For deals below $56,000 (30 million colones) the lawer's fees goes up to 1.5 - 2%. In total the closing costs ad up to be about 3.8% on a typical real estate transaction.
Is there financing offered for foreigners to buy property in Costa Rica?
Currently there are some banks that are offering financing in some areas of Costa Rica. The banks will not loan in high risk areas or for concession properties. The interest rates are higher than what we see currently in the US, and are normally based on the Liber plus 2 to 3%. The application process is similar to applying for a loan in the US, but you'll have to have all the documents certified by a Costa Rican CPA. The process can also take a really long time, up to six months, which may or may not work for any particular deal. More often we are seeing sellers who are willing to finance for a few years, or buyers are taking out lines of credit from their properties in the US to pay for properties in Costa Rica with cash. We have also heard it's possible for people to use their IRA funds for a purchase of property in Costa Rica.
What are the risks involved in buying vacant land in Costa Rica?
Water, water, water! Make sure that when you buy vacant land it already has water or you won't be able to get permits to build. We don't recommend trying to get your own water because you never know how hard that could be and if it's even possible. Squatter's rights use to be a big concern for people buying big tracts of land, but now it's very easy to prevent this just buy putting up fences and no trespassing signs.
How hard is it to build a house in Costa Rica?
Costa Rica has very strict building laws in order to control development and the environment. To obtain building permits you have to get approval from 5 different environmental entities in Costa Rica, which are MINAE, SETENA, INVU, SINAC and finally the Municipality, and this all usually takes up to a year to complete. It's not as hard as it sounds as long as you do your research about fesibility before buying the lot, and you'll need a Costa Rican architect and engineer, and they'll do all the work for you. There are many building companies to choose from, and we recommend to go look personally at the work they've done before hiring just anyone.
How safe is Costa Rica?
In general, Costa Rica is the safest county in Central America, even the water is safe for drinking. There are crimes here and you should be careful just like anywhere else in the world, however, there are little to no risks of kidnapping or violence in Costa Rica. The most common crimes are petty theft and robberies which is why we recommend to buy in gated communities, or safe neighborhoods with security measures installed at your property to prevent as much as possible any unwanted visitors.
Should I get title insurance when buying property in Costa Rica?
Title insurance is offered by some companies in Costa Rica, however it's not really necessary because they will do the exact same check that you're lawyer will do for you during the due diligence process before closing the deal.
What about a Costa Rican corporation?
It's a good idea to get a Costa Rican corporation or two if you're planning to live in or frequently visit in Costa Rica. They usually cost about $900 through a Costa Rican attorney. It's good to have one for business items, one for personal items and if you establish one for a property that should be it's sole purpose as before mentioned in the FAQ about closing costs, that way you can easily sell your property and save big on closing costs.
Choosing the Right Agent
Perhaps the biggest question people have when buying a property in a foreign nation is “how can I choose the right agent?” That’s an important question because real estate agent status remains mostly unregulated in this country. There were some regulations set forth in 2019 to try and build trust and transparency in the industry, but there is a still a long way to go.
All of this is to say it’s important that you do your due diligence to choose a realtor that is on the up-and-up and will handle transactions in a legal and ethical manner.
In addition, you want to ask prospective realtors some specific questions:
- Do they live in the communities where they work?
- Do they know the local market?
- Are they a registered SUGEF agent?
You’ll also want to ask around to see if this agency has a good reputation. Read reviews on their website. Look at their social media accounts to see what past clients have to say about their experience working with them.
Amigo Realty is SUGEF registered. We handle all of our transaction in an honest, transparent and ethical manner. For over 20 years we have worked diligently to educate our clients so they had the information necessary to make the best financial decisions.
We live in the communities we work in and know the local market like the back of our hand. And we invite you to take a look at our testimonials. Most of our business are referrals from very happy clients. We treat our clients like friends and in return, they give us more businesses.
If you’re looking for real estate agents in Costa Rica that will go above and beyond and always have your best interests in mind, look no further.
Do you have any other questions about the buying process? Thinking of buying a house in Playa Grande and wondering about Playa Grande real estate prices? Maybe you’re wondering where to buy an investment property in Costa Rica or in general, the best place to buy a home in Costa Rica.
Give us a call. We’re always happy to make time to answer any questions you may have.
We look forward to working with you and exceeding your expectations! |