News Feeds

Buying a home in Costa Rica? Here is all you need to know.

Moving to Costa Rica is a dream for many. Its beautiful beaches, nice weather, warm people, and safety attract expats from all over the world.

At the same time, investing in Costa Rica’s real estate is an attractive option because of its prosperous tourism industry, which makes owning property in Costa Rica a great opportunity for rental income and capital gain.

If you are thinking about buying a home in Costa Rica, either to live there or as an investment, keep reading because you will find all you need to know to get started.

Which are the benefits of buying a home in Costa Rica?

Investing in Costa Rica real estate has multiple benefits:

  • You can get the residence with a minimum investment of USD 150,000 and import one container and two vehicles tax-free. The investment can be on properties and/or vehicles.
  • You can move to a safe country with affordable healthcare.
  • Expat communities in Costa Rica are strong and very welcoming: you will make new friends that quickly become your family away from home.
  • The value of properties in Costa Rica keeps rising every year, so you will gain capital.
  • You can buy a property and rent it out during the year to get a return on your investment. There are great manager options available to make this possible.
  • Property tax in Costa Rica is very low: only 0.25% of the registered property value.
What should you do before buying a home in Costa Rica?
  • Visit Costa Rica and the locations you are interested in.
  • Make sure that the community you are interested in is easy to access by car since a lot of the streets in Costa Rica are not paved and this can be a problem during the rainy season. Also, keep in mind the access to services and health care centers.
  • Hire a bilingual real estate attorney from Costa Rica, since it is important that they specialize in Costa Rican law.
  • Hire a real estate agent or, if you are looking into buying property in a project, make sure they have a professional sales team.
  • Have an attorney do the due diligence. Refrain from doing it yourself, since there are many risks, especially with title research: it is important to check the legal title of the property.
  • Ask your attorney to explain how taxes work in Costa Rica and all the benefits you may obtain.
  • If you plan to make a serious offer on a property, talk to your banker ahead of time so you will be able to make a wire transfer by phone. Using an escrow contract may be very helpful regarding the transfer of funds.
  • If you decide to make an offer, ask your real estate agent to write it and take it to the seller. Do not make any verbal offers.
  • If you are not going to be in Costa Rica for the closing, leave a power of attorney for your lawyer, your real estate agent, or somebody you trust.
  • Wire the complete purchase price and any necessary legal fees into escrow well before the closing date as banks in Costa Rica might hold the money for several days. Escrow is not mandatory for real estate purchases but extremely helpful. If you do not wish to use an escrow your attorney will help you get all the documents requested by local banks.
What should you avoid when investing in Costa Rica real estate?
  • Do not try to do it all by yourself: the process of buying a house in Costa Rica can be difficult without professional help. By hiring an attorney, you will move faster and prevent many risks that could put your investment in danger.
  • Do not avoid paying taxes. Taxes in Costa Rica are reasonable and help you protect your investment.
  • Do not purchase property without a proper due diligence time and a proper due diligence process. This will save you many headaches.

Now that you know what you should and should not do when buying a home in Costa Rica, let us help you with some useful information:

Do you own the land when buying a home in Costa Rica?

Foreigners in Costa Rica can own property in their own names. You may also purchase property through a new or existing corporation which an attorney will help you create and set up.

Titled beachfront property in Costa Rica is available in about 6% of the country including Tamarindo and Langosta. Special rules may apply in Maritime Zones for concession property for which it is advised you work with an attorney.

Which taxes do you have to pay when moving to Costa Rica?

US expats in Costa Rica are required to file a US tax return even if they moved out of their country of origin.

If you are moving to Costa Rica from Canada, your situation is similar but different: you need to file your taxes just as you would if you had never left the country unless you become a non-resident. But, if you still receive income from Canadian sources like pensions, investments, business interests, or the sale of Canadian property, you will have to pay taxes in Canada.

All expats living in Costa Rica are required to pay taxes on any income they receive from a Costa Rican source, no matter if they are residents or non-residents. So these are some of the taxes you might be paying:

  • Costa Rica income tax: this tax rate varies based on what type of income you receive, going from exemption to 25% for residents. Non-residents’ salaries or self-employment income is taxed at a flat rate of 10%, 15%, or 25%. Dividend and interest income are generally taxed at 15%, while most capital gains are exempt from taxation.
  • Costa Rica property tax: the annual property tax in Costa Rica is assessed at a fixed rate of 0.25% of the property’s value per year.

On the other hand, there is no such thing as a Costa Rica tax on foreign income, since only revenue earned within Costa Rica is subject to Costa Rican tax. This means you do not need to pay taxes for any personal income earned outside of Costa Rica, although you may have to pay taxes in your country of origin.

How should you select your legal representative before buying a home in Costa Rica?

There are a few important factors that you should take into account when hiring your attorney in Costa Rica:

  • They have to be based in Costa Rica.
  • They have to also be a registered notary.
  • They must be bilingual (unless you are fluent in Spanish).
  • Look for somebody with references, you want somebody you can trust.
  • It is recommended that they are specialized in real estate law.
  • The ideal candidate should be somebody that finds practical solutions to avoid bureaucracy.

Tamarindo Park works with Land and Business, a non-traditional law firm that uses the experience of its lawyers to find practical solutions complemented with very competitive rates in the market.

Owning property in Costa Rica will open a new world of possibilities for you. Now that you have learned what you need to know, you can begin your search for your dream home!

Contact us to see the beautiful luxury homes we have at Tamarindo Park. Come and experience tropical modern living.

Discover Tamarindo Park

Live close to nature in elegance and comfort