FAQ’s & Buying Information

Frequently Asked Questions

  • First: After you have found the right property or parcel, we will submit an Offer to Purchase (also known as a Letter of Intent) to the Seller or the Seller’s listing agent in order to agree upon the sales price and basic terms of the deal.
  • Second: Once the Offer is accepted, a Costa Rican attorney will draft the formal Sale and Purchase Agreement.  This document is the legally binding document, and it clearly states all conditions necessary for the transfer of the deed. The attorneys will also connect you with one of the various Escrow Services who will hold the funds for the transaction during the process of your purchase per the terms agreed in the contract. 
  • Third: The Due Diligence period, which is the complete legal research of the property to insure there are no liens, contingencies, legal issues, and that it has clean title and may be legally transferred to a new owner. This period also includes Surveys, soil tests if requested, home inspections, and any other studies requiring professional services are conducted in this period.  If the property is being sold with an existing corporation, then the research of the corporation for any legal contingencies will also be completed during Due Diligence. Generally we recommend buyers open a new corporation and transfer the deed to their newly created corporation. 
  • Fourth: The Closing (transfer of the deed) occurs before a Costa Rican Notary Public, who will register the property under the new corporation or owner.  Alternatively, if the property is being purchased with an existing corporation, then the shares of the company are transferred at this time by a Shares Transfer Agreement.  In this case the Notary Public will make the corresponding changes to the corporation’s ownership in the National Registry.
  • Fifth: Declaring the property before the corresponding Municipality for property tax purposes by filling out the required form and presenting it along with the other documents through your attorney.
  • Every property acquisition in Costa Rica has to pay National Registry Fees.  Total property transaction costs are about 4.8% of the property’s value, and are usually paid for by buyer.
  • The easiest way is to make an international wire transfer from your home bank to an escrow company in Costa Rica.  These registered companies are dedicated to protect funds and provide escrow services in Costa Rica.
  • Property Tax:  This annual tax is 0.25% (one quarter of one percent) of the registered property value and are paid to the local Municipality for where the property is located.  These taxes are paid every 3 months or can be paid in full for the year in advance.  For example a $200,000 USD property pays $500 USD per year in Property Tax
  • Corporation Tax: This new tax was passed in 2012, the annual fee for corporations depends on weather your corporation is an active corporation receiving income or if it is a holding company for your property not conducting business. Most properties are held in an inactive corporation, because it will not be reporting income.  If you have a rental property, you can open an additional, active corporation to report income and expenses, we recommend you consult your Costa Rican Attorney and CPA for details and best format.  
  • Luxury Tax:  A tax levied against luxury homes valued at $250,000 USD and is also paid to the “Ministerio de Hacienda”.  This tax is around $2,500 and up depending on the registered construction value of the home. We recommend consulting your attorney for details on this Tax and how you can determin if a property you are interested is applicable for this “Tax”.
  • Yes, foreigners are permitted to own property outright in Costa Rica. Foreigners have the same property rights as Costa Rican Citizens. Private property is protected by the Constitution of Costa Rica. It is no different than owning real estate in the United States, Canada or Europe.

How are closing costs Calculated?

The closing costs for the purchase of real property in Costa Rica are, by law, a fixed percentage of the higher of (i) the fiscal value of the property or (ii) the purchase price, and are broken down as follows:

Total costs for a real estate transaction are on average about 4.8 - 5%. These costs are generally paid for by the buyer in our community. 

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Transfer costs

  • 1.5% - transfer tax on property
  • 0.9% - duties and stamps
  • 1.25% - notary fees - The Notary Fees refer to the standard rate charged by the National Notary Directorate (“Dirección Nacional de Notariado”) to draft, transcribe and record the public deed required to transfer the property to another person or corporation.

Due Diligence Report

The report will cover at least the following items:

  • Confirmation that the Seller has clear and marketable title, free of any liens or encumbrances that could affect the free use and enjoyment of the property;
  • Confirmation that the property is not located within any wildlife reserve, national park or protected area;
  • Confirmation that the property is legally suitable for residential construction, use and enjoyment and a review of the applicable zoning and construction regulations;
  • Confirmation that the property's onsite measure, boundaries & location match the recorded title and survey (this item will be outsourced to a licensed surveyor)
  • Confirmation that you will not assume liabilities with the property (e.g. Municipal taxes, corporate charges that may be rolled over, utility invoices).
  • In the event that there is construction on the property, confirmation that the structures are in good condition and not in need of major repairs (this item will be outsourced to a licensed civil engineer).
  • Confirmation that the property has access to water and power utilities.

Please keep in mind that the Due Diligence performed by any law firm varies depending on each transaction, and seeks to confirm all of the “musts” that the Client wants on a Property. 

The due diligence fee charged by the attorney will be a percentage (normally 0.625%) or a flat fee, depending on the value and difficulty of the transaction.

The technical inspections are billed separately by each professional (i.e. surveyor and civil engineer). 

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Commission

  • Commission by Costa Rica law has a sale tax on it that is required by law to be paid by the seller of 13%.
  • Here is the law described in English - Sales Tax: By law Number 6826 (Ley de Impuesto General sobre las Ventas), Article 1, section "n": the Brokerage is required to collect sales tax on all real estate commissions, so the Seller agrees to pay in addition to the commission due the 13% sales tax calculated on the commission amount only, and the Broker will be in charge of paying this to the Ministerio de Hacienda in favor of SELLER in accordance with Costa Rican Law.

Work With Us

Our team is equipped to provide our clients with experienced representation and personalized professional service. Contact us today to start your home searching journey or for more information about listing your property with us!

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Contact Details

Brian Bombard

Phone

+11 (506) 8887-2671

Email

[email protected]

Address

Surfing Nosara / Coldwell Banker 25 meters west of Cafe de Paris Down Town Playa Guiones Located between Banco Popular & Olo Alaia Surf & Brew

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