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Buying Property as a Foreigner in Costa Rica

View of the Pacific Ocean from a luxury ocean view home in Costa Rica - Illustration

Introduction

Costa Rica's stunning natural beauty, welcoming culture, and stable political environment have made it a top destination for foreign property buyers. Whether you intend to buy a beachfront retirement home, an investment opportunity, or a lush mountain retreat, Costa Rica offers attractive options. This guide will navigate you through the essentials of buying property in Costa Rica as a foreigner.

Legal Framework for Foreign Property Ownership

Equal Property Rights for Foreigners

Yes, Costa Rica does allow foreigners the same property ownership rights as nationals, including residential, commercial, and agricultural properties without restriction. Both foreigners and citizens can legally hold title to property individually or through corporations. This openness and legal certainty have significantly boosted Costa Rica's popularity as a property investment destination for international buyers.

Property Ownership Restrictions

While Costa Rica broadly allows foreign property ownership, there are special considerations for properties located in the Maritime Zone. This zone includes the first 200 meters from the average high tide line. The first 50 meters from the ocean are public and protected, prohibiting private ownership or development. The subsequent 150 meters are known as concession property, which can be leased under long-term concession agreements granted by the local municipality, typically for periods of 20 years, renewable thereafter.

Buying Process

Finding the Right Professionals

  • Real Estate Agent: Work with a reputable, locally-based agent knowledgeable about the Costa Rican property market. Just like anywhere else, WHERE you buy is very important if you want to ensure solid value and ease of sale should you need to exit the country for unexpected reasons.
  • Property Inspection: Conduct thorough inspections to ensure the property meets your expectations.  There are good quality professional home inspectors in the country that can help you with this.
  • Attorney: Engage a qualified real estate attorney who can perform title searches, verify legal standing, and handle all necessary documentation.  Your agent should be able to introduce you to lawyers specializing in real estate.

In Costa Rica, property transactions typically include selecting a trusted real estate agent, identifying the right property, securing legal representation, and then proceeding with detailed due diligence and negotiation processes.

Making an Offer and Due Diligence

When making an offer on a property in Costa Rica, ensure that your offer is in writing and clearly outlines the conditions, contingencies, and timelines for the purchase. It is common to include a reasonable earnest money deposit, held securely in escrow. Conducting due diligence involves verifying property boundaries, confirming legal access, checking for any liens or encumbrances, and ensuring compliance with local zoning regulations.

Closing Procedures

The closing process typically takes 30-45 days. It includes a comprehensive title search and verification by your attorney to ensure clear and uncontested ownership. Closing costs in Costa Rica typically range from 3.8% to 5% of the property’s value, covering items such as notary fees, transfer taxes, and registration fees. Finalizing the sale involves signing the transfer deed and registering the new ownership at the National Registry.

Financial Considerations

Market Trends and Prices

Costa Rica’s real estate market continues to attract global attention, especially along its Pacific coastline, with steady appreciation observed in recent years. The Guanacaste region, including areas such as Papagayo Peninsula, Playas del Coco, Playa Hermosa, and Playa Panama, has seen notable price growth driven by strong demand for vacation homes, retirement properties, and investment rentals. Prices vary widely depending on the specific location, property type, and proximity to beaches and amenities.

Financing and Payment

Local financing for foreign buyers is available in Costa Rica but usually involves higher down payments—typically around 40-50%—and higher interest rates compared to domestic borrowers.  It can also take many months and a lot of paperwork to qualify.  Most buyers opt for out of country financing or leveraging home equity from properties abroad. Either way we encourage you to explore all options, carefully evaluating interest rates, loan terms, and associated fees.

Illustrated aerial view of the Costa Rica coastline

Best Locations for Foreign Buyers

Guanacaste - The Gold Coast

  • Papagayo Peninsula: Known for its luxurious resorts, golf courses, and upscale residences.
  • Playas del Coco: Popular for its vibrant community, amenities, and affordable beachfront properties.
  • Playa Hermosa: Offers tranquility, upscale homes, and excellent beachfront investments.
  • Playa Panama: Quiet, upscale residential area ideal for retirement and luxury vacation homes.

These locations offer exceptional investment potential, lifestyle amenities, and strong tourism-driven rental income opportunities.

Residency Through Investment

Costa Rica offers residency options through real estate investment, making it highly attractive for international buyers. Investors purchasing properties valued at USD 150,000 or more can apply for temporary residency, renewable every two years. After three years of temporary residency, investors may become eligible for permanent residency, offering greater stability and long-term advantages including potential access to Costa Rican citizenship.

Managing Properties Remotely

Professional property management services greatly simplify remote ownership, offering comprehensive solutions such as security, property maintenance, rental management, and even tenant communications. Utilizing these services ensures peace of mind and helps maintain property value.

Illustration of a property manager

Taxation and Regulatory Compliance

Costa Rica’s property taxes are notably low, typically amounting to around 0.25% of the assessed property value annually. Luxury properties, valued above a certain threshold, incur an additional luxury tax. Property transfer taxes are calculated at 1.5% of the registered value upon purchase. It is crucial to consult with tax experts to ensure compliance and optimal tax planning.

Conclusion

Purchasing property in Costa Rica as a foreigner is straightforward with careful planning and professional assistance. Thorough understanding and expert guidance through each step of the process can lead to a rewarding investment in this captivating and economically promising country.