Buying real estate in a foreign country might at first seem to be a daunting proposition. However, you can safely buy property in Costa Rica with the assistance of a reputable realtor and attorney. Your realtor should be able to help you to find property suitable to your needs, educate you on the local market in your chosen area, and assist you with negotiating a fair price. You should also use an attorney with a good reputation who can handle the legal aspects of the transaction and ensure that you will have title to your property.
Escrow Services: Well-known international companies such as Stewart Title and First American Title currently operate in Costa Rica.
Ownership: It is possible to purchase real estate through direct transfer where one or more individuals acquire property in their personal name. Purchasing properties through a corporation is also very common in Costa Rica. The process of setting up a corporation is not complicated or expensive, but requires the expertise of your attorney to follow the legal protocols involved.
The Public Registry of Properties: All property in Costa Rica should be registered in the Public Registry of Properties, whether the property is fee simple or concession. By means of the Public Registry of Properties your attorney will be able to confirm that the seller possesses ownership of the property, and to discern if there are any restrictions on the property before the deal goes through. Avoiding the purchase of unregistered property is strongly recommended.
Folio Real Numbers and Cadastrals: Each property registered in the Public Registry of Properties has a Folio Real number, which is the unique number assigned to each property to identify it. The number is comprised of three parts, the first number indicates the province, the second group of six numbers is the number of the property itself, and the last group indicates how many owners the property has. All properties must have this number in order for clear title to be obtained. Each registered property also has a survey plan, or Cadastral. In order to transfer, mortgage, or acquire a property, the survey plan must be recorded at the Public Registry of Properties.
Property taxes in Costa Rica are very low, only ¼ of 1% of the registered property value. Certain standard closing costs are required in Costa Rica to transfer the title of a property from the seller to the buyer, and are usually split between the two. Closing Costs include: Real Estate Transfer Tax, which is (2) Documentary Stamps (3) The Notary Fee, which will total approximatly 3.7% of the purchase price. Your property might be subject to the new “Luxury Home” tax. Please speak to your agent to see if your property might qualify.
Financing: If you need financing to purchase, it is generally far simpler and interest rates are usually lower in your home country. However, if your credit rating is impeccable, financing in Costa Rica may be available. One or two banks in Costa Rica will finance for foreigners somewhere between 60% to 70% of the purchase. Current rates are between 9.5% and 12%, with points up front. Certain projects and/or private owners may also offer some kind of financing arrangement. Your realtor should be able to tell you which projects and owners offer financing.