Simplify your Costa Rica retirement research with our in-depth article about renting and buying property in Costa Rica. The good thing is that foreigners mostly have the same property ownership rights as locals. As with any foreign country, you need to familiarize yourself with the rules, process and fees, especially if you plan to make a significant investment in Costa Rica real estate.
If you are looking for a rental property in Costa Rica, especially before you move there, online resources come in handy. With these resources, you can make a list of potential places, and then check them out when you are in the country.
Your first stop should be online newspapers. There are a number of English newspapers that have extensive classifieds on rental properties. Two good examples are www.amcostarica.com (don't get scared away by the awful layout) and the classifieds section of the Tico Times.
You can also check out other sites dedicated to Costa Rica property listings. Such sites will often provide a lot of information concerning a particular rental property including rent prices, location, description and pictures. Examples of such sites are www.propertiesincostarica.com, www.encuentra24.com (one of my personal favorites, also for other Central American countries) and www.luxuryretreats.com (if you'd like to spoil yourself for a few nights).
For those looking for properties to buy, there are plenty of online resources too. The newspapers and sites mentioned above also list properties for sale (except luxuryretreats.com). Additional websites you could check out...
Of course you can always enlist the help of a realtor who specializes in international or Costa Rican real estate, if you don't want to do all the footwork yourself.
There are almost no special restrictions for foreigners planning to buy property in Costa Rica. The same rights given to local citizens are also provided to foreigners. The only special policy is one that applies to concession property within the MTZ or Maritime Terrestrial Zone.
This zone is measured as 200 meters from the high tide line. Concession property refers to property that is leased by the government to the buyer for a certain period of time, usually 20 years. Most of the real estate on the MTZ is concession property.
If you have set your sights on a beach front property Costa Rica, you should be aware of this policy. Basically, it states that no foreigner should have majority ownership of property that is within the MTZ. So if you opt to partner up with citizen of Costa Rica, the biggest stake you can own is 49%. An exception is granted to a foreigner who has resided in Costa Rica for five years or more. He or she can have majority ownership.
There are two main ways to purchase property in Costa Rica. The first is through direct transfer where the new property is registered under the buyer's personal name.
The second and most preferred is through a corporation. A simple transfer of shares represents the change in ownership. It also helps avoid transfer taxes and stamps, makes ownership anonymous and eases change of ownership in the future to family members. Note that if you form a new corporation to buy land, the usual transfer costs will apply.
The first step in buying real estate is making an offer. The offer may be accepted or negotiations may ensure. If accepted, funds must be deposited in an escrow. The next step is to carry out a title search for the property to ascertain all details such as ownership and dimensions. This is often done by a notary public or lawyer that you have retained.
Closing comes next. The deed is transferred into the new owner's name and in case of an existing corporation, shares are transferred to the buyer. Funds are also released at this point.
During the purchase of property, there are some fees involved. There is a government transfer tax charged a 1.5% of the purchase price. You may also have to pay other stamps and charges at the public registry. A notary public will charge 1.25% of the purchase price for his or her fee. Few other smaller fees need to be taken into account. Usually, the buyer can split some of these payments with the seller under the advice of a reputable lawyer. Also, note that if your lawyer has to create a corporation to purchase property, that is an additional $500-$1000.
Once the purchase process is complete and the property is wholly yours, you will have to pay property taxes. Property tax in Costa Rica is very friendly at only 0.25 percent of the property value to be paid annually. If you have bought a property worth 100,000, the annual property tax amount comes to $250.
If you used a corporation to buy property, you have to pay corporation tax. For an inactive corporation, it is $180. For an active one, it is $360. Finally, there is a luxury tax charged against homeowners of homes valued at more than $250,000. It is around $2,500 but may vary with the value of the registered luxury property.
To learn more about the real estate purchase process in Costa Rica and associated costs, visit propertiesincostarica.com. You will find plenty of information there.
Another great resource is Coldwell Banker's Guide to Buying Property in Costa Rica. It explains pros and cons of buying different types of properties in Costa Rica in an easy to follow manner. You'll also find a helpful overview over property management costs.
In urban areas such as San Jose, Escazu and Heredia you will find the most expensive properties. Homes here start at around $150,000 and go into the millions range for luxury houses. To rent in the urban areas expect monthly rental prices between $400 for one bedroom apartments to $1,000 or more for larger apartments and condos.
In rural areas, the purchase costs are much lower, often between $100,000 to $500,000. A few homes may cost less than $100,000. Rental prices are between $300 and $800.
These notes should give you a good head start on finding the perfect place for your perfect Costa Rica retirement. If you have specific questions, please let me know in the comments below.