Costa Rica’s real estate scene is booming, and foreigners are eager to take advantage of the affordable housing possibilities developers have in store for them. Investors, expats, and tourists from all over the world fall in love with the country’s tropical beaches, friendly people, affordable cost of living, and welcoming atmosphere and soon enough decide to call Costa Rica their home. Whether they have a modest household income or have their jet ready to take to their new destination, people who decide to buy a house in Costa Rica should take the time to explore the real estate opportunities presented by knowledgeable experts and not shy away from finding answers to a few essential investigative questions related to their investment.
Buying a house is a major investment regardless of your income. The housing market in Costa Rica can feel a bit intimidating, especially if you’re a first-time buyer, but with the help of a professional real estate agent, you’ll soon find yourself relaxing by your own pool admiring surreal sunsets. Because if not in Costa Rica, then where, especially, since the house buying process here is investor-friendly and foreigners have the same rights as citizens to purchase real estate. You don’t even need to be a resident in Costa Rica to buy and own property. You just need a top-notch real estate agent to help you make a wise investment at the perfect time and ensure the purchase is conducted properly.
1. Where do I want to live in Costa Rica?
Let’s start with the beginning and zoom in on the area where you would want to live in Costa Rica. Do you want to live by the beach or breathe in the freshness of the mountain air? Do you prefer a house in a gated community or a bungalow by the sea will do just fine? Do you need access to modern amenities, such as schools, hospitals, and public transportation, or a remote place with endless views is a dream come true for you?
The great part about moving to Costa Rica is that you can have the best of all worlds. For example, Senderos is a gated community with amazing ocean views and easy access to the town of Tamarindo, the country’s surf capital, dipped in greenery and framed by mountains and valleys. If you want to buy luxury property in Costa Rica and have a place to anchor your boat nearby, Marina Flamingo might be exactly what you’re looking for. On the other hand, the Limon Province is exactly what the doctor prescribes for people looking to enjoy the stillness in an isolated setting while still having access to powdery beaches and tropical rainforests.
2. Do I search for listings myself or retain the services of a real estate agent?
Unlike the United States and Canada, the real estate industry in Costa Rica is not tightly regulated. In other words, you will not find an MLS system to access properties for sale nor have a Costa Rican Zillow to browse through the offers. You will find online listings, most of them accompanied by amazing exterior pictures and views, but you shouldn’t trust the images alone. It is best to do some footwork and see both the home and the neighborhood. You can then find out more about the area, the neighbors, and the community rules.
If this is not possible, a good real estate agent will be able to help you with virtual tours of the property and present all the facts to help you make up your mind. Choose to work with a real estate agency that has a solid reputation to avoid exposing yourself to potential frauds under the guidance of “fake” agents. Real estate agents in Costa Rica usually cover a specific geographic area, so work with a reputable real estate agency with offers in the area where you have decided to invest.
3. What are the property taxes in Costa Rica?
Before moving on with an offer, it is useful to have an idea about how much the property taxes are going to cost you. The property tax in Costa Rica is 0.25% of the property’s value. It’s true that luxury properties are subject to a sliding scale luxury tax but this can’t be higher than 0.55%. Even so, the property taxes in Costa Rica are much lower than in many parts of North America. If you’re planning to buy a condo in Costa Rica or a property in a gated community, you will also have to pay condo fees. They are monthly payments ranging from US$20 to $100 meant to cover maintenance, security, and cleaning.
Costa Rica doesn’t have a capital gain tax, and the government will not tax property owners on the profit from the sale of their property. Foreign buyers, however, need to pay taxes on declared earnings brought back to their country of citizenship. The good news is that the sales commission is usually paid by the seller or owner and you, as a buyer, will not have to cover any commission costs.
4. Is the house worth the investment?
You can now ask the questions any potential home buyer should ask before acquiring property. First, you should find out if the house is exposed to natural hazards or safety hazards? Depending on its location, it may be exposed to environmental hazards and risks of extreme weather, floods, wildfires, or earthquakes. Fortunately, Costa Rica doesn’t experience natural disasters, such as tornadoes or tsunamis, despite having a wet season. The rains in Costa Rica have a schedule to follow and they usually make their appearance for a couple of hours in the afternoon. There has been the odd tornado once every couple of years but it never lasts long and leaves little damage behind.
Nevertheless, flood insurance is always a good idea, as is any insurance that can add an extra layer of protection to your belongings. It is not a bad idea to check the house’s history of insurance claims to identify potential issues you could have with the house and if there is a specific reason the seller decided to sell the house. Of course, this will never be the case if you decide to buy a brand new luxury property in Costa Rica! If you buy an old property, always ask about the age of the appliances, electrical systems, and any other major systems, and how long has the house been on the market. If the house has been for sale for a long time, it doesn’t necessarily mean something is wrong with it. It may just mean the seller has asked for a really high price initially.
5. How can I make sure the house has a clear title?
If you are a first-time home buyer or have no experience with purchasing a house in Costa Rica, you should rely on the advice and guidance of real estate experts. They will help you deal with any major issues that may arise during the purchase and protect you from fraud. Real estate agents can check that the property you are planning to buy is free of liens. Properties and all their documents are registered at the Registro de la Propiedad in San Jose – Zapote, and will give you clear information regarding the titleholder, tax appraisal, liens, boundary disputes, mortgage, or other elements that may affect the title.
If you want to buy beachfront property in Costa Rica, you should be aware that houses adjoining beach areas fall under the Maritime Zone Law. This law states that no one can legally build a house on the first 50 meters from the high tide mark and that the next 150 meters are subject to the Maritime Zone Law. While the zone cannot have an “original title,” it can be leased as a concession from the local municipality.
Let the real estate agents handle the papers
When your list of questions has found its answers, and you have found the perfect house, you can ask your agent to negotiate the price and write up an offer. While the process takes time, working with real estate agents and lawyers helps move things along faster. Remember, though, that this country is beloved because of its slow pace of life, and this is probably one of the reasons you’re planning to move or retire in Costa Rica.
Buying a home is usually the biggest purchase one can make and this often involves spending a big part of the family’s life savings, so hurrying things up doesn’t help anyone. Take the time to assess the buying market, consider any extra costs that may accompany the purchase, and ask for expert recommendations. Talking to a housing expert can help you make the best investment!