What is real estate tax and how does it work?
Just most monetary transactions in Costa Rica, real estate is taxed. It’s important to be knowledgeable about the subject to avoid any surprises during a purchase or sale.
The tax in question comes from the “Ley de impuesto general sobre las ventas: 6826 Articulos: 1.n – 2.d. – 3.c” and it states that a standard 13% tax will be collected for the sale of a property. So, just like with any other purchase in Costa Rica the seller must collect and pay 13% of the stated sales price to the government.
If you have sold property in Costa Rica in the past this might seem like a new law; it’s not. This law dates to 1987 but was only recently enforced after the fiscal reform so please keep it in mind next time you are ready to list your property for sale.
At Coldwell Banker Sta. Teresa, we are committed to excellent service and transparency. We place a high premium on moral values and ethics. As a result, we believe in handling all our transactions in compliance with Costa Rican law.
Do I need to be a Costa Rican resident to purchase property? If so, what is the process of becoming a resident?
To buy property in Costa Rica you DO NOT have to be a legal resident. A foreigner can legally purchase any kind of real estate under their individual name or a corporation. There are different tradeoffs to either route but for the most part it’s recommended to create a corporation for property purchases. This simplifies legal transactions and reduces personal liability.
That said, you may want to go ahead and start the residency process for access to resources only available to Costa Ricans. The main benefit of obtaining legal resident status is the possibility of applying for a bank loan to finance construction or further investments.
The simplest way to apply for residency is under the investor classification, which requires a minimum land purchase of $200,000 USD and a yearly visitation schedule. Additionally, you may also choose the designation of retiree in which case the applicant needs to prove a minimum pension of $1,000 USD. Although there are other routes to obtaining legal residency these are by far the simplest and quickest. We strongly recommend taking one of these to paths to avoid longer, dragged out processes.
Do I need a real estate agent in Costa Rica?
Even though it is not mandatory to use a realtor for a purchase or sale in Costa Rica we strongly recommend it. As with any financial transaction there is information asymmetry, and a real estate agent is there to help you navigate uncertainties and guarantee that everything checks out.
An agent can help a first-time buyer understand the process, set up an escrow, and facilitate communication amongst all relevant parties. They are also a great resource to consult on market trends, future growth, and pricing of a specific property. Additionally, during closing a real estate agent can help understand all applicable fees and taxes a buyer is liable for.
We understand we are biased on the matter, but if you are in doubt please don’t hesitate to reach out or stop by our office to speak to an agent.
Is COVID-19 a concern in Costa Rica?
Like most countries that are heavily reliant on tourism Costa Rica was impacted by the COVID-19 pandemic. However, through a series of restrictions on commerce and vehicular circulation the country did a commendable job keeping casualties at a minimum.
More recently, mask mandates have been removed countrywide and there are no restrictions on businesses. That said, a considerable amount of Costa Rican’s still wears their mask in public spaces and respect social distancing.
In the case that you do contract COVID-19 there are several resources available to make sure proper treatment is provided. Costa Rica is known for having excellent medical services available to the public and there is no shortage of private hospitals and clinics as well.
Is financing available to non-residents?
Despite the large number of foreign investors in Costa Rica, there is no available financing to non-residents. Both public and private Costa Rican banks will only offer loans to citizens and legal residents. However, the process to become a resident is very simple, check out “Do I need to be a Costa Rican resident to purchase property? If so, what is the process of becoming a resident?” for more details or stop by our office and we will gladly offer guidance on the matter