The amount of land required will depend on the size of the villa you want to build. In most cases, the amount of land required to build will be smaller than you may think.

If you are looking to invest in Costa Rica property, you will want to maximise your land use for the highest return on investment. 

ational parks, reserves and refuges

Costa Rica has protected approximately 28% of its land in national parks, reserves, and wildlife refuges. Just under half of this (12 %) is in a system of national parks. These parks are spread throughout the country in many different ecoregions.

First: After you have found the right property with your Real Estate agent, have them submit an Offer to Purchase (also known as a Letter of Intent) to the Seller or the Seller’s listing agent in order to agree upon the sales price and basic terms of the deal.

Second: Once the Offer is accepted, you take it to your Costa Rica attorney and they draft the formal Sale and Purchase Agreement.  This document is a legally binding document, and it clearly states all conditions necessary for the transfer of the deed.

Third: The period of Due Diligence, which is the complete legal research of the property to insure there are no liens, contingencies, legal issues, and that it has absolute fee simple title.  Surveys, soil tests, home inspections, and other studies requiring professional services are included in this period.  If the property is being sold with an existing company, then the research of the company for any legal contingencies will also be completed during Due Diligence.

Fourth: The Closing (conveyance of the deed) occurs before a Costa Rican Notary Public, who will register the property under the new company or owner.  Alternatively, if the property is being purchased with an existing company, then the shares of the company are transferred at this time by a Shares Transfer Agreement.  In this case the Notary Public will make the corresponding changes to the company’s ownership in the National Registry.

Fifth: Declaring the property before the corresponding Municipality for property tax purposes by filling out a simple form and presenting it along with the some other documents either yourself or through your attorney.

Yes, however, it is more common and recommended to acquire the property through a corporation in order to separate potential personal liabilities, facilitate the closing procedure, and allow for easier transfer to relatives in case of casualty.  The Costa Rica holding company will also make it easier to obtain services such as electricity and cell phones, as well as, opening a bank account.

Exception: A foreigner can only own up to 49% of the concession rights for a Concession Property within the Maritime Terrestrial Zone (MTZ).  Without getting too technical, the MTZ is limited to the area 200 meters from the median high tide line.  All other property outside of the 200-meter zone can be owned free and clear.

Every property acquisition in Costa Rica has to pay the following National Registry Fees:

Transfer Tax:  This is a national tax of 1.5% of the purchase price that is paid (by your lawyer) to the National Registry.  Prior to 2013, the cost for transferring the shares (instead of a direct property transfer) of the existing corporation to the new owner was significantly less.  Now in 2013, that option does not offer any significant financial savings.  These costs are often split by the Buyer and the Seller.

Legal Fees: for the purchase of property in Costa Rica are 1% to 2% depending on the sales price, complexity of the transaction, and the allotted time spent by the attorney on the deal.  Additional legal costs may include the formation of a Costa Rica corporation of around $600 USD; drafting of any supplementary contracts or Seller Financing Agreements and registering of such contracts; and translation of contracts into your native language.  The Buyer and Seller typically pat for the separate attorneys.  If one attorney is used by both Buyer and Seller, then some for these legal fees can be split.  However, the Buyer is usually solely responsible for starting a new company, any contracts for Seller Financing (if needed) and registration of those contracts, and translations if the Seller is Spanish speaking.

Lesser Fees include:

Registry: 5 colones per every 1,000 colones of purchase price

Municipal: 2 colones per every 1,000 colones of purchase price

Fiscal: a maximum of 625 colones

Bar Association: a maximum of 10,000 colones

Archive: 20 colones.

Other Closing Fees: may include topographer fees when you have the boundaries of the property (the cost of which varies depending on the size and terrain), soil tests, home inspections, etc.  These items are typically paid by the Buyer.

Total property transaction costs are about 4% of the property’s value, and are usually split 50/50 between buyer and seller.

The easiest way is to make an international wire transfer from your home bank to an escrow company in Costa Rica.  These registered companies are dedicated to protect funds and provide escrow services in Costa Rica. A direct wire transfer from the Buyer to the Seller can be done in certain cases.

Recorded and titled property has a plano catastro, also known as, a survey plan.  It details the boundaries of the property, the total size, ownership, the Folio Real number, and the date it was registered among other things. Planos, as they are referred to in Costa Rica, can be found in the Registro Nacional (Public Registry), as well as, at the municipality in which the property is located.

Property Tax:  This annual tax is 0.25% (one quarter of one percent) of the registered property value and are paid to the local Municipality for where the property is located.  These taxes are paid every 3 months or can be paid in full for the year in advance.  For example a $100,000 USD property pays $250 USD per year in Property Tax.  Low property tax is one of the many reasons to invest in Costa Rica real estate.

Corporation Tax: This new tax was passed in 2012, and it is a fixed fee of $180 USD for inactive corporations and $360 USD for active corporations.  Most properties are held in an inactive corporation, because it will not be reporting income.  If you have a rental property, you can open an additional, active corporation to report income and expenses.  These taxes are paid to the “Ministerio de Hacienda”.

Luxury Tax:  A tax levied against luxury homes valued at $250,000 USD and is also paid to the “Ministerio de Hacienda”.  This tax is around $2,500 and up depending on the registered value of the home.