Why invest in Costa Rica?
Costa Rica is consistently ranked among the best places to retire and invest in real estate due to its stable political and economic environment, stunning natural beauty, and welcoming communities. Foreigners have almost the same property ownership rights as locals, with a few restrictions on maritime and public land zones.
Step-by-step process of buying property in Costa Rica
1. Finding the right property
- Work with a reputable real estate agent experienced in the local market.
- Choose the location based on your needs (retirement, vacation, rental income, etc.).
- Consider different property types: homes, condos, gated communities, beachfront properties, or commercial real estate.
2. Verifying ownership and legal status
- Request the Folio Real (property title number) from the seller or agent.
- Check the Public Registry for:
- Ownership details
- Any liens, encumbrances, or mortgages
- Boundaries and land use classification
- If it is a Maritime Zone Concession, verify whether you qualify to acquire it (foreigners need at least 5 years of residency to hold a majority stake).
3. Calculating expenses and taxes
- Purchase costs:
- Legal fees (usually 1%–2% of value)
- Public Registry stamp (approx. 1%)
- Transfer tax (1.5%)
- Ongoing costs:
- Property tax: 0.25% of registered value
- Luxury tax (properties over ~$229,600 USD)
- HOA fees (if applicable)
4. Signing an option to purchase agreement
- Reserves the property while due diligence is completed.
- Usually requires a deposit (commonly 10% of the price).
- Should clearly state:
- Price and payment terms
- Closing timeline
- Refund conditions
5. Setting up a corporation or trust (if needed)
- Many foreigners choose to buy through a Costa Rican corporation (S.A. or S.R.L.) for:
- Liability protection
- Easier inheritance transfer
- Potential tax benefits
- A trust (fideicomiso) may be used for estate planning or to manage property on behalf of beneficiaries.
6. Conducting due diligence
- Review permits and zoning laws.
- Hire a qualified engineer to inspect structural, electrical, and plumbing conditions.
- Check community or condominium bylaws: some restrict vacation rentals or have architectural rules.
7. Structuring ownership
- Sole ownership: property in your name.
- Joint ownership: clear share agreement with a partner.
- Trust ownership: for estate planning or tax benefits.
8. Drafting and signing the transfer deed
- The Escritura de Traspaso is drafted by a public notary.
- Must be registered in the Public Registry to officially transfer ownership.
- Obtain a certified copy for your records.
- Ensure anyone signing on behalf of an entity is properly authorized.
Additional considerations
1. Legal rights for foreigners
Foreigners have the same rights as Costa Ricans, except:
- Maritime Zone Restrictions: cannot hold more than 49% of a concession without 5 years of residency.
- Public land: first 50 meters from high tide line are public.
2. Choosing the right location
Depends on climate, lifestyle, budget, accessibility, and infrastructure.
- Beach & coastal areas:
- Guanacaste, Jacó, Manuel Antonio, Nosara, Tamarindo, Santa Teresa.
- Ideal for retirees, surfers, vacation home investors.
- Consider hospital access, water supply, rainy season.
- City & suburban areas:
- Escazú, Santa Ana, Heredia, San Pedro.
- Ideal for professionals and families.
- Near schools, medical services, expat communities.
- Mountain & rural areas:
- Atenas, Grecia, San Ramón, Cartago.
- For tranquility and cooler climate lovers.
- Consider road conditions, internet, services.
3. Types of property
- Titled property (fee simple):
- Most secure form of ownership.
- Registered at the Public Registry.
- Can be in personal name or corporation.
- Concession property (maritime zone):
- 200 meters from high tide line.
- First 50 meters: public.
- Next 150 meters: concession from municipality.
- Foreigners need 5 years of residency to hold majority.
- Condominiums & gated communities:
- Shared amenities (pools, gyms, green areas).
- Condominium Law may restrict pets, rentals, modifications.
- Some ban short-term rentals (Airbnb, VRBO).
- Land & agricultural properties:
- Check zoning, access, and environmental restrictions.
- Ensure properly registered to avoid disputes.
4. Key terminology
| Term | Definition |
|---|---|
| Public Registry | Stores all property records. |
| Survey plan | Defines property boundaries. |
| Folio Real | Unique property identification number. |
| Transfer deed | Official document signed before a notary to transfer title. |
5. Costs and fees
- Purchase costs:
- Legal fees: 1%–2%
- Registry stamp: 1%
- Transfer tax: 1.5%
- Others: municipal, notary
- Annual property tax:
- 0.25% of value (low compared to North America)
- Paid to local municipality
- Luxury tax on properties over ~$229,600 USD (may change)
6. Easements & property rights
An easement grants legal rights over another’s land and can affect value.
Types:
- Right of way
- View protection
- Ecological
- Mandatory if no public access
Always verify easements before purchase.
7. Ensuring a safe & secure purchase
Due diligence checklist:
✅ Verify registration at Public Registry.
✅ Check for debts or mortgages.
✅ Confirm zoning with municipality.
✅ Hire a specialized lawyer & notary.
✅ Inspect drainage, electricity, structure.
Protect your investment:
- Register correctly (personal or corporate).
- Get insurance for natural disasters.
- Secure vacant land to prevent squatters.
- Keep legal documents safe and accessible.
Final considerations
Real estate investment in Costa Rica is generally safe and profitable. With proper legal guidance and thorough due diligence, buying property can be a smooth and rewarding experience.
👉 At Magma Legal, we guide you every step of the way so you can invest with confidence and peace of mind. Contact us today!