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Real Estate Purchase in Costa Rica

General Information

In matters of land and property ownership, foreigners and Costa Rican citizens have equal rights under the law (unless the owner bought the land as part of a government program). In these cases, the land can be traded or sold to foreigners only after the original owner has held it for certain period of time.

Foreigners do not have to live in Costa Rica to own property here.

Registration of a Property

Costa Rican properties are registered at the Registro de la Propiedad (Property Registry) which keeps track of all the title registrations. It is a great resource for verifying the status of a title or claim associated with a property.

If you wish to buy land in Costa Rica it is wise to either hire a lawyer or go yourself to the Registro de la Propiedad to search the title and verify that there are no liens against the property or the property owner(s).

Once you buy a property, you need to make sure the sale is properly registered at the Registro de la Propiedad, proof that you are the new legal owner.

There is no local financing for property purchased by foreigners.


Building and subdivision plans must be:

A. Signed by a registered local engineer

B. Approved by the local Ministerio de Salud (Health Department)

C. Approved by the Instituto de Vivienda y Urbanismo (INVU) (Housing and Urban Development Department)

Real Estate Brokers

The Ministerio de Economia (Treasury Department) issues real estates licenses on the recommendation of the Chamber of Real Estate Brokers.


Property taxes vary from 0.5% to 1.5% of the declared value of the property. However, Costa Ricans are a calm and resourceful people, so they customarily undervalue their properties by at least 20% when they register it.

The closing costs of a sale include a transfer land tax, a stamp tax, and legal fees. Closing costs run about 5% or 6% of the sale price, an expense divided evenly between buyer and seller. Transfer land tax and stamp tax assessments are based on the declared value. Legal fees are based on the selling price of the property.

Transactions may be conducted in U.S. dollars.

Costa Rican lawmakers have drawn up very strict rules governing the development of ocean front property along both coasts.

First, according Costa Rican law, the beaches belong to everybody and everybody has a right to use them. The first 50 meters (164 ft.) above the mean high tide line are public land. No one can restrict access to a beach or claim a beach is privately owned, exceptions being landholdings in port areas, old land grants or by some agreements made prior to 1973.

Second, along 80% to 85% of the coastline, the 150 meters (492 ft.) after the 50 first meters (164 ft.) are called the Maritime Zone and are controlled by the government. A foreigner must establish five years of residency to own more than 49% of a lease in this zone. Foreigners can evade the law by assigning the lease to a corporation that is wholly foreign owned or by assigning 51% of the ownership of the land (on paper) to a Costa Rican citizen. Take a careful look at the zoning laws before you start development in any of these areas.

If there is no zoning plan for land you want to develop, hold off on the celebration. If nobody has gotten around to making a zoning plan, then it's up to you to create one on your own and submit it to ICT (Tourist Board), the INVU (Housing and Urban Development Department), and the local municipality for approval.

The "zoning of land" plan you submit must address questions regarding – among other things – public use areas, roads, water and electricity.

If your development dream is located on the 15% or 20% of the coast land not in a Maritime Zone, then you may develop the property without filing a regulating plan. However, developments geared to the tourist industry must be approved by ICT (Tourist Board), anything else requires building permits.

Purchase Contracts

Costa Rica’s legal system is based on a "civil code" system, as opposed to a "common law" system like that of the United States. Under Costa Rica’s civil code, there is less interpretation of the law by judges, because the civil code is more restrictive. For this reason, land contracts in Costa Rica are far lass comprehensive, than the common law contacts most foreigners are used to. Under the civil code system, the contact covers only what is not regulated by law, and thus can be very simple.

In Costa Rica a land purchase contract is achieved through an "option to purchase". An option to purchase gives the buyer the right to purchase a described property in a set amount of time. Typically 10-20% of the purchase price is paid to the seller through a broker or attorney (after verifying the property can be legally transferred), for the purchase of the option. Most closings can take place in a matter of days if the property is already registered in the National Registry.A purchase agreement or option to purchase under civil code has far less components but should include:

The names and identification numbers of the buyer and seller, whether held by a corporation or personally.

A description of the property, which includes boundaries and size (if know at time of sale) and all numbers identifying the property in the National Registry.

The price in either colones or dollars.

The dates for the option period.

An agreement to the payment of closing costs;

Title Insurance

Title insurance is not necessary in Costa Rica due to the laws of the civil code. The buyer’ attorney should make a thorough title search prior to closing; after which, one can safely purchase the property. To pay a title company to perform the exact same task prior to closing is redundant and expensive. Additionally, when a property is transferred to a new owner in Costa Rica, all past claim that were not properly registered in the National Registry, can not be placed on the new owner, thus eliminating the need to insure against past problems coming to light. Many properties are held by corporations (S.A.).

After Sale

The purchaser should verify, through his broker or attorney, that the property was properly registered in the National Registry, and receive originals or copies of the documents showing all the proper stamps from the process.

Total Transaction Costs in Costa Rica

Fee Structure

1. Transfer taxes, stamps and other charges: In order to record the transfer of the property, the government charges 1.5% of the purchase price.  An additional 1% is charged for other stamps at the Public Registry.

2. Notary Fees: Notaries are required by law to charge 1.25% as their legal fees.

3. Survey fees: If you require or demand a new survey for your property, there are qualified surveyors available to perform this function. Pricing depends on the location and size of the property.

4. Mortgage registration fees: The government charges 0.6% of the mortgage value to register the mortgage deed on the property.

5. Escrow Fees: Fees are dependent on the escrow provider.

6. Incorporation: Fees for purchasing a corporation typically run between $500-$1000 or more.

III. Protecting the real estate investment:

One of the greatest concerns of foreigners purchasing real estate in a foreign country is to ensure that the transaction will be executed legally and that the system can ensure a lifetime of enjoyment of the property. The Costa Rican legal system, if followed correctly, does give ample protection to investors, but if the transaction is not executed properly, loss can and does occur. To guarantee the security of any real estate investment, there are three things that should be present in any real estate transaction.

a. Adequate legal representation and experienced Notary - While a notary’s primary duty is to provide Public Faith to a transaction, his/her job is also to act as the legal representative of the buyer, providing legal advice and representation throughout the process.  

b. Escrow - Most buyers from the US understand Escrow service to include not only the managing of funds for a property purchase, but all of the administrative work required to execute a closing. In fact, in states where an attorney is not required for a real estate purchase, the escrow agent becomes the central party responsible for ensuring that all documentation is in order before the close. In Costa Rica, the escrow agent performs many of the same duties. The primary function is as a financial service to prevent manipulation or mishandling of funds prior to closing. The escrow agent is a neutral third party responsible for issuing checks and executing payments. This system provides confidence and security to all interested parties (e.g. attorneys, brokers, seller, buyer) that funds are protected during the buying process and that all funds will be disbursed appropriately to all parties at closing.

Calculation table for transfer of real estate

Example value - US$100,000.00






$ 500.00



$ 100.00

Law 7535


$ 200.00



$ 200.00

Lawyer Board*


¢ 75.00

$ 25.00

Treasury Department C.R.*

¢ 625.00

less than
$ 2.00

National archive**

¢ 20.00

less than
$ 1.00

Transfer taxes


$ 1,510.00

Legal fees


$ 1,250.00

Total about 3.8%

plus fixed costs above**

$ 3,788.00

** Over the first ¢ 100,000.00 a fixed rate of ¢ 75.00 has to be cancelled.
* According to specific table rates, shown maximum payment in colones.
Up to ¢1,000,000.00 you pay 1.50% in legal fees, and 1.25% above that.

How difficult is the property purchase process in Costa Rica?

Costa Ricans and foreigners enjoy the same rights in terms of ownership of property in Costa Rica. Consequently, a restriction is imposed on both locals and foreigners.

The Maritime Zone, 200 metres along the shoreline, is state-owned. The Public Zone, 50 m. from the shore, is protected from any development. Private persons can acquire property in the Restricted Zone by applying to the Municipality, but in the Restricted Zone, leases cannot be granted to foreigners with less than 5 years of residency in Costa Rica. A company whose shares are less than 50% held by foreigners can be granted a concession.

The general custom is for the buyer and seller to share equally all closing costs, but depends on the terms of sale.

The above costs only apply to titled property, not to untitled or beachfront property. The legal fees are based on the property’s sales price and not on the property’s declared value. It is usual in Costa Rica to register a property at a figure far less than its actual sale price.

The Documentary Stamp Taxes of 0.325% consist of the following: 0.2% Municipal Stamp (Timbre Municipal); 0.025% Costa Rican Bar Association Stamp (Timbre del Colegio de Abogados); and, 0.1% Agricultural Stamp (Timbre Agrario). Additional fees are CRC 20 National Archives Stamp (Timbre del Archivo Nacional) and CRC 625 Fiscal Stamp (Especie Fiscal).

The property is transferred from seller to buyer by executing a transfer deed (escritura) before a Notary Public, who drafts the transfer deed and register the sale in the Public Registry (Registro Nacional). The Registro Nacional can be accessed online.

Having a clear title to the property

Costa Rican law requires that all documents relating to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most properties have a title registration number known as the folio real, and the records database can be searched with this number or by name index. Information available includes the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.

Since Costa Rica follows the doctrine of first in time, first in right, recorded instruments presented to the Public Registry are given priority according to the date and time on which they were recorded. Obviously, every situation differs and in some cases a review of the Public Registry record will not be enough to uncover all encumbrances. That is why it is important that the buyer have her or his own attorney conduct an independent title search and investigation rather than rely on the seller's attorney.

The importance of selecting the notary public

The local custom is that the buyer may select his or her notary/attorney to draft the transfer deed if paying cash for the property.

If the purchase price is financed, there are generally three alternatives for selecting the notary/attorney.

  1. If a large percentage of the purchase price is being financed by the seller and a mortgage needs to be drafted to guarantee payment, then the seller may request that her or his notary/attorney will draft the transfer deed.
  2. If a property is purchased 50 percent cash and 50 percent financed, it is common for the buyer's attorney and seller's attorney to jointly draft the transfer deed and mortgage in a single document. This is known as co-notariado.
  3. Finally, the buyer may insist that his or her notary/attorney draft the transfer deed and let the seller's notary/attorney draft a separate mortgage instrument. In this case, because the mortgage is being drafted separately, it carries a higher registration fee. The registration fees are discussed below in the section on closing costs. Drafting of the mortgage requires additional notary fees of around 0.5% - 1.25% of the amount of the mortgage.

The certification from the Registro Nacional must be acquired by the seller to present information about the titled property. After making sure that the property is cleared of taxes and charges, a Lawyer/Notary verifies the information on the property. When all taxes and fees are paid, the Lawyer/Notary files a “testimonio” (public deed) to Registro Nacional for reviewing. With no further corrections and problems, the “testimonio” is recorded and the buyer becomes the official owner of the property.

The need to evict squatters and tenants

It is advisable to have all tenants evicted before purchasing a property. If not, one may find oneself in court for a long time, without being able to use the purchased property other than leasing it to the tenant already there.

If you are an absentee owner, it is best to have someone oversee your property to prevent problems with squatters.

Basically, the law allows peaceful occupation of "untitled and unattended land" unless there is opposition by the existing owner. If your land is unattended and someone moves onto the land, they begin to establish certain rights after three months.

  • Action for removal is required before the end of the third month but the process is less complicated than if they occupy the land for a longer period.
  • If squatters have occupied the land for more than three months but less than a year, the process of eviction called desalojar or desalojo, becomes more involved, but you are not yet required to reimburse the occupants for their "improvements" to the property.
  • If the land is occupied for more than a year but less than ten years, you may still be able to recover the property, but the legal process may take years and you will be required to make a settlement for the "improvements" made by the occupants. "Improvements" can range from the construction of shacks, planting of crops and even cutting of trees to clear the property. Improvements and compensation are established by the court. In most cases, it is best to negotiate an out of court settlement. If someone is living on a property you are interested in buying, be it the owner, a relative, a worker etc., you must be sure this is addressed and settled as a condition of the transaction. Precario rights can affect both titled and untitled land but the process of eviction for titled property is in theory, faster and less complicated.

The Agrarian Development Institute (IDA), established in 1961, acts as a sort of a public defense body for peasant landowners unable to defend themselves against larger landowners trying to "expand" their territory. However, there are many cases today where the system is abused and people fall victim to "de-facto tenants". That is why it is important to know the history of possession and above all, follow the rules.

If ownership is legitimate, it must be demonstrated within the guidelines outlined in the law. It is important to remember that the precario law and the recognition of possession rights is considered the first step in the titling process and is the basis of how many lands were originally settled and eventually titled in Costa Rica in a legal manner.

The whole process of registering a property can take around 21 days to complete.

Please note that the data above is applicable for a newly built property which is not registered with the National Registry yet.

*For properties already registered and inscribed in the Costa Rican corporations, a lot of the above charges are avoidable. Please consult your real estate agent and/or lawyer in such cases.

Progressive Income Tax Rates in Costa Rica

Progressive income
tax rates in Costa Rica


Non-resident individuals are liable to tax only on their Costa Rican-sourced income. Married couples are taxed separately.

INCOME TAX (Impuesto sobre las remesas al exterior)

Income from non-employment sources are taxed separately from employment income. Income-generating expenses are deductible when calculating the taxable income from business activities. Income tax is levied at progressive rates.


Up to 2,599,000 (US$4,561) nil
2,599,000 - 3,880,000 (US$6,809) 10% on band over US$4,561
3,880,000 - 6,473,000 (US$11,359) 15% on band over US$6,809
6,473,000 - 12,972,000 (US$22,763) 20% on band over US$11,359
Over 12,972,000 (US$22,763) 25% on all income over US$22,763
Source: Global Property Guide

Capital gains are not taxed in Costa Rica unless they are derived from habitual transactions. Capital gains derived from habitual transactions are taxed at the standard progressive income tax rates.


Real Estate/Habitation Tax (Impuesto sobre bienes inmuebles)

Property taxes are levied on the cadastral value of the property as assessed by the tax authorities. Property taxes are levied by the municipalities at the flat rate of 0.25%. The real estate tax is calculated on a calendar year basis and must be paid annually, semiannually or quarterly, depending on the municipality.