Buying property in Costa Rica is relatively easy and similar to the buying process in the USA and Canada.
Although, caution is always needed when investing in property.
However, if you abide by these 7 tips, you should have a successful experience.
7 Time and Money Saving Tips
Tip #1: Type of Property Ownership.
Before seriously considering a piece of land, enquire about its status and perform a title search. These simple steps could save you a lot of money and effort.
Most properties in Costa Rica are registered in a computer system called “Folio Real”. Almost all titled property, called derecho de propiedad, is registered with the Folio Real. This system is centralized at the offices of the Public Registry in San José. A title seacrch will provide you with all sorts of important property data. ownership, boundaries, location, mortgages and other liens.
Some properties are not in the Folio Real system. They are still registered in special books kept in the Public Register. Such properties may also be accurately title searched in the Public Registry.
Ownership rights, or titled property, are registered and are equal to the concept of owning land in the United States or Canada.
Another type of property ownership is called “derechos de ocupación”, or ROP. It will not be registered. Therefore it cannot be title-searched and must go through a long process in order to be registered.
There is also “concession” land. This land is typically located along the waterfront or “Maritime Zone”.
The Maritime Zone is the first 200 meters from the high tide line, measured horizontally. Of that, the first 50 meters is public and cannot be purchased or owned by anyone. Property within 150 meters of this public waterfront area is known as “concession land”.
For concession lands, the government gives a private party the right to use the land for a specific period of time. In general terms, the concession may be considered as a lease.
The concessions’ registration system is different than the one for titled land. It also has requirements regarding zoning, terms, occupation, and more.
Impatient to Start Looking For Your Ideal Property?
Costa Rica offers real estate options for every type of investor.
- Land Development. A great vehicle if you want to create more wealth.
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- Commercial Property. This is a good option if you need more cash flow in your life.
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- Single Family Homes or Condos Ideal for your retirement or 2nd home.
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Tip #2 -Due Diligence & Necessary Permits
You must research 3 essential items before buying development property.
- Electricity. Is it available? Can you get permits to connect to the electrical system? How far away is the connection point from the property?
- Water. Is it available? Do you have the right to use it? Can you get a permit, if needed?
- Access. What is the access to this property? Is the access adequate for your plans to develop the property? That is, is it of the legally required width? Have others been granted easements through the property?
You will also need permits, various approvals, and possibly building contractors for a successful project.
- Approval from the local municipality according to its “Uso de Suelo”.
- A subdivision survey and soil study
- Master Plan for the project, usually done by an architect.
- Water permits from the local water administration authority .
- A permit from INVU, the Housing Authority.
- Coordination with the Instituto Costarricense de Electricidad, ICE, for electric and land line telephone service provision.
- Approval by SETENA, Secretaria Técnica Nacional Ambiental. SETENA is part of the Ministerio del Ambiente y Energia.
- An Environmental Impact Study may or may not be required by the Ministerio del Ambiente ye Energia
- All construction must meet rigid earthquake safety standards.
- Most investors will also need to find a project manager and building contractor to ensure the project becomes a reality.
We offer all the resources necessary to get each of these items accomplished. Give us a call and let us know how we can help you.
Tip #3 – Use A Realtor
A reputable realtor is a tremendous asset when you buy property in Costa Rica.
A good realtor will help you do your due diligence before you buy a property.
They can help you determine what area and kind of property suits your needs, budget and personality. They can also help you save money in the closing and negotiation phase of your purchase.
In addition, if you intend to build your home, a good realtor can help you select and effectively employ a building contractor. Most homes in Costa Rica are custom built; so you will most likely need to hire a contractor. Often a realtor can also help you understand Costa Rica’s sometimes confusing building codes.
A good realtor will have a network of people you will need to make your relocation go as smoothly as possible. From a real estate lawyer, mover and customs broker for shipping your household items, an immigration specialist, to a reference to a good maid.
If you find a property through us, you will also have an excellent realtor. Our goal is always to save you money and time finding the property of your dreams.
Tip #4 Homeowner Associations
Homeowner associations are governed by the Condominium Law (Ley de Condominio). These laws cover condominium properties that are officially registered as condominiums with the Costa Rica National Registry.
Exercise caution when getting involved with homeowner associations that are not registered as condominiums. They don’t have the same legal standing and could easily lead to complexities.
Tip #5 Closing Costs & Transfer Tax
In most transactions, buyers and sellers split closing costs, but this can also be a topic for negotiation.
Closing costs are approximately 3.5 percent of the purchase price.
Be prepared for the 3 percent property transfer tax that will be added to the sales price. The tax is based on the value of the property registered on the transfer deed.
FYI: Taxes on property are very low. Property taxes are usually not more than 1 percent of the property value. There is zero capital gains tax.
Tip #6 – Register Your Deed!
Costa Rica courts recognize a “first in time, first in right” policy, giving legal rights to whoever stakes the first claim.
Therefore, it is essential to register deeds immediately upon transfer of the property.
Tip #7 Get Your Pensiando Status
Retirees with verifiable pension or investment income can apply for pensionados status, which offers an array of benefits.
You only need to receive $1000 a month to qualify.
Investing in Costa Rica can be one of your best decisions.
We are here to help you make it a sound investment.
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