Legal and Tax Checklist for Buying Property in Costa Rica

Buying in Costa Rica should feel exciting, not risky. If you are a U.S. buyer, the legal steps and taxes look different from home, yet the path is clear when you know what to check and when. This guide gives you a practical, step by step checklist that keeps your purchase on track and your costs predictable. You will learn what you can buy, what you will pay at closing and beyond, how to structure ownership, and which red flags to avoid. Let’s dive in.

Who can buy property

Foreigners can buy and hold titled property in Costa Rica much like citizens. You can purchase in your own name or through a local company or trust. Always confirm title status and any special regimes before you commit. See an overview of foreign ownership rules in this local legal guide on buying Costa Rican real estate for nonresidents (foreign ownership basics).

Know restricted zones

Maritime Terrestrial Zone

Costa Rica’s coastal strip is heavily regulated. The first 50 meters from the tide line is public and cannot be owned, and the next 150 meters is managed by municipal concessions with special rules and approvals. Review the official coastal zone law before considering any beachfront asset (maritime zone law).

Border and public lands

Parcels in certain border strips and lands tied to agrarian or indigenous regimes face extra limits on ownership and transfer. Your attorney should verify whether any portion of the property falls under these regimes and what approvals are required.

Choose ownership structure

Direct title

Buying in your personal name is simple and common for personal use. It can be efficient, though some buyers prefer additional privacy or succession tools.

Costa Rican corporation

Many investors use a local S.A. or SRL to hold title, which can help with liability segregation or succession planning. Corporate ownership involves different compliance and tax considerations, so weigh the tradeoffs with counsel (entity and trust overview).

Bank trust (fideicomiso)

A fiduciary bank can hold title for your benefit, which can be useful for financing or operational control. Review trustee fees, duties, and transfer terms in the trust agreement.

Closing taxes and fees

The property transfer tax is 1.5 percent of the taxable base, typically the higher of the purchase price or registered value. It must be paid for the National Registry to inscribe the deed (transfer tax basis). You will also pay documentary stamps, registry fees, and notary fees based on statutory schedules. In many transactions, total buyer closing costs commonly range from about 3.5 to 6 percent of the purchase price, depending on value and legal complexity.

Capital gains when selling

Costa Rica taxes gains from the sale of real estate. The general rule is a 15 percent tax on net capital gains. If the property was acquired before the 2018 reform took effect, the seller may be allowed a one time option to pay 2.25 percent on the gross sale price instead. Timing and eligibility matter, so coordinate with your attorney on filings and deadlines (capital gains law summary).

Annual property taxes

Municipalities administer annual property tax. For many residential properties, the commonly cited rate is around 0.25 percent of the cadastral value, with higher bands above certain thresholds. Request a municipal certificate to confirm status and amounts for your specific property (municipal property tax framework).

VAT on new builds

Sales of used residential properties are generally outside VAT, while a first sale by a developer can be subject to VAT. The treatment depends on whether it is a new unit and the nature of the activity. Confirm VAT exposure before you sign (VAT rules overview).

Your buying process

1) Offer and escrow

Negotiate a written offer or option that includes a clear due diligence period and escrow instructions. Reserve funds are commonly used and should be held by a reliable escrow agent.

2) Due diligence period

Order official certifications, survey, and technical inspections. This is when you verify title, boundaries, zoning, utilities, and any environmental conditions that affect use or value.

3) Closing with a Notary

A licensed Notary Public, who is also an attorney in Costa Rica, drafts the public deed, collects government taxes and stamps, and submits the deed to the National Registry for inscription (closing with a Notary).

4) After closing

Confirm registration, update utility accounts, and ensure municipal taxes are current. If you are the seller, file and pay any capital gains tax within the legal deadline.

Essential due diligence

• Title and encumbrances: obtain a certified literal of title and full chain of entries to confirm owner, liens, easements, and annotations (registry services guide).
• Survey: match the registered plano catastrado to the folio real and the physical boundaries on the ground.
• Zoning and permits: check the municipal plan regulador, land use, and any building permits.
• Environmental: verify coastal set‑backs, wetlands, and protected areas with the appropriate authorities when relevant.
• Utilities and access: confirm legal road access, water rights or service letters, electricity, internet, and septic or sewer setup.

U.S. tax and reporting

As a U.S. person, you must report worldwide income. Report sale gains on Form 8949 and Schedule D, and rental income on Schedule E. You may be able to claim a foreign tax credit for Costa Rican tax paid (IRS overview of property sales). You may also have reporting duties for foreign accounts, such as FBAR or FATCA, if you hold funds in Costa Rican financial accounts during the year.

Common pitfalls to avoid

• Skipping the title literal, survey, or municipal tax certificate.
• Confusing concession rights with full title in the maritime zone (coastal zone law).
• Assuming a property is outside protected or restricted areas without official verification.
• Relying only on the seller’s counsel instead of hiring your own independent attorney.

Confirm with local counsel

• Exact title status and the registered survey for the folio real.
• Whether the parcel touches the maritime zone, sits inside a concession, or lies in any restricted border or indigenous area.
• Calculation and deadlines for transfer tax, stamps, and capital gains filings under current law (capital gains law summary).
• The best ownership vehicle for your use and estate plan, including company or trust options (entity and trust overview).

Quick budget checklist

• Transfer tax: 1.5 percent of the taxable base (transfer tax basis).
• Registry stamps and fees: commonly about 0.5 to 0.9 percent combined.
• Notary and legal fees: often about 1.0 to 1.5 percent depending on value and complexity.
• Surveys, inspections, municipal certificates, and escrow: variable.
• Typical total buyer closing costs: about 3.5 to 6 percent in many transactions.

Work with a single accountable partner

You deserve an experience that is clear, well managed, and design driven. Our boutique team can help you find the right property, coordinate due diligence with trusted attorneys and surveyors, and then design and manage any renovation so you receive a turnkey home or investment. For a confidential consultation, connect with Bryana Conway.

FAQs

Can U.S. citizens own titled property in Costa Rica?

• Yes. Foreigners can buy and hold titled property on similar terms as citizens, with special regimes like the maritime zone and some public lands requiring extra checks (foreign ownership basics).

What is the property transfer tax at closing?

• The transfer tax is 1.5 percent of the higher of the sale price or registered value and must be paid for registration to proceed (transfer tax basis).

Are Costa Rica’s annual property taxes high?

• They are relatively modest for many residential properties, commonly cited around 0.25 percent of cadastral value, with municipal variations and bands (municipal property tax framework).

How are gains on a property sale taxed in Costa Rica?

• Many sales are taxed at 15 percent on net capital gains, with a transitional 2.25 percent option on gross price for certain pre‑reform properties (capital gains law summary).

Do I owe U.S. tax or filings for a Costa Rica property?

• Yes. You report worldwide income, including rental and sale gains, and may claim a foreign tax credit; you may also have foreign account reporting like FBAR depending on balances (IRS overview of property sales).

Do I need a Costa Rican Notary to close?

• Yes. A licensed Notary Public prepares the deed, collects taxes and stamps, and files the transfer for registration with the National Registry (closing with a Notary).