Archive for the ‘Property’ Category

The Best Way to Buy Property in Costa Rica

Monday, January 29th, 2018

For anyone intending to buy property in Costa Rica, a deep understanding of the local real estate scene is important. There are several Costa Rican things you must abide by especially as a foreigner investing in property and real estate in this country. While the purchase of property and the small business deduction CRA remain largely transparent processes, it is impartial that you do your due diligence before purchasing as you would in any other part of the world and Costa Rica. You also need to understand the process involved in property purchase hence our investment in this article.

Below is a list of all the processes and the things you should know before and during property purchase in Costa Rica:

 

  • Foreign Friendly property laws

 

Unlike so many countries in the world, foreigners have similar property rights as locals in Costa Rica meaning that you can own property in your name or your corporation’s name without having to go through a complicated process.

Unless you are buying beachfront concession property where special rules apply, you will not require a local partner. However, most buyers of beachfront properties form corporations and then purchase the property with the help of reputable Costa Rican lawyers.

Why do people go through the trouble of forming corporations to buy property in Costa Rica?

  • Tax benefits: It is beneficial to have your income from the rental income or the capital gains from the sale of property taxed with a Costa Rican company rather than having your property income recorded as personal income.
  • Transfer: when you finally sell your property, having a Costa Rican corporation allows you to avoid paying property transfer for the second time because you will have to simply transfer the shares of your corporation to the new buyer.
  • Simple estate planning: with a Costa Rican corporation, you can will or give shares of your corporation to your family members.

 

  • Real estate registry

 

Costa Rica has a central land registry which provides your lawyer with all the information needed for the confirmation of the property’s title deed before the deal goes through. The land registry also keeps you in the loop in case there exist restrictions to the purchase of that property or any other properties you may be interested in. The upside to real estate investment in Costa Rica is that it has low property taxes and you only pay a quarter of 1percent in property tax.

 

  • Squatters

 

This is a real thing that may put you at risk of losing your property if you aren’t careful. If you buy property and have squatters living in it, you should ensure that the squatters get evicted within three months after they start living on your property. Failure to do so within three months easily leads to loss of your property rights.

 

  • Choosing a real estate agent

 

The complications and tricks of property purchase applied in North America also apply to Costa Rica. You need to make sure that you are working with a reputable real estate company that is licensed. Your real estate agents should understand the real estate market and most importantly, they should be property owners. Such information about the agents ensures that you are working with someone who knows what you need and how to purchase property safely.

This is also important because the real estate scene is highly unregulated in Costa Rica. You should ensure that your agent is a professional registered with the NAR (National Association of Realtors). A better agent is a member of the CCBR – Costa Rican Real Estate Association or CRGAR – Costa Rican Guanacaste Association of Real Estate.

Finally, the real estate agent or company must be reputable and well-known across Costa Rica.

 

Final thoughts

Ensure that the land you are buying is suitable for the construction of the type o building you intend to buy.  For this, you have to evaluate the water source, drainage, availability of electricity, structural integrity, telephone access and easement issues.

You should also be aware of the process of making an offer in Costa Rican real estate.  Closing costs are negotiable.