Buying property in Costa Rica: What taxes must be paid?

If a property is to be purchased in Costa Rica, the buyer must pay several taxes and costs. We must inform ourselves very well about these tax requirements to avoid unpleasant surprises at the last minute, before signing.

Now, we will explain in detail what are the main taxes you must pay, including the closing of the property tax in Costa Rica.

The main taxes you must pay when buying a property in Costa Rica

The main taxes you must pay when buying a property in Costa Rica are:

• Real Estate Transfer Tax: The transfer tax is the most important tax that must be paid when acquiring real estate in Costa Rica. This tax is calculated according to the value of the property (purchase price) at 1.5%.
• Government stamps: When acquiring real estate in Costa Rica, there is also registration stamps to the Government up to around 1.2% and 1.3% of purchase price, While some fees are nominal, others are calculated as a percentage of the total sale price. The final amount could -and most likely- change due to several factors: currency exchange rate variations between the colón and dollar, or additional registrable acts to be filed along with the transfer deed, such as cancelation of expired liens or rectification of the information in the title which is also very common.
• Property Tax: After closing, there is the Property tax and it is the amount paid annually on the value of the property. This property tax is calculated at 0.25% of the total value of the property.

Real Estate Investments in Costa Rica

Other costs associated with the transaction must also be considered, in addition to these main taxes, and these are the following:

• Notarial/legal fees: Since notaries must charge their own fees for the services provided when preparing and authenticating the property purchase transaction documents, this is something that must be taken into account. These fees vary depending on the value of the property, but they go usually between 1 to 1.5% of purchase price.
• Escrow fee: if funds are coming from overseas, they you should also think about the escrow fee to be paid to the escrow company which usually has a minimum of $750.00 and up to 0.35% of funds to be escrowed.

Protecting your Interests with commitment and experience

At LandCo, we understand how important it is to have a team of professionals committed to the client’s interests and legal needs. We deal with everything from estate planning cases to complex business matters, we are here to offer you the guidance and representation you deserve.

Our services are comprehensive as they include all aspects of the legal areas, designed to meet individual, family and business needs. Let’s take a look at our offerings:

• Estate Planning: This aspect protects your assets and ensures the well-being of your loved ones with wills, trusts and powers of attorney relevant to each case.
• Business Law: Everything related to the formation of new companies to the resolution of commercial disputes, we provide solid advice to protect your business interests.
• Real Estate Law: We are a team of experts in real estate transactions, from purchases to disputes related to the lease of your property.

Our team of professional experts can guide their clients through the entire purchase process and ensure that all closing requirements are met, including other relevant aspects of real estate law and its derivatives.

Also, the closing of property tax escrow in Costa Rica is an aspect that must be considered during the purchase process. Our experts will guide you through all the necessary steps to ensure that the transaction is carried out in the most convenient way.

If you have plans to purchase a property, do not hesitate to contact us today so that our team of experts in real estate law in Costa Rica can guide you and ensure that the entire process is carried out successfully and without any setbacks of any kind.