Investing / Real Estate FAQs – Live-happy-invest-wisely
What’s the first thing I should do before investing in Costa Rica?
Get to know the country well. Rent a car and explore the Caribbean, the South Pacific, the Central Valley and Guanacaste. Costa Rica is a pretty small country so it’s worth taking the time to explore the geography and understand the idiosyncrasy of its people. The ultimate goal would be to identify where in the country your investments will generate the appropriate return in order to achieve the goals previously set up.
Is residency a requirement to purchase a property in CR?
No, it isn’t necessary to have residency to buy property; you can do so as a tourist. However when living in Costa Rica as a tourist you need to leave the country every 90 days in order to maintain your legal status in Costa Rica. Some people fly back home or some just take a quick trip to Nicaragua or Panama.
What are the taxes involved when acquiring real estate?
Property taxes are fairly low when compared to the United States or Canada: only 0.25 percent of the property’s value according to the National Registry. The total calculation may vary depending on where the property is located. In recent years the government has placed an additional Luxury Property Tax on houses with a value over $230,000.
If your property is registered under a corporation you will have to pay an annual tax of $100 to $400, depending on the characteristics of the corporation.
Capital gains tax on the sale of a property is not currently required. However, the government has proposed a change that would introduce a new homeowners’ tax of 15 percent tax on the capital gains of their portfolio.
Do I need a realtor to buy property in Costa Rica?
It’s not mandatory to work with a realtor or real estate company. However, I strongly recommend establishing a trustful relationship with someone who knows how to do business the right way in Costa Rica, who understands how to complete a successful transaction and who can act as your portfolio advisor. Look for someone who understands what you want to accomplish and can help you get there, preferably with a financial background.
Can I get financing from a financial institution?
Getting a loan in Costa Rica from a bank or financial institution to buy real estate is quite a bureaucratic process. It takes a Costa Rican between two and three months to get approved for a loan. For foreigners, it is even harder due to bank regulations and SUGEF, the government’s financial entities overseer. It’s not impossible, but extremely difficult. There are other ways to get funding. The owner of the property could finance a portion of the total transaction or buyers could get a second mortgage on their primary home and then use the cash to acquire real estate in Costa Rica.
What’s the best place to invest in Costa Rica?
This is a great question. Some may say the GAM (Great Metropolitan Area – San José and other nearby regions); others may say coastal areas such as Guanacaste, Puntarenas and Limón. The truth is that there’s no one correct answer. I believe there are good deals to be made everywhere you go. That’s why it’s so important to have a clear investment strategy to find opportunities easier along the way.
How much money do I need to make my first real estate transaction?
You can start investing in real estate with $1,000 in your pocket (some have with even less). Deals can be structured in so many different ways that it only takes a little money to find opportunities to start your life as an investor. What you need is access to these deals. Find someone creative and knowledgeable enough who can help you structure your first transactions.
There are also crowdfunding companies that have emerged in recent years, radically changing the real estate industry. In some instances you can open a personal account with only $1,000 and have a portfolio selection of thousands of properties just a click away.
What’s the standard commission I have to pay a real estate company when selling my property?
The standard commission in Costa Rica is 6 percent of the total amount of the transaction. However, this is not written in stone. The percentage may be negotiable prior to signing the agreement. It’s extremely important to have a strong written agreement between the client and the realtor, so both parties know what to expect in the relationship.