A Comprehensive Guide to Real Estate Laws in Costa Rica

Costa Rica has emerged as a global hotspot for real estate investment, thanks to its robust legal framework that ensures security for property buyers. Whether you’re looking to purchase your dream home, invest in commercial property, or simply understand the legal landscape, knowing the fundamentals of Costa Rican real estate laws is essential.

Understanding Fee Simple Ownership

Fee simple properties represent the most comprehensive form of ownership in Costa Rica, granting the titleholder complete rights to their property. Foreigners enjoy the same legal protections as Costa Rican citizens, allowing them to own property under their name, through a limited liability company, or via shares in a corporation. This straightforward ownership model makes Costa Rica particularly attractive for international investors.

The Role of the Public Registry

The Costa Rican Public Registry plays a crucial role in safeguarding property rights. Every real estate transaction must be registered here, ensuring transparency and legal certainty. From ownership history to property surveys, the registry holds detailed records that help buyers verify their investments and avoid potential disputes.

The Standard Property Purchase Process

Purchasing real estate in Costa Rica involves:

1. Due Diligence: Conducting thorough research on the property’s title, surveys, zoning regulations, and environmental compliance.

2. Company Incorporation: Many buyers choose to purchase properties through a limited liability company to streamline legal obligations and protect personal assets.

3. Public Transfer Deed: A notary public drafts the transfer deed, which must be filed with the Public Registry for official recording.

4. Registration and Taxes: The property transfer process includes a 1.5% transfer tax and other registration fees, typically borne by the buyer.

Taxes and Compliance

Real estate transactions and ownership come with specific tax obligations, such as capital gains tax, annual property tax (0.25% of the declared value), and, in some cases, a luxury home tax. Moreover, investors engaged in rental activities must comply with VAT and other tax filings through Costa Rica’s electronic platforms.

Why Costa Rica?

The legal system in Costa Rica offers both transparency and fairness, providing equal opportunities for locals and foreigners to invest in its flourishing real estate market. This legal clarity, combined with breathtaking natural beauty and a stable economy, makes Costa Rica a prime destination for real estate investment.

If you have further questions about real estate laws in Costa Rica, feel free to contact Sferea Legal, one of the leading law firms in the region, specializing in real estate transactions and legal compliance.

Roberto Castillo

Direct: +506 2201-0025 rcp@sferalegal.com

Felipe Guevara

Direct: +506 2201-0031 WA/ +506 8866-2300 fgc@sferalegal.com