Buying property in Costa Rica as a foreigner: Complete guide

Buying property in Costa Rica is easy for foreigners. The country offers a vibrant tourism and a competitive real estate market. Hence, the demand for Costa Rican real estate increased for various reasons, including foreign business, leisure, and residence purposes. This article will provide a complete guide to foreigners buying investment property in Costa Rica.

Overview of the Costa Rican real estate market

The Costa Rican real estate market is expected to reach a value of $326.90 billion by 2024. Dominant in the statistics is residential real estate, with a projected market volume of $251.50 billion in 2024 and anticipated to exhibit an annual growth rate of 2.47% (CAGR 2024-2028). Foreign investments significantly influence the real estate market in Costa Rica. The country’s natural beauty, stable political system, and favorable property ownership regulations attract foreign investors. Moreover, there is increased demand for properties like luxury, waterfront, and sustainable homes for foreigners buying property in Costa Rica, as influenced by the strong eco-tourism industry.

Can foreigners buy property in Costa Rica?

Buying property in Costa Rica as a foreigner is generally easy since the country has no legal restrictions on foreign property ownership. Anyone can buy real estate properties except in the maritime zones indicated in Law 6043, which regulates beachfront ownership and usage in Costa Rica’s maritime zones. The first 200 meters measured horizontally from the high tide line define the boundary of the maritime zone, which is divided into two zones: the public area and the restricted area.

The public area is the first 50 meters from the high tide line, and properties within it are not available for ownership as they are designed for public use and enjoyment. The next 150 meters fall within the restricted area. Properties in this area can be owned only through concession, a lease agreement granted by the government to use the property for 5 to 20 years. However, a foreigner who has not lived in Costa Rica for at least five years can only possess up to 49% of a concession property through a corporation. Costa Rican nationals must own the remaining 51%.

Best places to buy a house in Costa Rica

Foreigners buying property in Costa Rica can choose from various properties that the real estate market offers. Here are some of the best places to buy a house in Costa Rica:

• San José: Approximately 1.48 million people live in San José in 2024, making it the highest populated city in Costa Rica. The capital city’s increasing population increased demand for residential and commercial properties. Foreigners buying property in Costa Rica can choose from the high-rise condominiums, historic homes, and luxury homes offered in San José.
• Heredia: Heredia is located near San José and is known for its colonial heritage, traditional architecture, and vast coffee plantations. If you plan on buying a house in Costa Rica, check Heredia because it offers condominiums and homes in contemporary, Mediterranean, and Tuscan styles.
• Tamarindo: Tamarindo is located on Costa Rica’s northwestern coast and is known for its solid surfing, international restaurants, unforgettable tours, and fun nightlife. Foreigners buying property in Costa Rica come to this place to purchase high-rise condos, single-family homes, vacation homes, and commercial properties.
• Limon: Limon is a town on an open roadstead overlooking the Caribbean Sea. This area of Costa Rica offers exotic tropical nature, hidden beaches, national parks, and abundant tourist amenities. If you are looking for the best beachfront, ocean-view, and mountain-view properties, Limon is one of the best places to buy in Costa Rica.
• Puerto Viejo de Talamanca: Locals call this coastal town as Puerto Viejo. It is known for its Caribbean beaches, jungles, vibrant nightlife, best surfing destination, and boutique hotels. If you plan on buying property in Costa Rica, check Puerto Viejo for luxury villas, beachfront properties, and modern houses.

How to buy property in Costa Rica?

Buying investment property in Costa Rica as a foreigner may be challenging and confusing for first-time buyers. Follow this six-step process on how to buy a property in Costa Rica.

Step 1. Determine your property needs

The first step in buying a property in Costa Rica is to determine your property needs. Costa Rica real estate for expats is a diverse market, and assessing your needs can help you pinpoint the properties that fit your liking and budget. A clear vision of your property can establish a fast and smooth acquisition process.

Step 2. Find a reliable realtor

A reliable realtor is an excellent guide when buying a home in Costa Rica. Find a realtor or real estate agent who has worked with foreigners. Their professional advice can help you navigate the real estate market. Realtors can access many properties due to their vast connections and property listings.

Step 3. Conduct house inspection

After finding a property, you must conduct a home inspection to assess its condition. When buying property in Costa Rica, conduct an ocular visit to check if it is in good condition and to spot damages on the property. Moreover, it is advisable to check the property’s energy consumption and maintenance costs to determine the expenses required to maintain it.

Step 4. Negotiate the purchase price

Negotiate the purchase price by sending the seller an offer letter indicating your initial price offer. Usually, the seller will give a counteroffer until you both reach a final price. A property lawyer is needed to draft the letter of offer and assist you in the legalities of buying a home in Costa Rica.

Step 5. Pay your deposit

When buying property in Costa Rica, the buyer must deposit 10% of the agreed purchase price as an initial payment to the seller.

Step 6. Close the sale

Completing the purchase takes a month or two, as the necessary documents are processed, and before the buyer becomes the legal owner of the property. The deal is closed by paying the remaining balance and other costs. Moreover, a public deed or escritura pública, signed in the presence of a notary public, transfers the property ownership to the buyer.

Costs of property in Costa Rica

Costa Rica real estate for expats is available at different price ranges, depending on property type, location, and market value. Here are the costs of property in Costa Rica:

• Buying land: Buying land in Costa Rica can be more expensive in urban areas than in rural areas. The value of agricultural lands in San José, an urban area, ranges from ₡ 143.96 million ($275,688) to ₡ 1.31 billion ($2.51 million). However, these prices are determined by the properties’ location, size, and amenities. The average cost of farms, ranches, and agricultural lands around this area is ₡ 18.32 million ($35,088) per acre. On the other hand, a cheaper option for buying land in Costa Rica is to purchase affordable land in Los Chiles, with some land valued under ₡ 26.17 million ($50,125).
• Buying a house: The average house cost in Costa Rica is ₡ 968,149 ($1,854) per square meter. Buying a house in Costa Rica per square meter will cost ₡ 1.61 million ($3,077) in San José, ₡ 677,891 ($1,298) in Heredia, and ₡ 749,877 ($1,436) in Limon. Many factors, like infrastructure, location, and access to services and amenities, influence the average house cost in Costa Rica.
• Buying an apartment: The average price of an apartment is ₡ 1.22 million ($2,343) per square meter, which is more expensive than buying a house in Costa Rica. An apartment per square meter will cost ₡ 1.1 million ($2,099) in San José, ₡ 1.04 million ($1,998) in Heredia, and ₡ 907,251 ($1,737) in Limon.
• Buying a condo: Buying a condo in Costa Rica has attracted many foreigners for many reasons. One reason is that vacation renters prefer condos over private homes since they offer resort-style amenities such as large pools, restaurants, gyms, and sports areas. This venture has become an excellent rental business for foreigners buying a condo in Costa Rica. A 2-bedroom condo costs anywhere from ₡ 136.11 million ($260,650) to ₡ 183.22 million ($350,876), depending on the property’s size, building location, and available amenities. 

Property taxes in Costa Rica

Other than the selling price of the properties, buying a property in Costa Rica requires paying property taxes to the government. Here is a tabulation of the property taxes in Costa Rica that buyers have to remember:

Pros and cons of buying property in Costa Rica

There are benefits and drawbacks to buying investment property in Costa Rica. To make an informed decision, you must be familiar with some pros and cons of buying property in Costa Rica. 

Pros of buying property in Costa Rica:

1. Strong rental market: Numerous foreigners are buying property in Costa Rica due to the strong rental market. Costa Rica is well known for its tourism, with many tourists visiting the country yearly. The demand for short-term and long-term leases is also increasing.
2. Lower crime rate: Costa Rica is relatively safe, with a crime index of 53.7, significantly lower than Venezuela’s of 81.2, the highest in the Americas. The US has a crime index of 49.3 and Canada of 45.2. The lower crime index shows that foreigners buying a home in Costa Rica can ensure their safety as residents.
3. Eco-tourism and favorable climate: Tourism is Costa Rica’s primary source of income. Tourists visit Costa Rica because the climate is tropical all year round, attracting those who want to enjoy a sunny environment.
4. Foreign ownership: There are no restrictions regarding foreign ownership, except for buying property in Costa Rica in maritime zones.

Cons of buying property in Costa Rica:

1. Risk of natural disasters: Earthquakes are common, and major volcanic eruptions constantly threaten Costa Rica.
2. Limited financing options: Few banks provide mortgages to foreigners buying property in Costa Rica. Although some local banks will finance foreigners, they may have to submit more paperwork and proof of income.
3. Remote property locations: Some properties in Costa Rica may be in remote locations with poor access to transportation and amenities.

Pitfalls of buying property in Costa Rica

There are several pitfalls of buying property in Costa Rica that you have to know. Here are some of the pitfalls that you must consider:

1. Fraudulent properties: Some sellers might try to sell properties foreigners cannot legally own. This fraud could be because the sellers lack proper ownership or the land falls under concession restrictions.
2. Lack of due diligence: Many foreigners buying property in Costa Rica must pay more attention to due diligence. This involves researching the property’s history, legal status, and limitations. Without proper research, foreigners might face an unexpected problem during or after buying a property.

Buy property in Costa Rica with Own Property Abroad

Are you thinking about buying property in Costa Rica? Own Property Abroad can guide you through a smooth and effective property acquisition process. Utilizing our deep knowledge and local expertise in the Costa Rican real estate market, we offer assistance with legal requirements, locating the right properties, securing favorable deals, and performing thorough due diligence.

With our experienced team by your side, you won’t have to face the complexities of the Costa Rican property market alone. For more information on how we can help you, please provide your details below or contact us at [email protected].

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