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Frequently Asked Questions About Costa Rica

Buying Real Estate in Costa Rica

Q. Why are so many Americans, Canadians and Europeans flocking to Costa Rica to buy property?

A. Costa Rica is a safe, stable country with a stable government and a thriving economy. It has a tropical climate and beautiful beaches and scenery. Property is affordable and appreciating rapidly. Finally, the government has made a sincere effort to encourage foreign investment.

Q. Can a non-Costa Rican purchase and own property in Costa Rica?

A. Yes, a foreigner has the same rights to own property in Costa Rica as do citizens. The ownership rights are guaranteed by the Costa Rican constitution and apply regardless of whether the property is placed in the name of a corporation or in the name of an individual. Citizenship, residence and presence in the country is not required for land ownership.

Q. Do I need to use a realtor or broker to buy property in Costa Rica?

A. If you are buying property in Costa Rica, you should enlist a reputable real estate company. Choosing a good agent will help you find the property that is right for you and ensure the purchase process is conducted properly.

Q. How is title transferred?

A. When buying Costa Rican property, title is transferred from seller to buyer by executing a transfer deed (escritura) before a public notary. Unlike the United States and Canada, where the role of the notary is limited to authenticating signatures, in Costa Rica the notary has extensive power to act on behalf of the state. The notary must be an attorney and may draft and interpret legal documents, as well as certify the authenticity of documents.

Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the necessary stamps.

Q. How much are the closing costs?

A. The general custom in Costa Rica is for the seller and buyer to share equally in the closing costs. This can be altered by agreement and typically depends on the particular transaction. Closing costs containing the notary fees are, based on the real sales price, 1.5% from the first one million Colones, the local currency, and 1.25% on the balance.

In addition, buyers need to anticipate land transfer tax, legal fees, and other fees of around about 2.56% of the declared value of the property.

Q. How much are property taxes in Costa Rica?

A. Property taxes (municipal tax) throughout Costa Rica are very low when compared to the North American countries or Europe. The municipal tax is applied at the municipal level and varies throughout the country. Paid quarterly, the property type, location and other factors contribute to the calculation of this tax.

The real estate tax is based on the declared value of the property. This tax is applicable throughout the country regardless of the property's location and payable when transferring title.

Q. Do foreign buyers have to pay capital gains tax in two countries - their native country and Costa Rica?

A. A nice incentive for foreign investors is that Costa Rica has no capital gains tax. The Costa Rican government will not tax property owners on their profit from the sale of their property as long as this is not undertaken as a means of business. However, foreign buyers would be obligated to pay taxes on any declared earnings being brought back to their country of citizenship.

Q. Who pays the sales commission?

A. Typically, the seller or owner pays the commission to the realtor or broker at closing. The buyer does not have to pay any commission when buying property in Costa Rica, unless he specifically agrees to do so as part of the transaction.

Q. How can a foreign buyer ensure that he has clear title to the property?

A. To ensure clear title, it's important that the necessary steps are taken to properly register the property, and more importantly, be assured that the property in question is free of all liens.

The Registro de la Propiedad (Property Registry) is located in San Jose - Zapote, where all property documents are recorded. A title search at the Registry would confirm good title and proper ownership. In the event that adjustments were made to any given title, these alterations must have been recorded at the Registry.

The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title. Title insurance further ensures that a real estate purchase can be fully secured.

Q. Do foreign buyers need an address in Costa Rica to purchase a property?

A. No, it is not necessary to have established residency to buy property in Costa Rica. Foreigners can buy property with a tourist status visa. Living in Costa Rica, however, is another matter. Foreigners and tourists have to leave the country for 72 hours once every three months in order to renew their legal status in Costa Rica.

Some of the foreigners without residency travel throughout Nicaragua or Panama for a couple of days to discover more of Central America and to renew their visa.

Q. Are there regulations regarding beachfront properties?

A. When buying property located on Costa Rica's beaches, buyers should be aware of the following: building a home adjoining beach areas falls under a category known as the Maritime Zone Law, the first 200 meters of land measured from the high tide line.

The first 50 meters from the mean high tide mark cannot legally be built on by anybody, as it is considered public beach. From that point, the next 150 meters is restricted and subject to the Maritime Zone Law. It cannot have an "original title," but can be leased by a concession from the local municipality.

General Information About Costa Rica

Q. Where is Costa Rica?

A. Costa Rica borders both the Caribbean Sea (to the east) and the North Pacific Ocean (to the west), with a total of 802 miles of coastline (132 miles on the Caribbean coast and 631 miles on the Pacific). It is about the size of West Virginia.

Costa Rica also borders Nicaragua to the north and Panama to the south-southeast (397 mi of border). In total, Costa Rica comprises 19,730 sq. miles. It also includes several islands. Among them are Cocos Island and Calero Island.

Q. How is Costa Rica divided up?

A. Costa Rica is comprised of seven provinces, which in turn are divided into 81 districts ("cantón" in Spanish, plural "cantones"), each directed by a mayor. Mayors are chosen democratically every four years by each canton's people. There are no provincial legislatures.

Q. Where did Costa Rica get its name?

A. Costa Rica means Rich Coast. Technically the country could be called "Costas Rica," or Rich Coasts simply because it has two coasts: one on the Pacific Ocean and the other on the Caribbean Sea.

Q. Are these two coasts the same?

A. The two coasts are physically as different from each other as are the Atlantic and Pacific coasts of North America.

Q. What is the Pacific Coast like?

A. The Pacific coast has a rugged (although mostly accessible) coastline where forested mountains often meet the sea. The area can be divided into three distinct regions - Guanacaste and the Nicoya Peninsula; the Central Coast; and finally the Southern Coast.

There are some spectacular stretches of coastline, and most of the country's top beaches are on the Southern Coast. The coast varies from the dry, sunny climate of the northwest to the hot, humid rainforests of the south.

Q. What is the Caribbean Coast like?

A. The Caribbean Coast can be divided into two areas. The remote northeast coastline is a vast flat plain laced with rivers and covered with rain forest. Farther south, along the stretch of coast accessible by car, there are uncrowded beaches and even a bit of coral reef.

Q. Where is Costa Rica located?

A. Costa Rica is in the middle of Central America. It is bordered by Nicaragua to the north and Panama to the southeast. The country is only slightly larger than Vermont and New Hampshire combined.

Q. What is the interior of the country like?

A. Much of the country is mountainous, with three major ranges running northwest to southeast. Among these mountains are several volcanic peaks, some of which are still active. Between the mountain ranges are fertile valleys, the largest and most populated of which is the Central Valley.

Q. What is the weather like?

A. With the exception of the dry Guanacaste region, much of Costa Rica's coastal area is hot and humid and covered with dense rainforests.

Q. What about the Central Valley and San Jose?

A. The Central Valley is characterized by rolling green hills that rise to heights between 2,900 and 4,000 feet above sea level. The climate here is mild and spring-like year-round. For that reason, it's Costa Rica's primary agricultural region, with coffee farms making up the majority of land holdings. The rich volcanic soil of this region makes it ideal for farming.

The country's earliest settlements were in this area, and today the Central Valley (which includes San Jose) is densely populated with decent roads, and dotted with small towns.

Many of the mountainous regions to the north and to the south of the capital of San Jose have been declared national parks (Tapanti, Juan Castro, and Braulio Carrillo) to protect their virgin rainforest against logging.

Q. What is the Guanacaste and the Nicoya Peninsula area like?

A. This region is in the northwestern corner of the country near the Nicaraguan border. It is the site of many of Costa Rica's sunniest and most popular beaches. Many Americans have chosen to build beach houses and retirement homes here.

Now that the new international airport in Liberia is up and running, travelers can get to this region on daily direct flights from North America.

Q. What is the weather like in the Guanacaste area?

A. With about 65 inches of rain a year, this region is by far the driest in the country and comparable to west Texas.

Q. What documents are required to enter Costa Rica?

A. Citizens of the United States, Canada, Great Britain, and most European nations may visit Costa Rica for a maximum of 90 days. No visa is necessary but visitors should have a valid passport.

Q. What currency is used in Costa Rica?

A. The unit of currency in Costa Rica is the colon. The colon is divided into 100 centimos. Foreigners can exchange money at all state-owned banks. ATMs are quite common throughout Costa Rica, particularly in San Jose, and at most major tourist destinations around the country.

Q. When is the best time to visit Costa Rica?

A. Costa Rica's high season for tourism runs from late November to late April, which coincides almost perfectly with the chill of winter in the U.S., Canada, and Great Britain. The high season is also the dry season. Christmas holidays are when the tourism industry operates at full tilt.

Q. When are the rainy and dry seasons?

A. Generally, the rainy season (or green season) is from May to mid-November. Costa Ricans call this wet time of year their winter.

The dry season, commonly referred to as summer by residents of Costa Rica, is from mid-November to April. In Guanacaste, the dry northwestern province, the dry season lasts several weeks longer than in other places.

Q. What are the important holidays in Costa Rica?

A. Because Costa Rica is a Roman Catholic country, most of its holidays are church-related. The big holidays include Christmas, New Year's, and Easter, which are all celebrated for several days.

Q. Is air travel available to Costa Rica?

A. It takes between 3 and 7 hours to fly to Costa Rica from most U.S. cities. As Costa Rica becomes more popular with North American travelers, more flights will become available into San Jose's Juan Santamaria International Airport.

In addition, Delta, American, US Airways, United and Continental all have regular non-stop commercial flights to the international airport in Liberia from their hubs in Atlanta, Miami, Charlotte, Chicago, and Houston.

Flying is one of the best ways to get around Costa Rica. Because the country is quite small, flights are short and relatively inexpensive.

Liberia is the gateway to the beaches of the Guanacaste region and the Nicoya Peninsula.

Q. Do the cruise lines go to Costa Rica?

A. More than 150 cruise ships dock each year in Costa Rica, calling at Limon on the Caribbean coast, and at Puerto Caldera and Puntarenas on the Pacific coast.

Q. What makes Costa Rica so attractive to visit?

A. Costa Rica is a rich and varied destination with numerous natural attractions and a broad selection of exciting sight, scenery, adventure activities, and ecosystems. On a trip to Costa Rica, visitors can see rainforests, cloud forests, active volcanoes and miles of beautiful beaches on both the Pacific and Caribbean coasts.

Costa Rica has 26 national parks, protecting more than 11% of the country. Many of these national parks are undeveloped tropical forests. Costa Rica is also a relatively compact country, which makes visiting several destinations during a single vacation both easy and enjoyable.

Q. Why is Costa Rica known for its ecology?

A. Costa Rica is home to a rich variety of plants and animals. It is world renowned for its bio-diversity. Over 25% of Costa Rica is composed of protected forests and reserves.

Q. What is the capital of Costa Rica?

A. San Jose is the country's capital and the most cosmopolitan city in Central America. Costa Rica's stable government and the Central Valley's climate have, over the years, attracted people from all over the world. There is a large diplomatic and international business presence here. The pleasant climate along with the beautiful view of lush green mountainsides, make San Jose a memorable city to visit.

San Jose was built on the profits of the coffee-export business. Costa Rica's climate, and specifically the climate of the Central Valley, is ideally suited to grow coffee.

Q. What are some other areas in Costa Rica that are popular with natives and foreigners?

A. Located just about 15 minutes west of San Jose and about the same distance from the international airport are the affluent suburbs of Escazu and Santa Ana, each of which has experienced rapid growth in recent years as the metropolitan area continues it urban sprawl.

Both Escazu and Santa Ana are popular with the Cost Rican professional class and North American retirees and expatriates.

Q. What is Costa Rica's population?

A. In 2005, Costa Rica had an estimated population of 4.43 million people. The majority of Costa Ricans are of Spanish ancestry or descended from a mixture of indigenous and Spanish ancestors.

Q. Is Costa Rica a stable country?

A. Costa Rica is, and has historically been, a sea of tranquility in a region that has been troubled by turmoil for centuries. For more than 100 years, it has enjoyed a stable democracy and a relatively high standard of living for Latin America.

The literacy rate is high, as are medical standards and facilities. Perhaps, most significant, at least for proud Costa Ricans, is that this country does not have an army.

Q. What is Costa Rica's relationship with the United States?

A. The United States and Costa Rica have a history of friendly relations based on respect for democratic government, free trade, and other shared values. Costa Rica generally supports the U.S. in international forums, especially in the areas of democracy and human rights.

The United States is Costa Rica's most important trading partner. The U.S. accounts for almost half of Costa Rica's exports, imports, and tourism, and more than two-thirds of its foreign investment. The two countries share growing concerns for the environment and want to preserve Costa Rica's important tropical resources and prevent environmental degradation.

Q. What are Costa Rica's natural resources?

A. Costa Rica's major economic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian Continents.

One-fourth of Costa Rica's land is dedicated to national forests, often adjoining picturesque beaches, which has made the country a popular destination for affluent retirees and eco-tourists.

Q. How does Costa Rica fare economically?

A. Costa Rica used to be known principally as a producer of bananas and coffee, but pineapples have surpassed coffee as the number two agricultural export.

In recent years, Costa Rica has successfully attracted important investments by such companies as Intel Corporation, which employs nearly 2,000 people at its $300 million microprocessor plant; Proctor and Gamble, which employs nearly 1,000 people in its administrative center for the Western Hemisphere; and Hospira and Baxter Healthcare from the health care products industry.

Manufacturing and industry's contribution to GDP overtook agriculture over the course of the 1990s, led by foreign investment in Costa Rica's free trade zone. Well over half of that investment has come from the United States. Dole and Chiquita have a large presence in the banana and pineapple industries. Two-way trade between the U.S. and Costa Rica exceeded $7.9 billion in 2006.

Are you interested in purchasing a second home in Costa Rica? To see what's available, visit our
Featured Properties of Costa Rica.

* The information above is general background about purchasing property in Costa Rica and is not meant as a substitute for the advice of your attorney or accountant, who can take into consideration your individual situation


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