What Are The Benefits of Owning Real Estate in Costa Rica?


Do you want to know what are the benefits of owning real estate in Costa Rica? Perhaps you are about to retire and considering your plans. You may be wondering about your options for a second home, or an investment property. Buying real estate is always a big step, especially when you are purchasing property in a foreign country, as many who buy property in Costa Rica are doing. There are additional factors to consider, such as property taxes, insurance, and transporting any possessions out to your new home. At Peninsula Papagayo, Central America’s foremost luxury coastal retreat, we have abundant experience in helping expatriates from around the world, in particular North Americans, with the purchasing process necessary to invest in Costa Rica’s real estate market. We can share with you all the advantages that Costa Rican property owners enjoy.

What to Know About Owning Real Estate in Costa Rica

Costa Rica is a country featuring incredible biodiversity. Its territory is only the size of Lake Michigan, yet it contains striking volcanoes, crystal clear lakes, and verdant jungles. The beautiful landscape is both a major selling point and a cause for pride among the native Ticos. The country has twice been ranked best in the world for environmental sustainability by the New Economics Foundation Happy Planet index, and it was ranked as the greenest republic in the world in 2009. It’s also an incredibly content country, happiest in Central America and second only to Canada in the whole Western Hemisphere. All of these factors contribute to the country’s desirability, as does the general friendliness of the property market and regulations to foreign investment. With that said, there are a couple of factors that must be considered when purchasing or developing property in Costa Rica:

  • Both foreigners or citizens face legal restrictions known as the Maritime Zone Law on purchasing or developing a property within 200 meters of the coastline at high tide. The first 50 meters adjacent to the coast are completely unable to be built upon, bought, or sold. The next 150 meters are more complicated. Some municipalities will lease this land for 20 year periods, with the possibility of renewal. However, foreigners cannot lease this land by themselves. They must split the lease with a Costa Rican citizen. In certain areas of Costa Rica, such as Tamarindo or Potrero Beach, foreigners can purchase beachfront properties within the 150 meter zone by themselves. 
  • Property titles are important in Costa Rica. Untitled land ‘for sale’ can be a scam, or at best, difficult to legally establish a legitimate claim over. Costa Rican law permits claims against untitled properties for up to 10 years after initial registration. It is best to purchase land that has a title that is fully registered, and save time, effort, and legal fees.
  • Costa Rica is one of the most lucrative property markets in Central America: economically and politically stable, with a climate that lends itself to year-round tourism. These combined factors mean that a property can make profits in excess of its purchase price quite easily.
  • It is rare for foreigners to be able to gain financing in Costa Rica. The most common ways foreigners finance their property purchases are home equity loans on prior property purchases, retirement funds, or simply direct savings. There are private financing options available in the country, but banks are strict in their requirements for foreign debtors.
  • Costa Rican law requires that all parties purchasing property make a ‘due diligence report’: legal documentation to verify that your purchase is above board, including proof that back taxes for the property have been paid in full, that existing liens or mortgages on the property are known, and that the registration of the title for sale has been verified.
  • Don’t forget about closing fees! While it is typical for buyer and seller to split the total closing costs, you should check that both of you are in agreement on this before completing the transaction. Closing fees may include deed transfer taxes (around 2.3%) and attorney fees (around 1.5%). Expect to pay around 3-4% of the property’s sale price in closing fees.
  • One advantage of owning and managing property in Costa Rica is that property taxes are low, some of the lowest in the area: around 0.25% a year. Other ongoing costs are also very reasonable: HOA fees, utilities, security, landscaping and maintenance, maid/pool services, even luxury taxes. If you aren’t living in the property full-time, be sure to enquire about management companies that can shoulder the responsibility of protecting your investment for you. At Peninsula Papagayo, 

Frequently Asked Questions about Real Estate in Costa Rica

Q: How do tourist visas work in Costa Rica?

A: Visitors from North America and Europe can spend up to 90 days in the country on a tourist visa. When this period elapses, historically visitors have circumvented the restriction by spending 72 hours or more in the neighboring countries of Nicaragua or Panama. Consult a local attorney if you intend on attempting this, as this strategy has been challenged recently. Those intending to stay for extended periods of time can pursue a temporary residency.


Is Living in Costa Rica Worth It?

A: Depending on your priorities, you may find the prospect of living in Costa Rica highly enticing. All things considered, Costa Rica strikes a balance that is hard to find in other expat locations around the world. Costa Rica is a tropical country with temperatures ranging between 70-81°F year-round. For those choosing to make Costa Rica their second home, spending part of the year enjoying “pura vida,” the country provides all the amenities and quality of life factors necessary for an easy adjustment. 

The pristine beaches of the Southern Zone, the matchless biodiversity and spectacle of the Papagayo Peninsula: there are many incredible sights to enjoy beyond the most popular tourist destinations. These wonders are treasures that you can relish all year round, and share with your guests.

The Peninsula Papagayo Club & Resort is a luxury coastal retreat residential community in the north of Costa Rica, built to create harmony between the sophisticated residential facilities at the disposal of our residents and the extraordinary landscape. We are surrounded by 600 square miles of protected wilderness, making us the perfect home for nature lovers and those who feel most at home in the great outdoors.

If you are ready to take the next step in exploring the benefits of living in Costa Rica, we invite you to inquire about luxury real estate opportunities at Peninsula Papagayo. 

Q: Can a foreigner open a bank account in Costa Rica?

A: Owners of Costa Rican real estate, or those on temporary residencies, are able to open bank accounts in Costa Rica. Banks will need proof of ownership, which attorneys can typically provide after closing. Letters of recommendation from your current banks will also help. Local attorneys are well positioned to help with the bureaucratic process.

Q: What are the property tax thresholds in Costa Rica?

A: Property tax is rated at about 0.25% per year, but often municipal authorities will value the property at less than its true market value. It is important to remember that any property valued at over approximately $200,000 will incur a luxury tax, a tax paid to the central government equal to another 0.25% of the property’s value.

Q: Is title insurance available?

A: Given the difficulties that one can run into with new title deeds in Costa Rica, title insurance is available.

Peninsula Papagayo offers several options for those interested in owning Costa Rican real estate, including custom homes and luxury residences. If you’re interested in making an inquiry, get in touch with us to discuss available options.