Can Americans buy property in Costa Rica? The short answer is yes, Americans (and other foreign nationals) have the same rights to buy and own fee simple property as Ticos (Costa Ricans) except concession property.
And why wouldn’t Americans want to own property in Costa Rica? With its world-class biodiversity, breathtaking landscapes, lush rainforests, peaceful politics, and stunning beaches, Costa Rica is a dream destination for many. Its unique charm and abundant natural beauty have not only drawn tourists from all over the world but also captivated the hearts of those seeking vacation properties abroad or an ex-patriot lifestyle.
For many Americans, Costa Rica seems like an ideal place to own land and build their dream home. In this article, we will explore the possibilities and intricacies of buying land in Costa Rica, offering insights and guidance for American investors interested in making this tropical paradise their second home, with the expert assistance of Coastal Realty & Property Management (CRPM).
Is It Legal for Americans to Buy Property in Costa Rica?
The Costa Rican government has adopted a friendly and open policy towards foreign ownership, making it relatively straightforward for foreigners to own property, including land. However, there are some essential details and considerations to keep in mind before making your purchase, and that’s where CRPM comes into the picture.
The Legal Framework
The legal framework in Costa Rica allows foreigners to own property without any restrictions. Unlike some countries that have restrictions on foreign land ownership, Costa Rica provides a welcoming environment for international investors. It is essential to note that the Costa Rican constitution guarantees equal property rights to both citizens and foreigners. As an American, you can legally own land in Costa Rica, and your ownership rights are protected by the same laws that apply to Costa Rican citizens, a fact that CRPM is well-versed in.
Costa Rican Beachfront Ownership
Most Americans are used to the concept of public beaches. In recent times, Mike Huckabee and Luke Bryant have asserted ownership of Florida’s beaches in the 30A area of Walton County, but this has been legally disputed.
In Costa Rica, no private citizen has attempted to claim ownership of the beach, in large part, because the law is very clear. 50 meters from the high tide line inland belongs to the public on both coasts and setting aside lifeguard stations and marinas, is mostly undeveloped.
For properties within the next 150 meters and title registered prior to 1977, the property is fee simple.
For properties not registered at that time, they became administered by their respective counties and available for lease.
Concession Properties – The Exception
Concessions are leases for specific use that eventually expire.
Where property rights for Americans differ from Costa Ricans is with concession properties. Foreigners with less than 5 years of legal residency cannot hold a concession or lease to these beachfront properties.
Where corporations are the leaseholders, they must be 51% Costa Rican-owned.
Beachfront & Concession Property in the Gold Coast
Costa Rica’s Gold Coast was already private title back in the 1970s for the most part. Hacienda Pinilla was originally purchased by Mr. Pattillo in the 70s.
While Tamarindo and Langosta have a few concession properties (check out our Langosta Vacation Rentals), the vast majority of beachfront land is fee simple.
Playa Grande is fee simple but had issues because of the government environmental agencies’ inability to conclusively interpret the laws regarding Parque Marino Las Baulas, but that has been resolved and building permits are being issued again.
Buying Property in Costa Rica as an American
Purchasing Costa Rica properties as an American is a relatively straightforward process. However, it’s crucial to be well-informed and work with professionals who can guide you through the transaction. Here are the key steps, and CRPM is an invaluable resource in this regard:
1. Legal Representation: It is highly recommended to hire a local attorney with experience in real estate transactions to ensure a smooth and legally compliant purchase process. They will help you navigate the complexities of Costa Rican property laws, and CRPM can assist you in finding a reliable legal advisor who speaks your native language.
2. Purchase Agreement: You’ll typically put a property under contract using an “Earnest Money Deposit Agreement.” It spells out the big picture terms of the agreement: purchase pricing, timing, due diligence, furnished or unfurnished, and then once all contingencies are cleared, an attorney registers the official purchase-sale agreement in Spanish and updates the Registro Nacional after closing.
3. Due Diligence: Conduct a comprehensive due diligence process to investigate the property’s title, ownership history, and any potential legal encumbrances. Your attorney, in collaboration with CRPM, can assist with this process.
4. Property Title: Verify that the property has a clear and marketable title. Your attorney, working in tandem with CRPM, will help ensure that the title is free of any liens, claims, or disputes.
5. Escrow: It is common practice to use an escrow service when buying property in Costa Rica, and CRPM can recommend trustworthy options. This ensures that your funds are held securely until the title transfer is complete, and all legal requirements are met. Note: that escrow services are generally requiring significantly more paperwork than in years past due to poorly written anti-money laundering laws.
6. Closing: The closing process typically involves the transfer of funds, signing of legal documents, and the official registration of the property in your name. Your attorney, alongside CRPM, will guide you through this final step.
Property Ownership Structures
There are different ownership structures available to foreigners who want to buy land in Costa Rica. CRPM can provide insights into which structure may be most suitable for your specific needs:
1. Direct Ownership: You can own land in your name directly, just like a Costa Rican citizen. This is the most straightforward option but uncommon given most foreigners purchasing property don’t live in the country full-time.
2. Corporation: Most foreign investors choose to create a Costa Rican C-corporation (Sociedad Anónima) or Costa Rican S-corporation (Sociedad Responsibilidad Limitada) to hold the property. This can offer some tax advantages and may be beneficial for estate planning.
3. Trust: Another option is to place the property in a trust. This structure can provide added privacy and facilitate the transfer of property upon your passing.
Condominium Ownership
Costa Rica has a set of laws on the books that govern the creation and administration of condominiums.
Pueblo del Mar is one of the oldest condominiums in the Tamarindo area, while Flamingo was developed even earlier.
Condominium HOAs/COAs in Costa Rica are their own legal entities.
Each individual unit can be purchased directly by an American or via an owned SA or SRL.
With condos, your right to use shared infrastructure and common areas is very similar to in other parts of the world.
Consideration for Taxes
While Costa Rica is known for its friendly property ownership policies, it’s essential to be aware of potential tax obligations. Property taxes in Costa Rica are relatively low compared to the United States. However, you may still be subject to property transfer taxes and capital gains taxes, depending on your specific situation and the property’s value.
Furthermore, consult with a tax professional to understand any potential U.S. tax implications. The United States has tax laws governing foreign real estate investments, so it’s essential to be compliant with both U.S. and Costa Rican tax regulations, a consideration where CRPM’s expertise can be invaluable.
Land Zoning and Usage Regulations
Costa Rica has strict zoning and land usage regulations that vary from one municipality to another. It’s crucial to research and understand these regulations before purchasing land, and CRPM can assist you in navigating these intricacies. You should ensure that the land you’re interested in is zoned for your intended use, whether it’s for residential, commercial, agricultural, or conservation purposes.
Environmental Considerations
Costa Rica is known for its commitment to environmental conservation. There are strict regulations in place to protect its natural resources. When buying land, be aware of any environmental restrictions or protected areas that may affect your property. Conduct environmental due diligence to ensure your project aligns with these regulations, and CRPM can offer guidance in this area.
Work with a Reliable Real Estate Agency
When considering buying land in Costa Rica, it’s advisable to work with a reputable and experienced real estate agency. Coastal Realty & Property Management (CRPM) is one such agency that can help you find the ideal property, navigate the legalities, and make your dream of land ownership in Costa Rica a reality. CRPM’s local expertise and network can simplify the process and provide you with peace of mind throughout the transaction.
Buying Land in Costa Rica as an American: Conclusion
Costa Rica’s welcoming attitude towards foreign property ownership makes it an attractive destination for Americans looking to buy land abroad. While the legal framework is favorable, it’s crucial to navigate the process with caution, seeking legal counsel, conducting thorough due diligence, and leveraging the expertise of professionals like CRPM.
With the right guidance and expertise, your dream of owning land in this tropical paradise can become a reality. Whether you’re looking to build a vacation home, an investment property, or a retirement haven, Costa Rica offers a diverse range of options for American buyers. So, start your journey to paradise and explore the possibilities of buying land in Costa Rica today with the trusted guidance of CRPM.
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