Costa Rica Real Estate Closing Costs: What Buyers Need to Know

Costa Rica Real Estate Closing Costs: What Buyers Need to Know

When buying property in Costa Rica, the purchase price is not the only cost to consider. Buyers should also budget for transfer taxes, stamps, notarial fees and other expenses associated with completing the transaction.

Understanding these costs before making an offer can help you plan your purchase and avoid unexpected expenses.

What Are the Main Closing Costs in Costa Rica?

For a typical purchase of titled property, the main closing costs may include:

1. Property Transfer Tax — 1.5%

Costa Rica’s real estate transfer tax is generally 1.5% of the applicable taxable value of the transaction.

The applicable value is generally determined based on the higher of the declared transaction value or the relevant registered or fiscal value, according to the applicable rules.

2. Registration and Documentary Stamps

Several stamps and registration charges are associated with transferring property in Costa Rica.

Depending on the transaction, these may include National Registry, municipal, fiscal, agrarian and other applicable stamps.

As a general planning estimate, buyers often budget approximately 0.5% to 0.85% for these charges, although the exact amount depends on the transaction.

3. Notarial and Legal Fees

Property transfers must be formalized by a Costa Rican notary public, who is also a licensed attorney.

Notarial fees are calculated according to a legally established fee schedule. For many real estate transactions, buyers commonly budget approximately 1% to 1.5%, depending on the transaction value and applicable fee scale.

In many transactions, the notary’s professional fee also includes the legal due diligence required for the purchase. However, buyers should confirm exactly what is included in the quotation before proceeding.

The applicable 13% VAT is generally added to professional legal and notarial services.

What Does Legal Due Diligence Include?

Before completing a purchase, the property should be carefully reviewed.

Depending on the property, due diligence may include checking:

• Registered ownership

• Liens and mortgages

• Easements and restrictions

• Property annotations

• Cadastral plan

• Municipal taxes

• Zoning and permitted use

• Building permits, when applicable

• Condominium regulations

• Other relevant legal or technical matters

For properties in coastal areas, additional analysis may be required because of Costa Rica’s Maritime-Terrestrial Zone regulations.

Who Usually Pays the Closing Costs?

This is an important point for foreign buyers because the legal default and the common practice in real estate transactions are not always the same.

Under Costa Rican law, certain transaction expenses may be divided equally between the parties when there is no different agreement between the buyer and seller. However, the parties can generally agree on how the transaction costs will be allocated.

In practice, it is common in Costa Rica for the buyer to pay the costs associated with the transfer of the property, including the real estate transfer tax, registration and documentary stamps, and the notarial fees for preparing and formalizing the transfer deed.

The seller will generally pay the fees of their own attorney, if they choose to have separate legal representation. The seller’s attorney may assist the seller with the documentation and requirements requested during the buyer’s legal due diligence and accompany the seller throughout the transaction.

Therefore, foreign buyers should not assume that a Costa Rican real estate transaction will automatically be divided 50/50.

The actual allocation of costs should be agreed upon by the parties and clearly stated in the purchase agreement.

Are There Other Closing Costs?

There can be. Depending on the transaction, buyers may also have expenses related to:

• Escrow

• Bank transfers

• Property inspections

• Surveys

• Appraisals

• Financing

• Corporation formation or maintenance

• Specialized legal or technical services

Not every transaction will require all of these services.

How Much Should a Buyer Budget?

For planning purposes, the principal transfer tax, stamps and notarial fees can often amount to approximately 3% to 4% or more of the applicable property value.

This is only a general estimate. The final amount can vary depending on the purchase price, applicable taxable value, ownership structure, financing and additional services required.

Before signing, ask for a detailed closing-cost estimate from the notary handling the transaction.

Final Thoughts

Closing costs are an important part of buying real estate in Costa Rica, especially for international buyers who may not be familiar with the local process.

Understanding the costs in advance allows you to budget properly and avoid surprises at closing.

As a Costa Rican real estate professional and attorney, I believe buyers should understand not only the property they are purchasing, but also the legal and financial structure of the transaction.

The goal is not simply to find a beautiful property. It is to understand exactly what you are buying, what it will cost, and how the transaction will be structured before you move forward.

This article provides general information and is not individualized legal or tax advice. Applicable taxes, fees and regulations should be confirmed with the professionals handling your specific transaction.