Is it possible for a foreigner buy a property in Costa Rica?
Yes, Costa Rica legal system allows foreigners to buy properties either under their personal name or under a corporation.
Can I close a real estate deal remotely?
The answer is yes, closing can be done through a special power of attorney, the way to grant a power of attorney will depends on if buyer shall buy under their personal name or under a corporation.
What are next steps once I have signed and option to purchase agreement?
Once buyer have signed the option to purchase agreement the contract shall be executed therefore all terms and conditions must be fulfilled, which most of the time requires:
- Set Up an Escrow Account
- Make the Down Payment Deposit: customarily is 10% of purchase price.
- Due Diligence: During this period buyers Attorney will review the property title and verify that the property is in good legal Standing, including but not limited to title condition, liens, rentals, taxes, homeowners’ association, utilities, governmental restrictions, etc. There will also be other non-legal items that must be done during this period like topographers’ studies, inventory, soil study etc. Once Due Diligence has been successfully approved closing shall proceed.
- Closing Statement: Escrow Company shall prepare the closing statement that must be approved by the parties.
- Balance Payment Deposit: Buyer must make the purchase price balance plus closing cost.
- Closing: Upon funds gets consigned in the escrow account parties shall be able to close on the deal, at closing the closing deed shall be signed by the parties, this deed is prepared by the attorney who must also be a notary public.
- Closing Inscription in the National Registry: Notary Public must submit a copy of the public deed to be finally filed under new owner’s name.
How can I pay monthly bills?
Monthly bills can be paid as follows:
- Electronically through internet banking using the contract number (electricity, cable, internet etc)
- Property Managers: In case new owner set up a property manager they offer this service.
- Automatically charge to debit or credit card.
- At the grocery stores tellers depending on the service providers.
What are my responsibilities once I become Real Estate Owner in Costa Rica?
Costa Rican law stablishes the following responsibilities:
- Property Tax: This tax must be paid at the Municipality where the property is located, taxes are due every three months (4 bills at the year). However, property taxes can be paid in full at the beginning of the year. Please notice that in case of non-payment Municipality is legally entitled to foreclose on the property.
- HOA: In case property is located within a condominium or gated community owner must pay homeowners association fee and any special assessment legally approved. Please notice that in case of non-payment HOA manager is legally entitled to foreclose on the property.
- Property Value Declaration: Every 5 years a property owner must declare and update the property value in the corresponding municipality.
- Corporate Tax: According to the law every January Corporate Tax Must be paid. In case of nonpayment this are the penalties:
- Non-inscription of any document related to the corporation in the National Registry.
- Nonissue of any certification related to the corporation.
- If the tax is not paid for 3 years in the row, National Registry will automatically dissolve the corporation and corporation will face liquidation process.
- Legal representatives will be personally responsible for this payment and their personal patrimony will be used as collateral.
- Rental Activity: In case new owner start rental activity must be filed as business active company in the Costa Rican Tax Department and follow the rules and regulations regarding tax declaration and payment, it is highly recommended to engage a professional service of a CPA.
- Luxury Home Tax Declaration and Payment: In case home has qualified as luxury home, through an appraiser that verifies house construction material worth more than ¢148,000,000.00 (approximately USD$280,000.00), owner must get filed as luxury home taxpayer, declaration must be done every 3 years and a mandatory yearly payment must be done every January.
- Shareholders and Last Beneficiaries Mandatory Annual Declaration: This declaration must be done every year between April-May-June in the Central Bank of Costa Rica online system that requires Costa Rican electronic signature (only Costa Rican citizens or Legal residents). If declaration is not submitted on time Government is legally entitled to impose penalties and fines also no documents related to a defaulting corporation will be filed in the National Registry.
Do I need to become a legal resident?
The answer depends on your plans, so it is highly recommendable to have a good meeting with your legal advisor to guide you with the best way possible.
Do I have to grant a Costa Rican las will or testament?
We highly recommend that as soon as you become a Costa Rican owner to set up a Costa Rican Last Will and testament, the benefit is to cover all assets according to your desires.
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