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Drake's Bay - Owning Properties

Accomplishing things in Costa Rica

If it seems like things take longer than necessary in Costa Rica, you're probably right. 
That's the way it is here.

Of course, there are many, many other reasons to be here that more than make up for the slow pace of getting things done.

Discovering the unique qualities that Costa Rica has to offer brings joy to those with the patience to find out.

About Land Ownership in Costa Rica

Ownership of real estate in Costa Rica by foreigners is fully guaranteed by the constitution. In addition, foreigners enjoy the same ownership rights as Cost Rican citizens, regardless if the property is placed in the name of a corporation or in the name of an individual. The decision to have the property under the name of a corporation is strictly up to the investor. This is very common and can offer benefits of asset protection and anonymity for the actual owner. A valid passport for three representatives (president, vice president and treasurer-all can be foreigners) is the only requirement for a foreigner to form a corporation in Costa Rica; the cost is approximately $500.00. When dealing with the maritime zone, a Costa Rican citizen is required to hold at least 51% of the corporation until the lease-concession is granted by the government.

Property taxes throughout Costa Rica are very low when compared to Canada and the United States. There are two forms of taxes, the Municipal Tax and Real Estate Tax. The Municipal Tax is administered at the municipal level and varies throughout the country. Paid quarterly, the type of property, location and other factors contribute to the calculation of this tax. The Real Estate Tax in based on the declared value of the propery, at a rate of 6%. This tax is applicable throughout the country regardless of the properties location.

A nice incentive for foreign investment is that there is no capital gains tax. You will not be taxed by the Costa Rican government on the profit from the future sale of your property as long as this is not undertaken as a means of business. You would be obligated to pay taxes on any "declared" earnings being brought back to your country of citizenship.

It is important that you or your attorney take the necessary steps in order to properly register the property, and more importantly, be assured that the property in question is free of all liens and encumbrances. The Registro de la Propiedad (Property Registry) is where all property documents are recorded, thus 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 be recorded at the Registry. This will show the name of the legal owner and will disclose any liens or limitations against the property.  Check if all taxes on the property have been paid to date. Also, ask to see an Official Registry Survey of the property. If one has not been completed, which can be common when purchasing a section of a larger parcel, request that any deposit be held by the attorney until an official survey has been provided. If this is the case, ask to review the Official Registered Survey of the "mother" parcel.

Always be sure to include any obligations promised by the owner (water, road access, etc.) in the written agreement. If the promised time for completion of these obligations is considerable, request an amount of the purchase funds to be held by the attorney until the obligations have been met.

When investing in property located inside the Maritime Zone, the area that makes up the first 250 meters of beach front property, you should be aware of the following:

Closing costs normally run approximately 5% of the purchase price, which includes a transfer land tax, legal fees, and miscellaneous fees. For the purpose of lowering the property transfer land tax, it is common practice to lower the gross amount paid by declaring a much lower sum than the actual sale price. Be aware that acting in this manner could cause problems in the future. As always, it is recommended that you consult a lawyer about closing costs.

Always be sure to meet with an attorney who can speak your language and answer your questions before depositing any funds or signing any documents.

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