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Buying A Property In Costa Rica
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General Guide About Buying A Property In Costa Rica
Samara Area Properties - Research and Assistance
Looking to invest or relocate in the Playa Samara area? Choose success – choose the right real estate agency!
Working with Pacific Homes Costa Rica means working with a local, knowledgeable and experienced team that will assist you from start to finish and beyond your Costa Rica Real Estate Journey.
Our knowledge goes beyond the real estate laws. For each property we will introduce you we will be able to give you our feedback about the location, quality of construction, rental opportunities, and building opportunities.
Whether you are just starting to look or are ready to move forward with your new property, we strive to make each client feel welcome and part of the Team. We believe in long – term relationships and understand that each client progresses at their own pace, while some may not be ready to invest, we feel strongly that all our clients need to understand the local market, gain local and specific information and tour properties to gain knowledge and become well rounded in the Samara Costa Rica Real Estate Market.
Acting as your buying agent and representing your interests in Costa Rica are responsibilities we take seriously. We will also make sure to introduce you to all the properties available on the market in your price range that meet your needs, while utilizing our expertise of the local market and the good relations we have with all our real estate colleagues and within the community.
Whether we conduct live showings here in Samara to view properties or virtually from the comfort of your home country – we are happy to communicate with you through WhatsApp and organize virtual live on-site property tours.
Buying Process in Costa Rica
Did you know? Any foreign person can buy property in Costa Rica solely with a Tourism Visa or Passport. Actually, you do not need to be a resident of Costa Rica to own your own piece of Costa Rica Real Estate.
All the properties we will introduce you have a property title legally registered in the Costa Rica National Registry of properties. A foreign person investing in Costa Rica owns 100% of the title, that’s one of the great benefits of investing in Costa Rica along with a solid democracy and stable economy.
The buying process in Costa Rica can be simple and transparent if you work with professional real estate agents and experienced lawyers. At Pacific Homes Costa Rica, we have the knowledge and experience to assist you throughout this process and help to make your transaction as smooth as possible. Most important to us here at Pacific Homes Costa Rica is transparency, we will make sure that you get clear and accurate information before making a final decision about your investment.
We can recommend you a trustworthy lawyer that will help protect you and your interests.
We are experienced working with buyer clients who have returned home prior to closing on their future property, we have experience of conducting transactions with buyer clients living abroad. Our continued success is based on effective communication and within meeting the time sensitive deadlines we have planned together.
What are the different steps of the buying process?
Step 1: Signature of a LOI
Once we have found the right property together, the first step is to help you draft a letter of intent to purchase, that will outline to the seller the purchase price as well as the key terms of the future purchase and sale agreement, such as the percentage of the down payment, the length of the due diligence, the closing date and the contingencies on the sale.
We will use this letter as a working basis for negotiating with the seller. We will lead the negotiation on your behalf and make sure you can get the best price and sale conditions for the property you want to purchase.
Step 2: Escrow account and Deposit
The buyer is required to pay a 10% deposit of the purchase price (earnest money deposit) in accordance with the terms of the Agreement and within the 10 -15 days following the signature of the agreement. The 10% earnest money is deposited into an Escrow account held by a licensed financial company, known for specializing in international transactions, until the closing date.
The Escrow Company is an unbiased, unaffiliated third party that receives and holds the 10% deposit. No moneys are paid directly to the Seller, Lawyer or Real estate Agency’s account until the closing date.
Generally, your lawyer is the one who will recommend you an Escrow company and setting up your Escrow account will be the first step for you to be able to send the deposit in the timeframe given.
Step 3: Signature of the Option of Purchase and Sale Agreement (OPSA)
Once the LOI has been accepted by both parties, Seller and Buyer, the next step is to sign the “Option of Purchase and Sale Agreement” (OPSA) which will detail the terms of the offer and will constitute the legal contract that legally bind you to the seller.
The Buyers’ Attorney is in charge of creating this OPSA agreement, they also complete the due diligence process and the legal closing of the transaction, they also act as a Pubic Notary. We will be happy to recommend you a trustworthy lawyer that will represent you efficiently all along this process.
Step 4: Due diligence of the property
The OPSA includes a due diligence period (generally 30/40 days) starting from the signature date of the OPSA. This period allows the BUYER’s attorney to review the property’s title to be sure there are no liens or encumbrances on the property, and to confirm clean, clear title, also to organize a home inspection as well a survey inspection if the BUYER requires them which is generally recommended.
This period also gives the Buyer ample time to retract from the purchase agreement, and receive back his earnest money deposit, if issues that materially affect the property arise during this period. ***At the end of the due diligence period, buyer deposit is non-refundable***.
At Pacific Homes Costa Rica, we are extremely pro-active during the due diligence period of the transaction, we assist the lawyers in obtaining necessary documentation in a timely manner, and organize and schedule inspections.
Step 5: Closing of the transaction and signature of the transfer deed
If during the due diligence period no negative issues arise, the closing of the sale can take place, usually between 2 and 3 weeks after the due diligence period ends or later, sometimes weeks or months later, according to the agreement made between BUYER and SELLER. The BUYER is required, in accordance with the Agreement, to transfer the remaining balance of the sale, 90% of purchase price, to the escrow account holder at least a few days prior to the closing date.
The day of the closing, the BUYER and the SELLER sign a deed to transfer the property from the SELLER to the BUYER and the escrow company pays the total price of the sale to the SELLER.
This transfer deed legally transfers title of said property and will be registered by the buyer’s lawyer in the Costa Rica National Registry of properties usually within the 2 weeks that follow the signing and Notarization of documents at the closing.
Buying Costs in CR
In Costa Rica, the buyer pays 100% of the buying costs due on the property, around 4.2%* to be added to the final purchase price. The seller pays the real estate commission (6% + 13% IVA) and the capital gains taxes if applicable.
The 4.2%* fees include the transfer of property taxes, stamps and the lawyer fees.
There additional costs for the optional yet recommended home inspection (generally 0,1%* of the property price) and survey inspection.
Someone can buy a property under his name, but lawyers recommend setting up a limited corporation to protect the BUYER from any liabilities in Costa Rica. The cost to set up a corporation is around $850* and done by the Buyers Lawyer. For new home construction, the existence of a corporation is required to start and open new electricity services in Costa Rica. This corporation is set up following the signing of the OPSA and prior to closing and it will hold the property title at closing. This is what we call an “inactive corporation” as no commercial activity is registered in that corporation.
Also, it’s good to know that if you are buying under a corporation, all transactions can be completed from abroad through a power of attorney, whether it is the Buyers attorney, Buyers Real Estate Agent, a family member friend signing behalf at closing, so that you don’t need to be physically present in Costa Rica.
* Estimated cost provided by the attorneys we have worked with in the past.
Escrow Account
Costa Rica is committed to fighting money laundering. Any foreigner who transfers money to Costa Rica for the purchase of a property must justify the origin of the funds that will be used for this transaction. That is why an Escrow company legally incorporated in Costa Rica and supervised by and supervised by a financial institution called SUGEF is utilized. The Escrow Company is responsible for collecting and justifying the origin of the funds before the deposit is made. Generally, three months bank statements from the account the 10% earnest deposit and the remaining 90% of purchase price come from are required, as well as copies of any closing statements from recently sold properties, Stocks or Bonds if that is where proceeds came from that will be used to purchase said property.
The cost of the escrow fees is 0.35% of the funds place in Escrow.
Annual taxes due on your property and on your corporation
- Property tax: the annual property tax in Costa Rica is 0.25% of the value of your property. So, if you buy a property of 200,000$; You will pay 0.25% of 200,000$ = 500$ per year.
- An additional luxury tax of 0.25% can apply on the purchase price of more costly properties (properties for constructions higher than US$214,000, tax applicable on the value of the construction and land).
- Corporation’s annual tax: 116$ paid annually as well a $30 Education Tax4.
- Corporation’s annual declaration of shareholders and equities. These declarations are done by your lawyer.
About Rentals & Property Management Services in Samara
Why Investing in Samara?
More than ever, Costa Rica has been recognized to be one of the best places in the world to invest and to live, whether it be part of the year on vacation or all year round! This is a safe and stable country with truly kind people and an amazing biodiversity. Samara has become more and more attractive in recent years. Before the Covid-19 issues, the tourism season was excellent, home rentals and hotel reservations were remarkably high compared to other countries. Now, once again tourism is coming back, and strong, year after year records is being broken for amount of people entering the country through our closest international airport in Liberia, Costa Rica and often more people are looking for homes to rent and stay both short and long term than are available in Samara, especially during the High Season and Holiday Seasons.
If you rent your property all year long, you can expect a 7%-8% annual return on your property, and if you rent by thenight part of the year and by the month other parts of the year our clients report until 9%-10% annual returns on their Costa Rica property investment. However, most clients look to buy a home to enjoy it some months and rent it out the other months, in this case, annual returns can be of course lower, but should be more than enough to pay taxes, cover maintenance costs of your home while still earning net returns to either save, reinvest in the property or spend on your family while here enjoying your home – or all three… If you decide to rent out your property when not personally utilizing it, a property manager can both take care of the property and manage your rentals whether you choose to pursue short or long terms rental contracts.
If you look to rent your home for short term periods, the high tourism season starts in December and ends in April but there are still people looking for rentals during the lower season (may to December), and especially in July and August, which is becoming known locally as a second high season period. There are also more and more families that look for monthly rentals to stay 4-6 months in Samara throughout the year, normally excluding our usual heavy rain periods of September and October.
What does the property manager do for you?
The property manager is your EYES and Ears in Costa Rica when you are not here. He takes care of your property and can manage your rentals if you desire. He delivers a monthly property report of your charges and rental activity and is in contact consistently to discuss any needed repairs or maintenance that your home might need.
Generally, the property manager offers a package and their pricing can flexible to the owner’s needs and requests. The property manager receives a monthly fee for his service (around 150/200$ per property) This fee includes the servicing of payment of yours bills and taxes, the supervision of your property as well as the people in charge of the cleaning of your home.
The maintenance costs of your home are charged extra:
- pool cleaning 70$* per month, once a week
- garden 60$** per month, once a week
- cleaning: 6$ per hour / weekly or at check out
- repairs and maintenance work: the property manager will send you an estimate and may also charge an extra cost to supervise the work.
* Amounts can change according to the size of your property, but should not vary much from the above estimates.
Let him be in charge of your Vacations Rentals
The property manager can also manage your rentals, which means he advertises your property on different booking websites, manages the inquiries and reservations, generates rental contracts, welcomes your guests (check-in/check-out) and helps them with questions or concerns during their stay and generally receives 10 to 15 % of the gross rental revenue.
Still have questions about buying a property in Costa Rica, feel free to contact us for a free consultation!
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