A short series of questions and answers on buying and owning property in Costa Rica.
Note: Page updated 18 April 2005. Changes in bold type

Table of Contents

   

  1. Where do I look...?
  2. What's next...?
  3. How can I finance...?
  4. Costs...?
  5. Taxes...?
  6. More Info...?
  7. Who wrote this...?

Where do I look:

The more important question is more where do I live?  Costa Rica is an ideal place to settle down in. The Country offers a wide variety of areas to call home. Where!  The where depends on you. We have some of the most beautiful beaches in all of Central America. The mountains are breathtaking. The valleys are gorgeous and the farming plains are tropical dreams.

Take your time, look around, get a feel and a "lay of the land".

Most North Americans blend in well with the Ticos. There are not many enclaves of "Gringos". Travel around and you will find Canadians, Americans, Germans, Russians all interspersed among the locals. The gringos are the tall ones with the fair complexions with the exception of the beach areas where they are golden tan.

The vast majority of real estate for sale in Costa Rica is available from Web Sites, such as this, local newspapers, Tico Times, La Nación and reputable Realtors throughout the country.  Probably the least expected place to find information on real estate for sale to the average North American, is on the bulletin boards at the local supermarkets.  Many rural areas are not serviced by Realtors. The local supermarkets are an ideal place to seek homes for sale in the immediate area.

 

Okay so much for the travel speech!

 

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THE NEXT!

Well you have found your dream home or slice of earth to settle on, where to from here?

The first and most important thing you must do is retain a good attorney. Closing, as we are used to the way things were done "at home", is not much different here, but we  advise strongly that an attorney is a must.

My gosh, I don't know any lawyers in Costa Rica and I can't just pick one from the phone book!  What do I do?  Here are some helpful tips in retaining an attorney to represent you in the closing. I emphasize representing YOU!    DO NOT be talked into the "sellers" attorney helping "put everything together"

Your investment here in Costa Rica is an important one.

The United States, Canadian or your home Country Embassy is a good place to start. Call or visit your Embassy and ask for a list of reputable attorneys with experience in real estate.  Most of the Realtors here also have attorneys they also can recommend.

Don't be afraid to negotiate, it's a way of life here.  For an interesting article authored by one of our reputable Realtors in Costa Rica on the things that can occur during a closing click here.

Make your offer, but do not offer any escrow or down payment money, until you have YOUR attorney in your "pocket". Nothing moves very fast here and if the sellers are serious they will respect your request that you seek consul before putting your hard earned cash on the table. Let your attorney or realtor put the offer together.

 

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Financing!

Financing real estate in Costa Rica is not always an easy task, but possible. Now much easier

Bank financing, typical of what occurs North, is about the same here. The exceptions are banks will only finance up to about 70% of their appraised value of the property.

The down side to bank financing are the interest rates. Current interest rates on real estate loans are very high, 25% to 30% per year. Banks, sometimes, do tend to overstate the value of the real estate, allowing for possibly more than 60% value financing. Plenty of mortgage money available typically 3% to 4% over NY prime for up to 30 years

An option used here is to obtain an interest only loan for 3 to 5 years. The interest is paid and a final payment is made for the principal amount.

Many United States and Canadian Banks have branch banks here. The possibility exists to arrange for a secured loan in the US or Canada and use the funds to make a "cash deal" here in Costa Rica. US banks will generally NOT carry a mortgage on property outside the US.

One viable option, and one of the better ones, is to arrange for the seller to carry the mortgage on the property. Many sellers will, some will not. Your attorney or realtor can offer advise during the negotiating process. One thing, do not look for 25 or 30 year loan terms. The normal is 5 to 10 years. The interest rates can be more favorable.

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Costs!

Costa Rica, the Land of the Eternal Spring.  Since you have decided to call it home, I will not go into the benefits and cost of living on a daily basis, you already know this.

The costs of home ownership in Costa Rica will be hard to grasp to those of us used to soaring real estate taxes, school district taxes, county taxes, local community and hospital taxes, etc. etc. etc. The list seemingly goes on forever.

Typical Costs:

Electricity:

ICE, the government owned power utility, provides electrical power to the entire country. The costs are about 10 cents per kilowatt hour.  Monthly costs for the average house runs about $20.00 to $30.00 per month. The exceptions to this are, if you just have to have air conditioning or you live in the mountains and need electric heaters to take the morning chill away.

Cooking can be done with electric or gas ranges  (propane, sorry no natural gas). Gas can be purchased from your local supermarket in the small tanks or the larger 100 liter tanks can also be used. Your neighborhood gas supplier will deliver large or small tanks for a small charge. Average usage for cooking with a small tank is about one month, the big tank should last 8 months to a year.

Gas is one of those items with a fixed price from the government. Expect to pay a deposit for every tank you have and also purchase the regulator, hose, fittings, etc. A good idea is to use a large tank and keep a small tank as a back-up. Knowing you never run out of gas on a normal work day.

Every community has a local gas supplier who will be happy to set you up for gas to your range and/or dryer. They are good and their prices fair.

Water!

Yet another government utility, "A&A" (Acueductos & Alcantarillados) (Water & Sewer). Unless you have a swimming pool, water should be about $5.00 per month. All homes on A&A have meters. Many rural properties also have well water along with city water. Living on the beach in Puntarenas, we used our well to fill the pool and irrigate the lawn and garden. Drinking well water from a shallow untreated well is not a good idea.  Water costs are $0.25 per cubic meter. And, ah yes, don't forget if A&A mails your bill they charge you the postage $0.12.

Telephones & Internet:

You guessed it, another government utility, there is hope however. Plans call to "privatize" the phone and electric monopolies. Don't hold your breath!

Telephone - be wary of a house or land that does not have a phone line installed. Getting a new phone line installed, depending on where you're located, can take years. If you must have a phone, be sure to buy real estate with an existing  phone line or assure yourself that you can have a line installed in your lifetime.

Telephone costs are reasonable. A typical monthly phone bill, excluding of course,  overseas calls, runs about $20.00 per month.

Long distance calls from Costa Rica are very costly (typically a $1.00 a minute to the US or Canada). The good news is that there are several service companies here that can connect you to the North for less, and even free via the Internet.

Cellular phones cost the same as home phones as long as you use no more than 60 minutes a month of "air time". The big difference here is that you pay only for your outgoing calls. The caller pays for your inbound calls. Cell phones are readily available, but costly. The cellular network is good throughout most of the country, and is continually expanding.

Internet!

There are two options on Internet connections, again depending on where you live.

Now most cable companies offer cable Internet services. We use AMNET and have 56K up and 128K down for $45.00 per month, 56K/56K is less. You must take cable TV to have their Internet. ASDL (RSDI here) is available in some areas, but not sure on cost.

Internet connection provided, yeah, you guessed it, by RACSA ( the phone people from ICE) is based on a usage cost. $10.00 per month for 10 hours, $25.00 per month for 25 hours. $35.00 per month for 90 hours. Excess hour charge on the 25 hour plan is $0.90 per hour.  A new service has been recently added, $15.00 per month unlimited access, but with some restrictions; only available to residence phone lines in your name, connection is only allowed on that phone line, no roaming or access from outside Costa Rica. That's all there is folks!

The access charges to the Internet DO NOT include phone charges

The second option is TV cable Internet. Two types are available now, more in the future.

Again, depending on where you live, you can obtain a "2-Way" cable modem or "1-Way" cable modem. Ok, without becoming "nerdy", the 2-way allows you to be on the Internet 24 hours a day and connect to and receive from the Internet via your TV cable. No more one-way service available

The 1-way allows you to receive the internet via TV cable, but you need a phone line to send. (Only in my opinion, a bit of a waste.)

The costs, at this writing, are for a 2-way $80.00 per month plus $200.00 for the "box" and another $100.00 for installation.  The 1-way is somewhat less.

RACSA and the cable TV folks are constantly expanding so don't take my word, check them out. (www.racsa.co.cr) (www.amnet.co.cr).

Cable TV!

I hate to sound redundant, sorry, depending on where you live, cable TV is available.

The bigger the city the better the cable service. CNN, HBO, etc. are on the cable. Costs about $20.00 per month. There are premium services available also, more movies, Playboy, etc. Check it out at www.amnet.co.cr.

Pay them bills!

All utility bills can be paid in several ways. Most major supermarkets, most banks, or your handy credit card. No fancy payment envelopes to mail, besides your utility would probably be disconnected before the mail made it. Forget about the horror stories you've heard, it's not a big deal to pay your bills! Most all bills are out the 15th of each month and usually due in 10 days. Now all utility bills and business bills can be paid on-line in minutes. On-line baking is now up and running, pay mortgages, transfer funds between accounts.

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Taxes!

The enviable! Here's one of the real perks. Real Estate taxes here are painless. Taxes on a $250,000.00 home are about $250.00 per year. Ok breathe, this also includes the local municipal charges, trash, etc. as well.

Closing costs!

The government collects a 3% transfer tax on all Real Estate transfers. Don't panic! A lot of homes are held in a corporation, so simply buying the corporation includes the Real Estate and no transfer tax, just a small attorney fee. Another good need for an attorney is to assure yourself that the only assets of the corporation are the Real Estate with no liabilities.

Attorneys will usually charge $50.00 or less for a title search. Title insurance is also available here,  your attorney or realtor can advise on this option.

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More Info!

The author has included links to other informative site on the Internet regarding purchasing Real Estate in Costa Rica. P.S. Find a good one not here, drop me an e-mail and I'll include the link dick@intertica.com

www.racsa.co.cr Phone and internet provider.

www.amnet.co.cr Cable TV people.

www.costarica.com/embassy Embassy of Costa Rica in Washington, DC.

www.nacion.co.cr La Nación newspaper ( weekly English section)

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Who wrote this...?

The author, a transplanted Texan, and Web Master of www.intertica.com - For Sale By Owner - Costa Rica.

Don't take my word for anything, I'm not an attorney, I don't practice law. What has been placed in the article is answers to the many questions received at this site by visitors from around the world. The costs we refer to above are the actual costs we researched when this page was put together. Things change, so check it out yourself to be sure.

Questions???? Drop a note to info@intertica.com

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