Taxes, Fees, Covenants, Restrictions, Amenities, Title, Location and Ownership of Real Estate in Costa Rica

Here is a look at typical costs, restrictions and convenants to own real estate or property in our developments in Costa Rica. 

Our basic covenants:  We haev no time limit to build but we do require you have your lot cleared once per year which we do for you and we charge $100 per acre for the clearing.  The clearing is so your land stays build able since secondary forest becomes protected if the trees reach a certain diameter.  We set up your purchase in a corporate form once fully paid for, where the land is owned by a corporation and you are the shareholder of the corporation.  This form of ownership is preferred in Costa Rica and in much of Latin America.  The advantages are limited liability to the owner in the event someone is hurt on the property.  Imagine you set up the property as a rental and someone drowns in your pool.  Owning in a corporate form protects the owner from liability and also avoids probate in Costa Rica if you or one of the other shareholders (typically your spouse) should die.  The corporation that owns the land (and home if you had one built) is a legal entity of its own and lives on in perpetuity. 

There are no capital gains on corporate gains and if you decide to sell the land (and home if you had one built) you simply sell the shares of the corporation to the buyer and there is no need to pay closing costs on a property transfer, tax stamps, re-register deeds, title search, etc.  Our last covenants are the you use the land for residential use only (unless it was designated commercial) and that you build a minimum of a 1000 square feet in the main home on the property.  Guest cottages, casitas and such can be smaller as long as the main home is at least 1000 square feet.

Property taxes run $1.45 per thousand for property valued under $190k and $1.95 per thousand for values over $190k.  A $150k property would have an annual property tax of $217 per year and a property valued at $300k would tax at $585 per year.  Tax is based on declared value and most homes are declared at less than actual value though there is now a movement to get homes in Costa Rica declared at a more accurate valuation.  There is no capital gains tax on the sale of homes so undervaluing the basis does not end up costing you in capital gains tax when you sell the property later on.

Most of our developments are titled in true urbanization title, not farm or finca title.  Many developments in Costa Rica are using a loophole by titling land for residential use as "farm" title (finca in Spanish).  Developments that have all lots sized bigger than an acre are likely using the finca title loophole.  When titling farm land there are very few requirements in completinginfrastructure improvements prior to titling.  This loophole allows developers to sell titled land that does not yet have roads, water or electric in place.  Many developments sold in Finca title have left owners without utilities that often cost 10 times the cost of the land they have purchased.  We title in true "residential" title.  Titling in residential title, as we do, is referred to as "en conominio" title but has nothing to do with Condominiums as we know them in the states.  En Condominio title is true residential title and in what are know as urbanizations in Costa Rica.  This is the highest and most difficult form of title to obtain for residential use of property in Costa Rica and both more difficult to obtain and more costly to meet this higher standard.  The requirements of our roads, water system and electric meet a higher standard than farm title and gives property owners greater flexibility and rights when building homes, swimming pools and out buildings.

We are located in the town of Ojochal  along the southern Pacific coast of Costa Rica.  Ojochal is about 3 hours drive from San Jose which is currently the closest international airport to our community.  We have built 19 phases to date and sold out 11 of them.  The first three phases were in the town of Tres Rios de Coronado, phases 4 – 11 and Las Brisas where in the town of Ojochal and our newest phases are in the town of Chontales.  Our newest developments sit on one contiguous piece of land totaling 2200 acres.  This planned community will hold 6 phases when completed, with the first two phases already sold out.  This new development is located within minutes of the new hospital (5 to 15 minute depending where you are in the developments).  Ojochal is about 25 minutes from the hospital and Tres Rios about 20 minutes.  The new international airport to be built just to our south will be about 30 minutes drive from the middle of our developments.  There is a domestic airport in Palmar Sur about 25 minutes south of Chontales with two airlines already providing daily commuter flights to San Jose from the town of Palmar Sur.  The new international airport is being built just west in Palmar Sur Sierpe.  The new hospital is located across the highway from our Chontales development and that hospital, part of the airport program, is an 88 bed, 80,000 square foot facility complete with an emergency room and a good number of specialists.