A US citizen can buy a house in Costa Rica with essentially the same rights as a Costa Rican national. The constitution protects foreign ownership of titled land, no residency or special permit is required, and you can register the property directly in your name. Most purchases close in cash because mortgages are hard to get, closing costs run 3.5% to 5% of the price on top of the property itself, and if you hold the house through a Costa Rican corporation you pick up annual US tax filings that carry five-figure penalties for missing them. The rest is due diligence.
What You’re Allowed to Buy
Costa Rica grants foreigners the same property rights as its own citizens. You can buy residential homes, commercial buildings, agricultural land, and vacant lots directly, with full rights to use, sell, lease, or develop what you own. No work permit, residency card, or government approval is needed to sign a deed.
The one meaningful boundary is the Maritime Zone, a 200-meter strip measured inland from the high tide line along both coasts. The first 50 meters are public and cannot be built on or privately owned. The next 150 meters, the restricted zone, can only be occupied through a government concession lease, and foreigners face extra limits: any corporation holding a concession must be at least 51% owned by Costa Ricans, and an individual foreigner needs five years of legal residency to qualify for a concession at all.1The Tico Times. The Costa Rica Maritime Zone and Concession Property If the beachfront listing you’re looking at falls inside that strip, you’re not buying titled land; you’re buying (or being sold) an interest in a concession, and the rules are different. Confirm which one it is before you pay for anything.
How to Hold Title
Three structures are common, and the choice affects transfer costs, inheritance, and your US filings.
In Your Own Name
The simplest option. The property is registered directly to you at the National Registry, there are no ongoing entity fees, and you avoid the annual filings a corporation carries. The trade-off shows up later: any future transfer, including inheritance, requires a new deed and triggers transfer taxes, and if you die owning the property personally your heirs go through Costa Rican probate, which can take a year or more.
Through a Costa Rican Corporation
Many foreign buyers hold the house through a Sociedad Anónima (S.A.) or Sociedad de Responsabilidad Limitada (S.R.L.). The corporation owns the property, you own the shares. Selling the shares later transfers control of the property without a new deed or transfer tax, and the corporation adds a layer of liability separation.
The corporate route has real ongoing obligations. Every Costa Rican entity pays an annual corporate tax each January whether or not it earns income, and must file an annual declaration with the Registry of Transparency and Beneficial Owners (RTBF) disclosing every beneficial owner. Miss the RTBF filing and the entity can be frozen at the National Registry.
The bigger issue for Americans is on the US side. If you own 10% or more of a foreign corporation, you must file IRS Form 5471 every year. The initial penalty for not filing is $10,000 per corporation per year, climbing to $50,000 per failure if you ignore IRS notices, with further reductions to your foreign tax credits and criminal exposure in extreme cases.2IRS.gov. Instructions for Form 5471 (12/2025) Most buyers who set up a Costa Rican holding company own 100% of it, so this hits nearly everyone using the corporate structure. Set up the corporation only if you (and your US tax preparer) are ready to file Form 5471 every year for as long as you own the house.
Through a Trust (Fideicomiso)
A fideicomiso puts the property in a trust managed by a regulated trustee, usually a bank. The trust agreement sets who inherits and under what conditions, bypassing probate. Trustee fees run higher than corporate maintenance, and you’re dependent on the institutional trustee. Fideicomisos are less common for a straightforward vacation home but make sense for higher-value properties or complex family situations.
Due Diligence Before You Close
Costa Rica’s property system is generally reliable, but “generally reliable” still leaves room for expensive surprises. Hire your own attorney, independent of the seller and the real estate agent. Here’s what that attorney should be checking.
Title
Every titled property has a unique registration number, the Folio Real, recorded at the National Registry in San José. Your attorney pulls a title study (Certificación Literal or Estudio de Títulos) to confirm the seller actually owns the property and that no liens, mortgages, easements, or court orders are attached. This catches the most common problems: unpaid taxes, disputed boundaries, and sellers who lack authority to sell.
Survey and Boundaries
A registered survey, the plano catastrado, maps the legal boundaries. Fences and walls don’t always match them, especially in rural areas. If the existing survey is old or the lines look questionable, pay for a new one from a licensed surveyor. Boundary fights with neighbors are among the most common property conflicts in Costa Rica, and they are far cheaper to catch before closing.
Zoning and Municipal Permits
Check the municipality’s land-use designation (uso de suelo) before assuming you can build, renovate, or run a rental. What a seller says the property can be used for often doesn’t match what the municipality will approve. Any construction also needs proof of legal water access, typically a water availability letter from the national utility (AyA) or the local association (ASADA). No letter, no building permit.
Environmental Review
Properties near rivers, wetlands, forests, or coastlines may need clearance from SETENA, the national environmental authority, before any construction. Review ranges from a simple statement for low-impact work to a full Environmental Impact Assessment for larger projects. Building without the required permit can bring a demolition order.
Physical Inspection
Home inspections exist in Costa Rica but aren’t as standardized as in the US. A thorough one covers the roof, structural integrity, plumbing, electrical, retaining walls, septic, and termite damage. The tropical climate accelerates deterioration in ways that aren’t always visible, especially water intrusion and wood-destroying insects. Budget three to four hours for a proper inspection of a single-family home and make sure drainage and pool equipment are in the scope.
Squatter Risk if You Won’t Live There
If you’re buying a home you won’t occupy full-time, understand how Costa Rican law treats unauthorized occupants. After one year of continuous occupation, a squatter can no longer be removed through a fast administrative process; the owner must file a judicial eviction, which can take two years or more. After ten years of uninterrupted possession, an occupant can file for legal ownership through usucapión. Reliable property management, regular inspections, and physical security are basic risk management for absentee owners, not extras.
The Closing Itself
Offer, Deposit, and Escrow
A written offer becomes a Promise to Purchase Agreement (or Option to Buy) once the seller accepts, locking in the price and key terms. Earnest money is typically 5% to 10% of the price. Escrow is not legally required in Costa Rica, but it’s the single best way to protect that deposit. Use a neutral third-party escrow, either an attorney or an escrow company. Without escrow, your money goes straight to the seller, and clawing it back if the deal falls apart is a legal fight you don’t want.
The Notary Public
A Costa Rican Notary Public is not the person who stamps documents at a bank. It’s a licensed attorney with special government authorization to authenticate legal transactions. The notary drafts the transfer deed (Escritura Pública), verifies both parties’ identities, confirms the transaction complies with Costa Rican law, and submits the deed for registration at the National Registry. The notary is a neutral representative of the state, not your advocate. Keep your own independent attorney to run due diligence and review the deed before you sign.
Title Insurance
Title insurance is available in Costa Rica, including through providers like Stewart Title Latin America, and isn’t required unless you’re financing with a mortgage. A policy protects your financial interest against defects the title search missed: forged documents, hidden heirs, unrecorded liens. Worth considering on higher-value purchases.
Closing Costs and Ongoing Taxes
Budget 3.5% to 5% of the price for closing costs on a direct property transfer.
- Transfer tax of 1.5% of the purchase price or registered municipal value, whichever is higher. Buyer and seller customarily split this, though the split is negotiable.
- National Registry fees and stamp duties of roughly 0.8% to 1.3% of the price for registration of the new deed and mandatory documentary stamps.
- Notary and legal fees of roughly 1% to 1.5% of the property value, covering the notary’s drafting work plus your independent attorney’s due diligence if you’ve hired separate counsel.
- 13% VAT on legal and escrow services, adding roughly 0.13% to 0.20% to the overall cost.
If the property is already held in a corporation and you buy the shares rather than the property, you avoid the transfer tax and registry fees. That’s the main financial argument for the corporate structure, and it has to be weighed against ongoing corporate maintenance and the US tax filings the corporation triggers.
After closing, annual taxes are low by US standards. The basic property tax is 0.25% of the registered value, paid to the municipality.3Gobierno Local de El Guarco. Como se Calcula el Impuesto Sobre Bienes Inmuebles A property registered at $300,000 costs $750 a year. A separate luxury home tax kicks in when the construction value exceeds roughly 143 million colones (about $275,000 to $280,000 USD depending on the exchange rate), with progressive rates from 0.25% to 0.55% on the value above the threshold. If you hold through a corporation, expect a few hundred dollars a year in corporate entity tax regardless of income.
Rent the house out and Costa Rica applies a 15% withholding tax on gross rental income earned by nonresidents, with no deductions for maintenance, management, or depreciation against that withholding. Sell it and capital gains are taxed at 15% of the profit under Law 9635, with an exemption for a primary residence. You’ll owe US tax on the same rental income or gain, generally offset by the foreign tax credit for the Costa Rican income tax you paid.
US Tax Reporting You Can’t Skip
The IRS taxes US citizens on worldwide income and requires disclosure of certain foreign accounts and foreign corporation interests even when no income is involved.4Internal Revenue Service. Publication 54 (12/2025), Tax Guide for US Citizens and Resident Aliens Abroad Owning Costa Rican real estate directly in your name does not, by itself, trigger FBAR or Form 8938 filings.5Internal Revenue Service. Comparison of Form 8938 and FBAR Requirements What you do around the property usually does.
Open a Costa Rican bank account to pay bills or collect rent and you must file FinCEN Form 114 (the FBAR) if the combined value of all your foreign financial accounts exceeds $10,000 at any point in the year. The threshold is aggregate, not per account, and even briefly holding purchase funds in a Costa Rican escrow account can push you over.6Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
Form 8938 (FATCA) applies to foreign bank accounts and to your interest in a Costa Rican corporation if you use one, once you’re over the asset thresholds: for a single US resident, $50,000 on the last day of the year or $75,000 at any point during it; for a married couple filing jointly, $100,000 and $150,000.7Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
Form 5471 applies if you own 10% or more of an S.A. or S.R.L. that holds your property. Penalties start at $10,000 per corporation per year and rise to $50,000 per failure if you ignore IRS notices, with foreign tax credit reductions and possible criminal exposure on top.2IRS.gov. Instructions for Form 5471 (12/2025)
For the foreign tax credit, only foreign income taxes qualify. Costa Rica’s 15% rental withholding and 15% capital gains tax generally qualify. The property tax, transfer tax, and luxury home tax do not.8Internal Revenue Service. Foreign Taxes That Qualify for the Foreign Tax Credit You can deduct Costa Rican property taxes on Schedule A if you itemize, subject to the same $10,000 SALT cap that applies to US property taxes.
Paying for the House
Mortgages are the weak point of the process. US banks generally won’t lend against foreign real estate, and Costa Rican banks impose steep terms on foreign borrowers: down payments often 30% to 50%, shorter loan terms, and elevated interest rates. Most foreign purchases close in cash.
When cash isn’t available for the full price, seller financing is the usual fallback. A typical arrangement is 50% or more down with the balance financed by the seller over three to ten years. These are private contracts with negotiable terms, and remedies for missed payments vary widely. Read the default provisions carefully with your attorney. Some seller financing contracts let the seller reclaim the property after a single missed payment with no refund of prior payments.
Residency as a Side Benefit
Buying a house doesn’t give you the right to live in Costa Rica, but it can qualify you for temporary residency. Under Law 9996, a real estate investment of at least $150,000 qualifies you for the Inversionista category. The property must be registered in your personal name at the National Registry, and you must maintain the investment continuously. The permit is granted for two years and renewable for equal periods.9Dentons. Costa Rica: What You Need to Know About the New Regulations to Attract Investors, Foreign Income Earners, and Retirees A spouse and dependent children under 25 can be included with apostilled marriage and birth certificates. After three years of temporary residency you can apply for permanent residency. Holding the property through a corporation instead of your personal name may not satisfy the investment requirement for residency purposes, so if residency is part of your plan, decide on the ownership structure with that in mind before you sign.