Buying Real Estate in Costa Rica.

Buying Real Estate in Costa Rica
Private land ownership in this country is a right for locals and foreigners alike. Each year more and more people are moving to Costa Rica, especially Europeans, Canadians, Americans and others. And unlike other countries, foreigners have the same rights purchasing Real Estate in Costa Rica as locals do. Income earned from abroad is not taxable in Costa Rica.

Many people have discovered how to make their dreams a reality and retire in style by living and investing in paradise! It all begins with the real estate market. Those who know, say the real estate market in Costa Rica is one of the most stable in the world. You could easily find a beautiful beach house for $250,000 overlooking the ocean. Or buy a piece of land near the beach for $80,000 and build your dream home.

Two-thirds of Costa Rica’s population is within the Central Valley with temperatures reigning 12 months a year where neither heating nor air conditioning is required. San Jose, the capital Costa Rica, offers various types of residences, from the highly urban centers neighboring areas such as Sabana, Rohrmoser, and Barrio Escalante , and the western suburbs of Escazu and Santa Ana which are extremely popular with foreigners. Just a few miles north of San Jose is Heredia, with its college-town center, quaint surrounding towns, and mountains that have become favorite spots for country homes? Alajuela boasts a warmer climate, with many foreigners choosing La Garita for a large hacienda with a pool. Just east of the Central Valley lies Cartago, which is cooler than San Jose, and offers great mountain retreats at lower prices.

The Central Valley is the most popular area to live, open a business, or retire by having the best access to restaurants, shopping centers, hospitals, spas, etc. The area west of San Jose is the favorite for foreigners, having a greater variety of shopping centers and private health care facilities such as CIMA Hospital, close to the airport, as well as the gateway to the breathtaking beaches of the Pacific coast.

If you prefer beach locations, we also offer homes for sale in Guanacaste, Jaco and other popular beach areas of Costa Rica. Locations on the Pacific coast are among the favorites of foreigners looking for beachfront properties, both residential and investment, in Costa Rica due to its recent developments and significant growth of commercial and other services in the area.

A medium range home can start at around $110,000 with financing options available and with a down payment www.gapinvestors.com may be able to finance the rest for you. Beachfront property is generally more expensive depending on the location.

The Buying Process.

1. We work through all local listings (both online and offline) in the desired search areas including that of all other real estate agencies and brokers to ensure “No Stone is left un-turned”. Then we will begin to create a “Short List” of all your favorite listings. We will create a schedule for you to confirm, and begin making appointments with all other agents and homeowners to allow us access and to view the listings. A detailed schedule is very important as we will need to give both owners and renters sufficient notice, arrange keys, and utilize your time wisely.

2. Over the course of a few days, we will work through, view and narrow down the listings. Once we have narrowed the search, we will then begin re-visits and obtain any information crucial to making your decision and an offer.

3. Meet with a local Real Estate attorney and other professionals who will be able to explain and answer any questions in person about the legal process of buying Real Estate in Costa Rica, fees, and duties. The process will not only educate you further, it will allow you to establish additional contacts with local professionals. We will only recommend the best professionals in the area based on pervious experiences and we can arrange appointments to meet and understand their services.

4. In Costa Rica, it is not uncommon to make an informal offer using a “Letter of Intent (LOI)” which is a non-binding offer outlining the terms and conditions. An LOI will also allow us to determine the motivation of the seller, begin the negotiations and determine if you will be able to come to terms prior to entering into a formal legal agreement. A formal Option to Buy and Sell Agreement will be created once the price and terms have been negotiated. This Option agreement will be a binding agreement by both parties and allows a due diligence term to being.

5. A Due Diligence period will always be requested to allow any and all investigations into the title, corporation, home inspection, property survey or anything else deemed necessary to purchase title of a property free and clear of any liens, mortgages or encumbrances.

6. Establish an Escrow account to handle the deposit and final balance payment. I would recommend in most cases utilizing an internationally recognized Escrow title company such as Stewart title or Chicago Title, these are names you most likely recognize and will give you the reassurance you may be looking for when transferring large sums of money to a foreign country. An escrow account can be used in the sale of a house, for example. If there are conditions to the sale, such as the passing of an inspection, the buyer and seller may agree to use escrow. In this case, the buyer of the property will deposit the payment amount for the house in an escrow account held by a third party. This assures the seller – in the process of allowing the house to be inspected – that the buyer is capable of making payment.

7. Once all of the conditions to the sale are satisfied, the escrow transfers the payment to the seller, and title is transferred to the buyer. NOTE: All escrow service companies will require the following:

– Two forms of identification must be valid and issued by a government entity (only one ID required from seller)
– Escrow Agreement duly executed by both parties.
– Know Your Customer (KYC) form duly executed by the Depositor.
– Copy of Utility bill showing buyer’s current physical address (less than three months old)
– Proof of income supporting transaction amount (Tax Returns, W2 Form, CPA Letter, IRA Form)

8. A Final Closing and Purchase agreement will be established approximately 5-10 days prior to closing to ensure all is in order. The closing documents will include, a Closing statement and Escrow agreement, (which outlines the disbursement of funds, attorney’s fees, taxes, commissions, mortgages, Escrow and title fees, and all other fees that must be paid out of the sellers proceeds prior to the seller receiving funds (a separate closing statement will be issued to the buyer and the seller with their respective closing fees)), Final Purchase agreement, and a Share transfer (in the case a corporation is purchased which holds the title). The appointed Escrow Company will be responsible for issuing payments to all respective parties and ensure payments are completed.

Closing Costs: The government collects a 2.5% transfer tax on all Real Estate transfers. The total taxes levied on a purchase are about 3.8% of the declared value. Nevertheless, a lot of homes are held as a corporation, so simply buying the corporation includes the Real Estate as an asset and no transfer tax is required, just a small attorney (Notary) fee of about 1-1.25% of the declared value. The cost for setting up a new corporation, called a Sociedad Anonima, is about $600.00.

Property Taxes: Estate taxes here are very little, ¼% of the total value. Taxes on a $100,000.00 home are about $250.00 per year.

9. Register final title or corporation transfer in the National Registry. You attorney will be responsible for the final registration in the National registry to show you as the new titleholder and or manager of the holding corporation. We always advise that in any case, you follow up with your attorney as well as request your real estate agent to follow up with your attorney until the registration is completed 100% (this process can take between 2-4 week to reflect in the national registry, however all documents are legally signed and you are officially the owner and title holder).

10. Enjoy your new Purchase in Paradise!

How to Choose a Real Estate Buyers Agent:

Do You Feel Comfortable with the Agent?

You will be working very close with your agent as you search for the perfect home. So it’s essential for you to feel comfortable with the agent you select. Not only do you want to feel as if your agent is truly operating in your best interest, but communication is key to finding your ideal property as quickly as possible. So, be sure to work with a buyer’s agent who you feel comfortable talking with and who you believe is truly listening to you when you discuss your needs and wants.

Is the Agent Familiar with the Market I am Interested in?

Finding an agent who is familiar with the area in which you are interested is also essential. The more familiar the agent is with your market of interest, the better he or she will be able to locate properties on your behalf. Furthermore, the more experience the agent has with your market, the better he or she will be able to judge the value of the property and advice you on the price you should offer and expect to pay.

Does the Agent have Reputable References?

Anytime you work with someone who provides a service, it is important to check their references. Before hiring a buyer’s agent, be sure to check references and to use other resources to learn more about the agent you are considering hiring. Performing a local search or checking for testimonials are two great resources to explore.

Does the Agent’s Process Make Sense to You?

You should ask the buyer’s agent to run down the process that he or she uses for finding a home and for helping to negotiate the price on your behalf. If the process doesn’t make sense to you and if the agent is not willing to provide clarification that makes sense to you, you should move onto a different agent.

Does your Agent Work with other Agents and are they willing to split commissions?

Because Costa Rica doesn’t have a MLS, it’s important to pick an agent that will work with other agents and willing to split the commission and pay “finder fees” with other agents and brokers to get your home sold FAST. Don’t work with agents that are selfish.

Call Johanna at 8373 2085 or email her at Johanna@GapRealEstate.com

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