How much will it cost to buy real estate in Costa Rica?
Mayo 8 de 2021You came to Costa Rica, fell in love with the country, and you are thinking about buying property in Costa Rica. You started searching online for properties, found the best realtors in Costa Rica; of course we are talking about Deal Real Estate & Architecture. You came to Costa Rica yet another time to look at property. You found a property you love, like our beautiful Casa Perezosa in Playa Tamarindo, Guanacaste.
Or maybe you are living in Costa Rica and you are ready to buy your first property; it could be a family home or a beautiful condo or some land. May be you are not looking to buy because you are the seller, you want to sell your property and need to come up with the right price for you to net the amount you need. Regardless of what your scenario is, you need to know that there are some costs associated to a real estate transaction whether you are the buyer or the seller.
But, what are these additional costs? Well, if you are the buyer, besides the purchase price, you will have to pay: Property transfer tax (1,5%) and lawyer fees (1-2%).
If you are the seller you will have to pay: realtor commission (5%): this is the fee due to the realtor who sold your property, it is calculated of the final sale price. IVA (13% of commission): this tax has to be paid to the realtor who will then transfer it to Ministerio de Hacienda, it is a 13% aggregated value tax of the amount paid in commission. Mortgage cancelation dues: in case there is a mortgage over the property and it has to be cancelled in advance, the lawyer who handles the process with the bank will charge a fee, which will be determined based on the mortgage amount. And, capital gains tax: as of July 1st, 2019 all sellers have to pay a capital gains tax. This tax is a 15% of the gain on the sale of the property. The gain is the difference between the sale price and the initial purchase price. However, there is a one time exception. If the property has never been transferred prior to July 1st, 2019 then instead of the 15% tax over capital gains, the seller can choose to pay a 2.25% over the total sale price.
So, before we go, let's give you and example with numbers for you to see how this works. We will assume the property was bought in 2015 for $80.000 and sold in 2020 for $100.000:
The buyer will have to pay:
| Expense Type | Amount |
|---|---|
| Purchase Price | $100,000 |
| Property Transfer Tax (1.5%) | $1,500 |
| Attorney fees (2%) | $2,000 |
| Total Expenses for the buyer | $103,500 |
Seller will have to pay:
| Expense Type | Amount |
|---|---|
| Capital gains tax (2,25%)* | $2,250 |
| Realtor commission (5%) | $5,000 |
| IVA (13%)** | $650 |
| Total Expenses for the seller | $7,900 |
* In this example, the capital gain was calculated at 2.25% as it is the lowest amount. 15% of the capital gain is $3,000
** IVA is calculated over commission amount.
In this example, the final investment for the buyer will be: $103,500. The seller will net $92,100.
We hope this gives you a better scenario about real estate costs in Costa Rica. If you have any more questions please contact us by phone or email, or visit our social media on Instagram, Facebook and Twitter. We will be glad to answer your questions.