| Transferring Title
If a property appears free and clear of encumbrances, the
lawyer can then proceed. Your lawyer should then draft a transfer
deed or escritura de traspaso to move the ownership
from seller to buyer. The transfer deed should include details
about financing of the property. In Costa Rica the buyer and
the seller usually share the closing costs, which normally
run about four to five of the total purchase. A small real
estate transfer tax, or 1.5 percent of the actual value, is
included, as well as a registration fee, stamps and notary
fees, which vary depending on the price of the sale. Title
insurance is optional but advisable. It is common practice
with many lawyers in Costa Rica to lower the actual amount
paid on a sale to a much lower sum on paper to reduce land
transfer tax. This can be risky and problems may arise later
on. Make sure you understand what you are expected to pay.
Property may be purchased individually, between several people
or in the name of a corporation (sociedad anónima).
Buying and registering a property in a corporation has many
advantages, mainly, asset protection in the event of a divorce
or a lawsuit. When a corporation owns the property, the sale
or purchase of the company can be negotiated so you don't
have to pay property taxes or stamp fees. All you have to
do is change the board of directors, the legal representatives
of the corporation, and transfer the shares.
Home in a Middle Class Neighborhood
Do not hire the same lawyer used by the seller of the property.
In Costa Rica an attorney can legally represent both parties.
Also, do not forget to check that you are buying the land
from its rightful owner. Some owners have sold their land
to several buyers. You can protect your real estate investment
further if you talk with neighbors about water shortages,
safety and burglaries in the area.
Remember, always see the property in person and never buy
sight unseen. Don't forget to check if you need special permits
to build. Be sure to check the comparative land values in
your area to see if you are getting a good deal. If you are
thinking of living in a remote area, check to be sure that
roads, electricity and telephone service are available.
Property Taxes
You will be pleased to know that no capital gains taxes
on real
estate exist in Costa Rica, so it is an excellent
investment. You do have to pay yearly taxes, but they
are low by U.S. standards. Yearly property taxes are on a
sliding scale up to .25 percent of the stated value of a particular
property. So on a house valued at $100,000 you pay about $250
yearly. This is a bargain compared to what most people pay
in the United States.
Property taxes are collected by the local municipal government,
which also collects a separate tax for garbage. The latter
has to be paid when you pay your property tax. Every year
I go through this painless procedure at the Palacio Municipal
de Heredia. The taxes on my home run about $280 including
garbage. I have found the clerks at the city offices to be
very courteous and helpful.
If you want more information contact Prime
Costa Rica real estate and retirement properties or
call toll free 1 888 581 1786. |
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