FAQ: Selling Your Property in Costa Rica
Selling a property in Costa Rica can be a rewarding experience, but it’s important to understand the nuances of the local market, legal requirements, and common practices. Here’s a comprehensive FAQ to guide you through the process, covering everything from preparing your property for sale to understanding taxes and closing costs.
Q: Can foreigners sell property in Costa Rica?
A: Yes! Foreigners have the same rights to buy, own, and sell property in Costa Rica as Costa Rican citizens. There are no restrictions on selling property, and you don’t need to be a resident to own or sell property.
Q: How should I price my property?
A: Pricing your property accurately is crucial for a successful sale. It’s highly recommended to work with a local real estate agent who understands the market in your area and can help you set a competitive price. Consider factors like location, property condition, amenities, and recent sales of comparable properties. Overpricing may discourage potential buyers, while pricing competitively can attract more interest and speed up the sale.
Q: Should I use a real estate agent to sell my property?
A: Using a real estate agent in Costa Rica can simplify the process and help you reach a wider pool of buyers. Local agents understand the market, have access to networks and listings, and can provide valuable insights. However, Costa Rica does not have a national MLS, so it's wise to choose an agent with a good reputation and local experience, as well as knowledge of marketing strategies to showcase your property effectively.
Q: What is the difference between an open listing and an exclusive listing?
A: And open listing allows for multiple agents to list and market your property, and only the agent who closes the sale earns a commission. This can increase visibility (as the property is listed on more agency websites) but may result in inconsistent pricing and marketing. An exclusive listing give just one Costa Rica real estate agent or agency the right to market and sell your property. This can provide more consistent service, better marketing efforts, and a streamlined experience but with potentially less visibility. However, most experienced Costa Rica real estate agents will work with the other agents in their region to help promote your property. Your choice will depend on your preferences, the uniqueness of the property, and the current market demand.
Q: What paperwork is required to sell property in Costa Rica?
A: To sell property, you’ll need the following:
- Property Title: A clear title proving ownership is essential. If the property is held by a corporation, you’ll need corporate documents.
- Survey Plan (Plano Catastrado): An official survey plan showing the property’s boundaries, registered with the National Registry.
- Copy of Identification: If you’re a foreign seller, a valid passport or local ID (cedula) is required.
- Municipal Tax Receipts: Receipts showing all municipal property taxes and fees are up to date.
- Other Permits: If you’re selling a commercial property, you may need additional permits.
It’s common to work with a Costa Rican attorney to ensure all documentation is in order and the sale process goes smoothly.
Q: What are the taxes and closing costs when selling a property?
A: When selling property in Costa Rica, the main costs are:
- Agent Commission: In the Guanacaste region, commission is generally 6% of the negotiated sales price. However, commissions can (and do) vary, in some regions up to 10%.
- Legal and Notary Fees: These generally amount to around 1% to 1.5% of the sale price.
- Real Estate Transfer Tax: Typically 1.5% of the property’s registered value, although in the Guancaste region, closing costs are traditionally paid by the buyer.
- Capital Gains Tax: This tax is 15% of the profit from the sale. However, if it’s your primary residence, you may be exempt from capital gains tax.
These expenses should be addressed and confirmed with your real estate agent and attorney.
Q: How do I protect myself from squatters while my property is listed for sale?
A: Squatters, known as "precaristas," can be an issue if a property is left unattended for an extended period. Here are some ways to protect your property:
- Regular Inspections: Hire a caretaker or property manager to check in regularly, especially for rural or remote properties.
- Fencing and Signage: Clearly mark property boundaries and consider “For Sale” signs to show the property is active and not abandoned.
- Documentation: Keep copies of all property documents and up-to-date municipal tax receipts as proof of ownership.
Hiring a property manager or caretaker can provide added security, ensuring your property is protected and maintained.
Q: Can I sell my property if it’s owned by a Costa Rican corporation?
A: Yes, if your property is held in a corporation (which is common in Costa Rica for tax purposes), and you are a legal representative of the Costa Rica corporation, you can sell your property. There are various ways to do this including transferring ownership of the corporation or transferring it out prior to the sale. Consult with your attorney to determine the best approach, as both approaches have advantages and disadvantages.
Q: What’s the closing process like in Costa Rica?
A: The closing process in Costa Rica is straightforward and requires the assistance of a notary public (a lawyer with additional training) hired by the buyer. The steps are as follows:
- Drafting the Sales Agreement: The buyer and seller agree on terms, and a preliminary agreement may be signed with a deposit placed in escrow.
- Due Diligence: The buyer’s attorney conducts due diligence, including a title search and verification of property boundaries and zoning.
- Final Transfer: Once due diligence is complete, the notary drafts the transfer deed. Both parties sign, and the funds are released to the seller.
- Registration: The notary registers the transfer at the National Registry.
While the buyer's attorney generally facilitates the closing, it's recommended that sellers hire represenation as well to ensure their interests are fairly represented.
Q: How long does it take to sell property in Costa Rica?
A: The time to sell varies depending on property location, condition, pricing, and market demand. Properties in high-demand tourist areas, like Guanacaste or the Central Valley, may sell faster than remote or rural properties. With a competitive price and good marketing, expect the process to take anywhere from a few months to over a year. In 2024, the average days on market on the Nicoya Peninsula was 471.
Q: What marketing strategies work best to sell property in Costa Rica?
A: Effective marketing is essential, especially in a competitive market. Here are some common strategies:
- Professional Photos and Videos: High-quality images and virtual tours are essential to showcase the property.
- Local and International Listings: Listing on popular Costa Rican real estate sites, as well as international platforms, can help reach a broader audience.
- Social Media: Targeted ads on social media platforms like Facebook and Instagram can help attract interest from expats and international buyers.
- Real Estate Agent Network: Work with an agent who has local connections and can leverage networks to attract interested buyers.
Using a mix of these strategies will improve your property’s visibility and likelihood of a successful sale.
Q: What if the buyer wants financing?
A: Bank financing is limited for foreigners in Costa Rica, so cash sales are common. However, some sellers offer financing options, especially for higher-priced or remote properties. If you choose to offer financing, work with your attorney to draft a promissory note and ensure you’re legally protected.
Q: Can I use my property’s sale proceeds to purchase another property in Costa Rica?
A: Yes, you can reinvest the proceeds from your sale into another property in Costa Rica. Many sellers do this, either to upgrade their property, invest in a different area, or simplify their real estate portfolio. Consulting a tax advisor may help if you’re looking to minimize capital gains taxes through reinvestment.
Conclusion
Selling property in Costa Rica can be a straightforward process with the right guidance. Working with a knowledgeable agent, hiring an attorney, and staying informed about taxes and legal obligations will ensure a smoother transaction. With a well-prepared property, realistic pricing, and strategic marketing, you’ll be well-positioned for a successful sale. For more information about selling your property, contact us today!
