Foreign investors most often chose to acquire property with a corporation. It provides liability protection while minimizing transfer costs. Transfer taxes are assessed on each sale and the transfer of corporate shares has a levy approximately 1/3 as great as that required in a personal transfer.

A simple purchase of a property (to hold) with a corporation is taxed at the lowest possible corporate rate. A simple tax return stating that your investment is “inactive” will result in a standard assessment for the existence of the corporation.

The owning of property for income production (as in vacation rentals) is considered a business activity and must file detailed tax returns and report profits or losses.

There currently is no capital gains tax on property transfers.

Costa Rica Real Estate Store, and its allied property management company, Summerland Services, are prepared to help you have benefit of it special relationship with the global accounting firm, Deloitte.

Standard closing costs are required in Costa Rica to transfer a property between owners, and are customarily divided between both sides. The nature of the entities in the transfer will significantly affect the amount of the closing costs with regard to the transfer taxes discussed above.

Your attorney will advise you on the level of anticipated closing costs before closing and provide a detailed estimate for your approval.

If you buy a property with structures in the “Public Area”, you should not be surprised if they are targeted and demolished on a couple of hours notice at any time.

The people of Costa Rica also control the use of the “Restricted Area”, the next horizontal 150 meters above the “Public Area”. Investors may own property in this zone on a “fee simple” or “concession” basis.

“Fee simple” or “Titled” beachfront property in the “Restricted Area” allows a foreign owner to have absolute control over the property. This allows a foreign investor to use it, lease it, improve it, or sell it as they see fit, subject to other laws for building permits, environmental protection, etc.

“Concession” beachfront property in the “Restricted Area” is essentially a lease situation, where the government retains authority to approve uses with Municipal (County) supervision through the building permit process. Owners may develop and subdivide concession property with approved permits.