How does buying a home in Costa Rica as an American work?

Authored by the expert who managed and guided the team behind the Costa Rica Property Pack

Everything you need to know before buying real estate is included in our Costa Rica Property Pack

Who is the author of this content?

THELATINVESTOR

A team specialized in real estate investing in Latin American countries (Costa Rica, Mexico, Colombia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Costa Rica. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At TheLatinvestor, we explore the Costa Rica real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like San José, Tamarindo, and Nosara. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Can Americans legally buy property in Costa Rica, and are there any restrictions compared to Costa Rican citizens?

Americans can legally buy property in Costa Rica with almost identical rights as Costa Rican citizens.

The Costa Rica constitution specifically protects foreign property ownership, making it one of the most foreigner-friendly real estate markets in Latin America. Americans can own property outright, buy multiple properties, and enjoy full rights to sell, lease, or inherit property.

The main exception applies to the Maritime Zone, which is a 200-meter strip along the coastline. The first 50 meters from the high tide line are public land and cannot be owned by anyone. The next 150 meters can only be leased (not owned) by foreigners who have lived in Costa Rica for at least five years.

Outside this Maritime Zone, Americans face no restrictions compared to Costa Rican citizens. You can purchase residential properties, commercial buildings, and land throughout the country without any limitations on the number of properties or their value.

It's something we develop in our Costa Rica property pack.

Do Americans need to be residents or have a visa to purchase real estate in Costa Rica?

Americans do not need to be residents or have a visa to buy real estate in Costa Rica.

Property can be purchased while on a tourist visa, and many foreigners buy property without ever applying for residency. The Costa Rica government welcomes foreign investment in real estate and has structured its laws to facilitate property purchases by non-residents.

You can complete the entire property purchase process during a vacation or short-term visit to Costa Rica. Tourist visas typically allow stays of up to 90 days, which provides sufficient time to identify properties, conduct due diligence, and complete the purchase process.

While residency is not required for property ownership, some Americans choose to pursue residency status for other benefits such as easier banking, potential tax advantages, or the ability to lease properties in the Maritime Zone after five years of residency.

Is it necessary for Americans to be physically present in Costa Rica to complete a real estate transaction, or can it be done remotely?

Both parties must generally be physically present at closing to sign documents in Costa Rica.

The Costa Rica legal system requires notarized signatures for property transfers, and notaries typically require in-person appearance to verify identity and witness the signing of documents. This is a standard practice that protects both buyers and sellers from fraud.

If you cannot be present at closing, there is an alternative option of granting a power of attorney to a trusted representative. This power of attorney must be properly notarized and translated into Spanish, allowing your representative to sign documents on your behalf.

Remote signing through digital platforms is not standard practice in Costa Rica real estate transactions. The traditional notary system remains the primary method for completing property transfers, emphasizing the importance of planning your travel schedule around the closing date.

What is the step-by-step process for an American to buy a home in Costa Rica, and what documents are required?

The Costa Rica property purchase process follows a structured seven-step approach that typically takes 30-60 days to complete.

Here is the complete step-by-step process:

1. **Identify a Property**: Work with a reputable real estate agent to find a property that fits your needs and budget2. **Conduct Due Diligence**: Verify the property title, check for encumbrances, and confirm boundaries through a title search at the National Registry3. **Sign a Purchase Agreement**: Once you agree on terms, sign a promissory agreement, usually with a deposit of 5-10% of the purchase price4. **Finalize Financing**: Secure funding, whether through local banks or personal funds from your home country5. **Attend Closing**: Both parties must be present (or represented by power of attorney) to sign the final deed at a notary6. **Register the Property**: The notary files the deed with the National Registry to transfer ownership7. **Obtain Insurance**: Secure property insurance and begin utility transfers

The required documents include your passport (notarized and translated if required), proof of funds or financing approval, power of attorney if you cannot be present, clean title certificate from the National Registry, and property survey if available, especially for rural land.

The due diligence phase is particularly critical, as it involves verifying that the seller has clear title to the property and that there are no liens, encumbrances, or legal disputes affecting the property.

Is hiring a local attorney mandatory or strongly recommended for Americans buying property in Costa Rica?

Hiring a local attorney is strongly recommended, though not legally mandatory for Americans buying property in Costa Rica.

A trusted legal professional ensures compliance with local laws, verifies property titles, and protects against fraud or legal disputes. This is especially important due to the less regulated market compared to the United States, where real estate transactions have more standardized consumer protections.

Local attorneys familiar with Costa Rica real estate law can identify potential issues that might not be apparent to foreign buyers, such as zoning restrictions, environmental regulations, or future development plans that could affect property value.

The cost of hiring an attorney typically ranges from 1-2% of the property value, which is a reasonable investment considering the protection it provides. Many attorneys also coordinate with real estate agents and notaries to streamline the purchase process and ensure all legal requirements are met.

It's something we develop in our Costa Rica property pack.

What are the common legal and financial pitfalls Americans face when buying property in Costa Rica, and how can they avoid them?

Americans buying property in Costa Rica commonly encounter five major pitfalls that can result in significant financial losses.

Deficient due diligence is the most serious pitfall, where buyers fail to verify titles, boundaries, or zoning restrictions. This can lead to legal disputes, boundary conflicts, or discovery that the property cannot be used as intended. Conduct thorough title searches at the National Registry and verify all property boundaries with a licensed surveyor.

Unexpected expenses frequently catch American buyers off guard, as closing costs, transfer taxes, notary fees, and legal fees can add 3-5% to the total purchase price. Budget for these additional costs from the beginning and request a detailed breakdown of all fees before signing any agreements.

Scams and fraud occur more frequently in Costa Rica's less regulated market compared to the United States. Work only with reputable agents and attorneys, verify all credentials, and be suspicious of deals that seem too good to be true or require unusual payment methods.

Ignoring maintenance costs is particularly common for Americans purchasing vacation homes or investment properties they won't occupy full-time. Property management, regular maintenance, and upkeep in Costa Rica's tropical climate can be substantial. Factor these ongoing costs into your investment calculations.

Market misunderstanding leads to poor investment decisions when Americans don't research local market trends, seasonal demand patterns, or future development plans that could affect property values. Stay informed about regional development projects, infrastructure improvements, and tourism trends that impact property demand.

Can Americans get a mortgage in Costa Rica, and if so, what are the typical terms, interest rates, and conditions?

Americans can get a mortgage in Costa Rica, but the process is complex and bureaucratic compared to financing in the United States.

Local banks require significant documentation, including proof of income, banking history, and credit reports from your home country. All documents must be translated into Spanish by a certified translator, which adds time and cost to the process.

Mortgage Aspect	Typical Terms	Additional Notes
Down Payment	25-50% of purchase price	Higher than typical US requirements
Loan Term	Up to 20 years maximum	Shorter terms than US mortgages
Interest Rate	7.5-10% annually	Fixed for initial years, then variable
Loan-to-Value Ratio	Up to 75% maximum	Minimum 25% down payment required
Prepayment Penalty	Up to 3% if paid early	Applies if paid before year 5
Processing Time	60-90 days typically	Longer than US mortgage approval
Currency	Costa Rican colones or USD	USD loans may have better terms

Many Americans find it easier to secure financing from their home country banks or use cash from property sales in the United States, as the documentation requirements and approval process can be challenging for foreign borrowers in Costa Rica.

What are the best regions in Costa Rica for Americans to live, based on safety, infrastructure, healthcare, and lifestyle?

The best regions for Americans depend on lifestyle preferences, but three areas consistently rank highest for safety, infrastructure, healthcare, and expat communities.

Guanacaste Province, including Tamarindo, Playa Flamingo, and Nosara, is popular for beach living, tourism, and established expat communities. This region offers excellent beaches, developed tourism infrastructure, and proximity to Liberia International Airport. Healthcare facilities are adequate for routine care, with more serious medical needs requiring travel to San José.

Central Valley, encompassing San José, Escazú, and Santa Ana, offers urban amenities, excellent healthcare, and international schools. This region provides the best healthcare facilities in Costa Rica, including modern hospitals and English-speaking medical professionals. Infrastructure is most developed here, with reliable internet, good roads, and proximity to Juan Santamaría International Airport.

Pacific Coast areas like Santa Teresa and Dominical are known for surfing, eco-tourism, and relaxed lifestyle. These areas attract younger expats and retirees seeking a more laid-back atmosphere. Infrastructure is improving but still developing, and healthcare facilities are more limited compared to urban areas.

All three regions are recognized for relative safety compared to other Central American countries, though standard precautions apply. The Central Valley offers the most comprehensive services, while coastal areas provide better beach lifestyle and tourism-related investment opportunities.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Costa Rica versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Where do Americans typically invest for rental income or capital appreciation, and what are the recent gross rental yields and tourism statistics by region?

Americans typically invest in coastal areas for high rental yields during tourist seasons and in Central Valley for steady appreciation and professional rental demand.

Coastal investment areas like Tamarindo, Santa Teresa, and Nosara generate the highest rental yields due to strong tourism demand. These areas benefit from international airport access, established tourism infrastructure, and year-round demand from both tourists and short-term residents. Properties in these locations often achieve occupancy rates of 60-80% during peak seasons.

Central Valley investments, particularly in San José, Escazú, and Santa Ana, provide steady rental demand from professionals, expats, and students. These areas offer more consistent year-round rental income but typically lower yields than tourist-focused coastal properties.

Recent gross rental yields by region show significant variation: national average is 7.27%, San José achieves 8.25%, Heredia reaches 7.67%, and Santa Ana provides 7.01%. Coastal tourist areas often achieve higher yields during peak seasons but may experience seasonal fluctuations.

Costa Rica's tourism sector remains robust, with coastal regions experiencing high occupancy rates, especially during peak seasons from December to April and July to August. The country consistently ranks among the top eco-tourism destinations globally, supporting strong rental demand in well-located properties.

It's something we develop in our Costa Rica property pack.

How do property prices compare across popular areas in Costa Rica, like San José, Tamarindo, Nosara, Santa Teresa, and Dominical?

Property prices vary significantly across Costa Rica's popular areas, with coastal tourist destinations commanding premium prices compared to urban centers.

Region	Typical House Price (USD)	Market Characteristics
San José	$180,000	Urban center, best infrastructure, high rental demand
Central Pacific	$230,000+	Higher for beachfront, tourism-driven market
Tamarindo	$300,000-$1M+	Luxury market, established expat community, high rental demand
Nosara	$400,000-$1M+	Eco-tourism focus, upscale market, strong expat presence
Santa Teresa	$350,000-$1M+	Surfing destination, bohemian atmosphere, growing expat community
Dominical	$250,000-$800,000+	Eco-tourism, relaxed lifestyle, expat-friendly
Escazú	$280,000-$600,000	Upscale suburb, international amenities, expat services

San José offers the most affordable entry point for property investment, with strong rental demand from professionals and students. The urban market provides steady appreciation and rental income but lacks the tourism-driven yields of coastal areas.

Coastal premium destinations like Tamarindo and Nosara command the highest prices due to established tourism infrastructure, international airport access, and strong expat communities. These areas attract luxury buyers and investors seeking vacation rental properties.

Santa Teresa and Dominical represent emerging markets with strong growth potential but requiring more tolerance for developing infrastructure and services compared to established areas like Tamarindo.

What are the tax and fiscal implications for Americans owning property in Costa Rica, including income tax on rentals and capital gains?

Americans owning property in Costa Rica face several tax obligations both locally and potentially in the United States.

Annual property tax in Costa Rica is 0.25% of the declared property value, which is typically lower than market value. Properties valued over $250,000 are subject to additional luxury tax ranging from 0.25% to 0.55% depending on the total value.

Transfer tax of 1.5% of the purchase price is paid at the time of purchase, along with notary fees and legal costs that typically add another 1-2% to the total transaction cost.

Rental income tax applies to Americans earning rental income from Costa Rica properties. The first 3.8 million colones (approximately $7,600 annually) is tax-free. Above this threshold, progressive tax rates of 10-25% apply to rental income. Short-term rentals are subject to an additional 13% VAT.

Capital gains tax treatment in Costa Rica is complex and depends on various factors including how long the property was held and whether gains are reinvested in Costa Rica. Americans should consult with both Costa Rica and US tax professionals to understand their complete tax obligations.

US tax implications may include reporting foreign property ownership on Form 8938 if total foreign assets exceed certain thresholds, and potential taxation of rental income and capital gains under US tax law regardless of Costa Rica tax treatment.

What are the most common mistakes Americans make when trying to invest in Costa Rican real estate, and what tips can help avoid them?

Americans commonly make five critical mistakes when investing in Costa Rica real estate that can result in significant financial losses.

Not conducting proper research on the market, location, or legal requirements is the most expensive mistake. Many Americans rely on vacation impressions rather than thorough market analysis, leading to poor investment decisions. Research local market trends, rental demand patterns, seasonal fluctuations, and future development plans before making purchase decisions.

Ignoring due diligence on property titles and boundaries causes legal problems and financial losses. The Costa Rica property system is different from the United States, and title issues can be complex. Always conduct comprehensive title searches, verify boundaries with licensed surveyors, and ensure all permits and zoning compliance.

Underestimating total costs beyond the purchase price catches many buyers unprepared. Closing costs, transfer taxes, legal fees, ongoing maintenance, property management, and insurance can add 5-8% annually to the total investment cost. Create detailed budgets including all ongoing expenses before committing to purchases.

Not hiring qualified local professionals to navigate the legal and regulatory environment leads to compliance issues and missed opportunities. Work with experienced local attorneys, accountants, and real estate agents who understand both Costa Rica law and American investor needs.

Ignoring local market trends and future developments results in poor location choices and timing decisions. Stay informed about infrastructure projects, tourism developments, environmental regulations, and economic trends that affect property values and rental demand in your target area.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. TheLatinvestor - Costa Rica Buying Property American
2. CB Sunset Tree Realty - Residency Requirements for US Citizens
3. CRIE - About Buying Property in Costa Rica for US Citizens
4. HRG Vacations - Guide Buying Property Costa Rica
5. Lang CR - FAQs on Real Estate Closings in Costa Rica
6. GAP Real Estate - Best Practices for Buying Real Estate
7. Special Places of Costa Rica - Top Pitfalls of Buying Property
8. RE/MAX Ocean Surf - Financing for Foreigners
9. Global Property Guide - Costa Rica Rental Yields
10. RE/MAX Costa Rica - Average Cost of a House