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?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

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 The LatinVestor, we explore the Costa Rican 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 Manuel Antonio. 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 what restrictions exist?

Americans have full legal rights to purchase and own property in Costa Rica with virtually the same protections as Costa Rican citizens.

Foreign buyers, including Americans, face only one significant restriction: properties within the Maritime-Terrestrial Zone, which extends 200 meters inland from the coastline. In these beachfront areas, foreigners can only own up to 49% of a property through a corporation structure, while Costa Rican nationals must hold at least 51% ownership.

Outside of this coastal zone, Americans can purchase residential properties, condominiums, commercial buildings, and land with complete ownership rights. There are no citizenship requirements, investment minimums, or restrictions on the number of properties you can own. The Costa Rican government actively encourages foreign investment in real estate as part of its economic development strategy.

Property ownership is secured through the National Registry system, which provides clear title documentation and legal protection. This system has been functioning reliably for decades and offers the same security level that American buyers would expect in the United States.

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

Do Americans need residency or a visa to purchase property in Costa Rica?

No residency status or special visa is required for Americans to buy property in Costa Rica.

You can complete an entire real estate transaction using only a valid U.S. passport as identification. Costa Rica's property laws specifically allow non-resident foreigners to purchase real estate without any preliminary residency requirements or long-term visa applications.

The distinction between property ownership and residency is important to understand. While you don't need residency to buy property, you will need appropriate residency status if you plan to live in Costa Rica for more than 90 days at a time. Tourist visas allow stays up to 90 days, which can be renewed by briefly leaving the country.

Some Americans choose to pursue residency after purchasing property, but this is separate from the buying process itself. Residency applications can actually be easier once you own property in Costa Rica, as it demonstrates ties to the country, though property ownership alone doesn't automatically qualify you for residency status.

Must Americans be physically present during the property purchase process?

Physical presence in Costa Rica is not required to complete a property purchase.

Americans can execute the entire transaction remotely through a Power of Attorney arrangement. This legal document authorizes a trusted representative, typically your Costa Rican attorney, to sign documents and complete the purchase on your behalf.

The Power of Attorney must be properly notarized in the United States and then authenticated by the Costa Rican consulate before use. Many experienced attorneys handling foreign buyers can guide you through this process efficiently. However, many buyers choose to be present for the final closing as it provides additional peace of mind and allows for final property inspection.

If you do choose to be present, the closing typically takes place at the notary's office and can be completed in a single day once all documentation is prepared. Being present also allows you to open local bank accounts, set up utilities, and handle other practical matters immediately after purchase.

What is the complete step-by-step process for Americans buying Costa Rican property?

The property purchase process in Costa Rica follows a structured legal framework that protects both buyers and sellers.

1. **Property Search and Selection**: Work with a licensed real estate agent to identify suitable properties. Verify the agent's credentials and ensure they have experience with foreign buyers.2. **Initial Offer and Negotiation**: Submit a Letter of Intent (LOI) outlining your offer terms, including price, conditions, and timeline. This is typically non-binding but shows serious interest.3. **Purchase Agreement**: Sign an Option to Purchase and Sale Agreement (SPA) that includes specific terms, contingencies, and a timeline for closing. This usually requires a deposit of 5-10% of the purchase price.4. **Due Diligence Period**: Your attorney conducts comprehensive title searches, property surveys, and legal verification. This includes checking for liens, easements, boundary disputes, and proper permits.5. **Escrow and Financing**: Deposit the remaining funds into an escrow account managed by a reputable company. If financing is involved, finalize mortgage arrangements during this period.6. **Final Documentation**: Prepare the Transfer Deed (Escritura de Traspaso) and gather all required documents including your passport, tax identification number (NITE for non-residents), and official property survey (Plano Catastrado).7. **Closing and Registration**: Complete the transaction before a Notary Public, who must also be a licensed attorney in Costa Rica. The deed is signed and immediately registered with the National Registry.8. **Title Transfer**: Receive your official title documents from the National Registry, typically within 2-3 weeks after closing.

Is hiring a lawyer mandatory, and how do you find a qualified one?

Hiring a qualified attorney is effectively mandatory for property purchases in Costa Rica.

Only licensed attorneys who are also registered Notary Publics can execute and register property transfers in Costa Rica. This dual requirement ensures that your transaction is handled by someone with comprehensive legal training and official authority to complete the transfer.

When selecting an attorney, prioritize those with specific real estate experience and bilingual capabilities. Look for lawyers who are members of the Costa Rican Bar Association (Colegio de Abogados) and have positive references from other American buyers. Reputable real estate agencies often maintain relationships with qualified attorneys and can provide referrals.

Attorney fees typically range from 1% to 1.5% of the property value, which includes notary services, document preparation, and registration. While this may seem expensive, the attorney's role is crucial for verifying clear title, ensuring proper documentation, and protecting your interests throughout the transaction.

Avoid attorneys who quote unusually low fees, as this often indicates inexperience or potential corner-cutting that could create problems later. A qualified attorney will also help you understand tax implications and ongoing legal obligations as a property owner.

What are the main taxes, fees, and ongoing costs for American buyers?

Americans face the same tax obligations as local buyers, with total closing costs typically reaching 3-4% of the property purchase price.

Cost Category	Rate/Amount	Paid By
Transfer Tax	1.5% of purchase price	Buyer
Legal/Notary Fees	1-1.5% of property value	Buyer
Property Survey	$800-$1,500	Buyer
Title Insurance (optional)	0.5-1% of property value	Buyer
Escrow Fees	$500-$1,000	Split between parties
Registration Fees	$200-$500	Buyer
Annual Property Tax	0.25% of registered value	Owner (ongoing)

Ongoing costs include annual property taxes calculated at 0.25% of the registered property value, which is typically lower than market value. Properties valued over $200,000 may be subject to luxury home taxes. Additional recurring expenses include municipal services, utilities, and condominium fees if applicable.

Foreign buyers don't face any additional taxes or fees compared to Costa Rican citizens, making the country particularly attractive for international investment.

Can Americans get mortgages in Costa Rica, and what are current rates?

Mortgage financing is available for Americans in Costa Rica, though requirements are stricter than domestic financing options.

As of September 2025, interest rates for foreign buyers typically range from 6% to 9.5% annually, depending on the lender, property type, and buyer qualifications. Local banks including Banco Nacional, BAC San José, and Banco Popular offer foreign buyer programs, though approval requirements are stringent.

Most Costa Rican banks require foreign borrowers to demonstrate significant local income, obtain residency status, or provide substantial collateral. Down payment requirements usually range from 25% to 40% of the property value. Many Americans find it more practical to secure financing through U.S. banks using home equity loans or cash-out refinancing on existing U.S. properties.

Some international banks with Costa Rican operations, such as Scotiabank, may offer more flexible terms for qualified borrowers with existing international banking relationships. Developer financing is also available for new construction projects, often with more attractive terms than traditional bank mortgages.

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

Which areas of Costa Rica are most popular among American residents?

American expats concentrate in specific regions that offer optimal combinations of climate, amenities, and established expat communities.

The Central Valley, including Escazú, Santa Ana, and Atenas, attracts Americans seeking urban conveniences with cooler mountain climates. These areas offer excellent healthcare facilities, international schools, and easy access to San José's international airport. Escazú and Santa Ana are particularly popular among business professionals and retirees who want modern amenities.

The Guanacaste Gold Coast, featuring Tamarindo, Flamingo, and Playas del Coco, draws Americans seeking beachfront living with established tourist infrastructure. These areas offer numerous restaurants, English-speaking services, and direct flights to North America during peak season.

The Southern Zone around Dominical, Uvita, and Ojochal appeals to environmentally conscious Americans seeking quieter, more natural settings. This region offers excellent eco-tourism opportunities and tends to attract younger demographics and digital nomads.

Lake Arenal provides a unique option with cooler temperatures, stunning scenery, and a growing American community. The area around Nuevo Arenal has become particularly popular among retirees seeking affordable living with natural beauty.

Which areas offer the best investment potential for rental income and appreciation?

Coastal regions near international airports and established tourist infrastructure offer the strongest rental income potential for American investors.

Tamarindo leads rental yield performance with annual returns ranging from 7% to 10% for well-positioned vacation rentals. The town's international airport access, established tourist infrastructure, and year-round demand from North American visitors create consistent rental opportunities.

Manuel Antonio provides premium rental rates due to its national park status and upscale tourist demographics, though yields typically range from 5% to 8% due to higher property acquisition costs. The area's limited development potential helps protect property values long-term.

Jaco offers strong rental yields of 6% to 9% with growing popularity among digital nomads and younger travelers. Its proximity to San José airport and consistent surf conditions support year-round demand.

The Papagayo Peninsula represents the luxury market segment with appreciation potential driven by high-end resort development and limited supply. While rental yields are lower at 4% to 6%, capital appreciation prospects are strong for premium properties.

Central Valley locations like Escazú and Santa Ana offer stable long-term rental markets serving international business travelers and expatriate families, with yields typically ranging from 4% to 7%.

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.

What are current average home prices across Costa Rica's regions?

Costa Rican property prices vary significantly by location, with coastal and upscale Central Valley areas commanding premium pricing.

Region/City	Average 2-Bedroom Home	Average 3-Bedroom Home
San José Metropolitan	$125,000 - $250,000	$180,000 - $350,000
Escazú/Santa Ana	$250,000 - $500,000	$350,000 - $750,000
Tamarindo/Coastal Guanacaste	$300,000 - $750,000	$450,000 - $1,200,000
Manuel Antonio	$400,000 - $800,000	$600,000 - $1,500,000
Nosara/Guiones	$400,000 - $1,000,000	$650,000 - $1,800,000
Southern Zone (Dominical/Uvita)	$200,000 - $500,000	$300,000 - $750,000
Central Valley (Atenas/Grecia)	$150,000 - $350,000	$220,000 - $500,000

Beachfront properties command significant premiums, often 50% to 100% above non-oceanfront homes in the same area. Properties with ocean views typically price 20% to 40% above similar homes without views. New construction and luxury developments can exceed these ranges significantly, particularly in exclusive areas like Peninsula Papagayo or Los Sueños.

What are the most common mistakes Americans make when buying Costa Rican property?

The most costly mistake Americans make is inadequate due diligence on property titles and legal restrictions.

Failing to conduct comprehensive title searches can result in purchasing properties with hidden liens, boundary disputes, or unclear ownership history. Some Americans also unknowingly purchase in Maritime-Terrestrial Zones without understanding the 49% foreign ownership limitation, creating future resale complications.

Overestimating rental income potential leads to financial disappointment for many investors. Americans often base projections on peak season rates without accounting for seasonality, vacancy periods, maintenance costs, and local competition. Realistic annual occupancy rates for vacation rentals typically range from 40% to 65%.

Underestimating total ownership costs beyond the purchase price catches many buyers unprepared. Beyond closing costs, Americans often fail to budget for ongoing expenses including property management fees (10-15% of rental income), maintenance reserves, insurance, and periodic capital improvements required in tropical climates.

Choosing inexperienced attorneys or skipping legal representation entirely creates significant risks. Some Americans attempt to save money by using general practice lawyers unfamiliar with real estate transactions or foreign buyer requirements.

Rushing the purchase process due to vacation timeline pressure leads to inadequate property inspection and negotiation. Taking time for proper evaluation and multiple property visits typically results in better purchase decisions and terms.

How does Costa Rican property ownership affect American tax obligations?

American property owners in Costa Rica face tax obligations in both countries, requiring careful planning to optimize total tax burden.

In Costa Rica, property owners pay annual property taxes at 0.25% of registered value, which is typically 70-80% of market value. Capital gains taxes apply to property sales, with rates varying based on ownership duration and residency status. Properties held over two years by non-residents face capital gains tax rates of 15% on profits.

U.S. tax obligations continue for all American citizens regardless of property location. Rental income from Costa Rican properties must be reported on U.S. tax returns, though foreign tax credits may reduce total U.S. tax liability. Americans must also report foreign bank accounts related to property ownership if balances exceed $10,000 annually.

Capital gains from Costa Rican property sales are subject to U.S. taxation, though foreign tax credits for Costa Rican capital gains taxes paid can reduce U.S. obligations. The foreign earned income exclusion does not apply to rental income or capital gains from property ownership.

Estate planning considerations are complex for Americans owning Costa Rican property, as both countries may claim estate tax jurisdiction. Proper legal structuring through trusts or corporations can optimize tax efficiency and simplify inheritance processes.

Consulting with tax professionals experienced in U.S.-Costa Rica tax treaties and international real estate is essential for compliance and optimization.

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

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. Central America Second Homes - Costa Rica FAQs
2. Wise - Buy Property in Costa Rica Guide
3. RE/MAX Ocean Surf - Buying Property Costa Rica
4. Coldwell Banker Costa Rica - Property Buying Guide
5. Special Places of Costa Rica - Property FAQs
6. Quatro Legal - Non-Resident Property Ownership
7. Tico Times - Legal Terms Glossary
8. HRG Vacations - Property Buying Guide
9. OSA Property Management - Purchase Guide
10. Costa Rica Guide - Real Estate Buying Process