Understanding Property Transfer Taxes and Closing Costs in Costa Rica

Why Closing Costs Matter

When buying real estate in Costa Rica, most buyers focus on the purchase price. But what often surprises first-time investors and expats are the transaction costs - the fees and taxes required to legally transfer property ownership.

Unlike North America, where closing costs can vary widely by state or province, Costa Rica follows a national structure. That consistency makes the process more predictable, but it also means you should understand every line item before signing the deal.

For foreign buyers, mastering the math behind closing costs isn’t just about budgeting - it’s about protecting your investment from unnecessary expenses or misunderstandings.

The Core Cost: Transfer Tax

The property transfer tax is the central government fee applied when ownership changes hands. It’s calculated as 1.5% of the declared property value, payable to the National Registry (Registro Nacional) at the time of transfer.

For example:

• On a property valued at $300,000, the transfer tax equals $4,500.

• On a $1 million luxury villa, expect $15,000.

  
  

The key detail lies in the declared value. Costa Rican law allows the buyer and seller to report a value equal to or higher than the registered municipal value, but never lower. Most transactions now declare the true market value to avoid future legal issues and to reflect accurate taxation, especially for resale and capital gains purposes.

Notary and Legal Fees

Every real estate transfer in Costa Rica must be executed by a licensed Notary Public, who also functions as your closing attorney. Notary fees are typically 1% to 1.25% of the property value, covering deed preparation, registry filings, and official recording.

If your property is valued at $500,000, legal and notary fees will likely range from $5,000 to $6,250. These fees can vary depending on complexity - for example, if a corporation is being transferred or a special escrow structure is used.

A common practice among serious buyers is to hire their own independent attorney, even if the developer or seller provides one. This ensures that your representation is unbiased and your due diligence is done properly.

Additional Registration and Documentation Fees

Beyond the main transfer tax and legal fee, several smaller line items make up the full closing cost picture:

Fee Type	Description	Typical Cost
National Registry Fee	Paid to record the title in your name	0.5% of property value
Archive Stamps and Documentary Stamps	Small government stamp duties	$100–$300
Municipal Tax Clearance	Verifies seller has paid all local property taxes	Usually included in legal process
Escrow Account Fee	Third-party company handling funds securely	$300–$600
Due Diligence Report (optional)	Independent verification of title, water, and permits	$800–$1,200

In most cases, total closing costs range between 3% and 4% of the property’s declared value.

Who Pays the Closing Costs?

In Costa Rica, buyer and seller can negotiate who pays what portion of the closing costs. Traditionally, the buyer covers the transfer tax and legal fees, while the seller pays any capital gains or broker commission.

However, in competitive transactions - for instance, new construction or luxury listings - developers may offer to split closing costs or cover registration fees to incentivize buyers.

The Role of Escrow and Earnest Deposits

All serious real estate transactions in Costa Rica now use regulated escrow accounts, which protect both parties and ensure compliance with anti-money-laundering laws.

The typical process involves:

• A 5% to 10% earnest deposit placed in escrow once the purchase agreement is signed.

• Funds remain there until all due diligence is complete.

• On closing day, the escrow releases payment to the seller after title transfer is officially registered.

  
  

Always verify that the escrow company is SUGEF-approved (the Costa Rican financial regulatory authority). This protects your funds under local financial law.

Common Buyer Questions About Closing Costs

1. Can I reduce the transfer tax by declaring a lower value? Technically, you must declare at least the registered municipal value, and it’s increasingly standard practice to declare the full purchase price. Under-declaring can complicate future resale or financing.

2. Are closing costs higher for foreigners? No. Costa Rica’s system does not differentiate between foreign and local buyers — everyone pays the same rates.

3. What happens if I buy through a corporation? If you purchase an existing corporation that already owns the property, you’re technically buying shares, not real estate. In this case, transfer tax may not apply, but legal and notary fees still do. Always have an attorney verify that the corporation has no hidden debts or pending taxes.

4. Can closing costs be paid in U.S. dollars? Yes. Most transactions in tourist and expat regions are denominated and settled in U.S. dollars, though official filings at the registry will be recorded in colones.

Avoiding Unnecessary Costs

To prevent surprises:

• Request a pro forma closing cost estimate from your attorney before signing.

• Confirm all fees in writing — especially notary percentages and escrow charges.

• Ensure that the seller provides proof of paid property taxes and utilities to avoid inheriting unpaid bills.

• Always use a licensed real estate attorney who is a registered notary in Costa Rica.

  
  

Doing your due diligence up front can easily save several thousand dollars — and days of bureaucratic frustration.

Expert Insight

“Most foreign buyers don’t realize how transparent Costa Rica’s closing process is once you understand the system,” says José Andrés Porras, a notary public based in Liberia. “Unlike other Latin American markets, there’s a single national registry, and every property transaction is public. That means a good attorney can verify title history, liens, and ownership in minutes.”

This transparency, combined with predictable taxes, is part of what makes Costa Rica so attractive to foreign investors. The key is clarity and patience: don’t rush the process, and insist on clear documentation at every step.

Final Thoughts

Property transfer taxes and closing costs are a necessary part of buying in Costa Rica - but they don’t have to be confusing. With transparent laws, regulated escrow systems, and predictable fee structures, the process is far more straightforward than many buyers expect.

The takeaway: budget roughly 3% to 4% on top of your purchase price for a safe and clean transaction. Partner with experienced professionals, declare values honestly, and you’ll find the Costa Rican real estate closing system refreshingly clear - and remarkably fair.

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