How Property Ownership Works in Costa Rica

Commercial Property

If you’re seeking commercial property in Playa Hermosa, Playas del Coco or the surrounding areas around the northern beaches of Guanacaste, we’re here to help! Just tell us exactly what you’re looking for and we’ll be more than happy to do the footwork required to find your perfect property.

Beachfront Properties

If your dream is to own a beachfront property in Costa Rica, it’s not totally impossible. But it’s not uncomplicated, either. There is only one type of property that a person who has not been a legal resident of Costa Rica for 5 years cannot buy outright, and that is concession beachfront property. Allow us to explain with a quick history lesson.

In 1973, Costa Rica passed legislation that regulated the ownership, sale and purchase of properties located on the shoreline. The Shoreline is legally defined as a strip of land measuring two hundred meters wide, starting from the line set by the lowest tide and moving inward two-hundred meters. Of those two-hundred meters, the first fifty are public domain/government owned land and, therefore, cannot be owned by any physical or legal person. Access to that fifty-meter strip is open to all, since it is meant to be for public use.

The administration of the remaining strip measuring one hundred and fifty meters wide, also known as the “Restricted Area”, has been awarded to the local Municipalities, who may grant concessions for its use. These regulations are governed by the “Shoreline Zone Act” (in Spanish: “Ley de Zona Marítimo Terrestre”), which establishes a number of conditions and regulations instated for the use of concessions granted in the maritime-terrestrial zone. Some of these conditions and regulations are described below.

Limitations to Possessing Concessions: As of this writing, new legislation for eliminating the prohibitions restricting the concession of shoreline areas to foreigners is being discussed in the Costa Rican Congress. Currently, the Shoreline Zone Act establishes that the following persons and entities cannot be granted concessions in the Shoreline Zone:

I – foreigners who have not resided in the country for at least five years;

II – corporations with bearer shares;

III – corporations registered or established abroad;

IV – corporations and entities constituted by foreigners; and,

V – corporations in which more than fifty percent of the capital stock is owned by foreigners.

Procedure to Register a Concession: The procedure to be followed for a land grant or concession consists mainly of submitting a request before the local Municipality. The request will be reviewed and the land will be inspected. If approved, the local Municipality will issue a notice that must be published in the official newspaper providing an opportunity for interested parties to manifest their concerns, complaints or opposition regarding usage rights that may have existed previously.

Once this procedure concludes, the Municipality will be able to pass a resolution approving the concession and authorizing the drafting of a contract with the selected beneficiary, and such document must also be approved and signed by the Costa Rican Tourism Board. After this contract has been signed, a Public Notary must notarize the document and file it before the Concession Registry of the Costa Rican Public Registry, to guarantee that the grant will be protected from potential future claims by third parties.

Term of the Concession: Concessions are granted for terms ranging from five to thirty years, but they may be extended for equal time spans if the beneficiary of the concession has complied with the Municipality’s requirements and established concession fees have been paid on the required dates.

Payment of Concession Rights: Upon the granting of concession, the Municipality will establish an annual cannon (recurring tax obligation) that the beneficiary must pay in order to enjoy the rights granted to him by the Municipality. The concession cannon has been established between 1% and 3% for Condo-Hotel and Hotel zoning and 4% for residential zoning. The amounts are calculated based on the appraisal that is done by the Tax Administration and it can be updated each 5 years. The value appraised is not based on the market value.

If you’re still set on buying concession beachfront property and have legally resided in Costa Rica for at least 5 years, then please feel free to contact us and we’ll help you through the process.

The Ins and Outs of Homeowners Associations

Homeowners Associations (HOAs) are available in Costa Rica and can offer some fantastic benefits, but they also come with their own set of considerations. Let’s take a closer look at what living in an HOA in Costa Rica entails so you can make an informed decision that suits your lifestyle and preferences.

The Pros of Living in an HOA in Costa Rica

Landscape Maintenance: One of the biggest advantages of living in an HOA community is the professional landscape maintenance of common areas of the development. Imagine waking up to lush, manicured gardens, vibrant flowers, and perfectly trimmed hedges—all without lifting a finger.

HOAs often hire landscaping companies to maintain the community’s green spaces, ensuring that the entire neighborhood looks pristine year-round. This not only enhances the beauty of your surroundings but also helps maintain property values. If you end up purchasing a property and are not planning on staying in Costa Rica full time, and if it is a single family home, you may ask the HOA to take care of your personal landscaping as well. It is a convenient way to have your landscape taken care of. This way, you do not come home to an overgrown jungle!

Exterior Home Maintenance: In an HOA community, particularly in a condo complex, exterior home maintenance is often taken care of for you. This means that tasks like painting, roof repairs, and gutter cleaning are handled by the HOA, saving you time and hassle. Plus, because the HOA oversees these maintenance tasks, you can rest assured that they are done to a high standard, keeping your condo in top condition. If it is a single family home the maintenance will be the responsibility of the homeowner.

Amenities: Many HOA communities in Costa Rica offer fantastic amenities that residents can enjoy. From swimming pools and fitness centers to tennis courts and walking trails, these amenities can enhance your quality of life and provide opportunities to socialize with your neighbors. Best of all, the cost of maintaining these amenities is included in your HOA fees, making them a cost-effective way to enjoy a range of leisure activities.

Conflict Resolution: Living in close proximity to your neighbors can sometimes lead to conflicts, but HOAs can help mitigate these issues. HOAs often have rules and regulations in place to address common disputes, such as noise complaints. Additionally, many HOAs have a formal process for resolving conflicts, which can help maintain harmony within the community.

Security: This is a top priority for many homeowners, and HOA communities often offer enhanced security measures. This can include gated entrances, security patrols, and surveillance cameras, all of which help keep residents safe. By living in an HOA community, you can enjoy peace of mind knowing that your home and neighborhood are well-protected.

The Cons of Living in an HOA in Costa Rica

Now let’s take a look at some of the negatives of living in an HOA:

Fees: One of the most significant concerns for homeowners in an HOA is the fees. HOAs typically charge monthly or annual fees to cover the costs of maintaining common areas, amenities, and services. While these fees can vary widely, they can add a significant expense to your monthly budget. It’s essential to carefully review the HOA’s financials and fee structure before purchasing a property to ensure that you can afford the ongoing costs.

Exterior Regulations: Living in an HOA community often means adhering to strict exterior regulations. These regulations can govern everything from the color you can paint your home to the type of plants you can have in your yard. While these rules are intended to maintain the community’s aesthetic appeal, they can feel restrictive to some homeowners who prefer more freedom in how they maintain their property.

More Rules: HOAs typically have a set of rules and regulations that all residents must follow. These rules can cover a wide range of topics, including noise levels, parking restrictions, and even the types of pets allowed. While these rules are designed to create a harmonious community, they can sometimes feel overly strict or arbitrary to residents.

Cookie-Cutter Designs: In some HOA communities, there may be restrictions on the types of homes that can be built. This can result in a neighborhood where many homes look similar or have a “cookie-cutter” design. While this uniformity can create a cohesive aesthetic, it can also lead to a lack of individuality and personalization in your home.

Management: The management of an HOA can also be a concern for some homeowners. While many HOAs are well-run and efficient, others may suffer from poor management practices or lack of transparency. This can lead to frustration among residents and issues with the upkeep of common areas and amenities. Most HOA if not all have a Board of Directors that are made up of actual owners in the development, that will oversee the administrator to make sure the owners best interest are in place.

Types of Homeowners Associations in Costa Rica

It’s important to note that there are actually two types of homeowners associations in Costa Rica: one is called a “homeowners association” or private club, and the other is a legally registered association known as a “condominium” – not to be confused with the “condo” property type.

For example, you may come across “Condominium Horizontal” property options during your search for a home in Costa Rica. This property type allows owners to have separate and shared ownership of the entire property, and they consist of several fully titled home lots in a gated community measuring several acres in size.

The services and amenities offered are the main differences between the two types of homeowners associations available in Costa Rica, as well as how the association operates, overall. This is why you’ll find some associations carry much higher monthly fees than others.

The Legalities of Condominiums vs. Private Clubs

It’s important to note that if a development was originally set up under the law of condominium, it has to follow the rules of the law of condominium of Costa Rica. Some of those requirements include an annual meeting with the presence of a legal representative, basically an attorney or notary. All that is discussed and passed during this meeting needs to be registered in the public registry system of Costa Rica. So there is a fee involved with this, as well.

In addition, legally registered condominiums have to file an annual tax return with the government showing the amount of money that came in from dues and all the expenses, as it is considered a non-profit organization. Hence, one of the reasons it’s more expensive is because a legally registered condominium association should have an attorney on staff, as well as a certified public accountant.

Another reason for the difference in cost is that many of the owners may be part-timers not living here day to day, so these associations hire an outside company to manage the day-to-day operations of the associations. This is actually a good thing as it takes the liability off of the property owners, and most do not want to get involved or deal with the daily aspects of the development. So, the administrator will handle all these items, instead, as in managing the security company, the landscapers and so on.

When it comes to security, a well-run and smart association will hire a legally licensed security company and ensure that the company is properly paying its employees to the letter of the law so it doesn’t fall back on the owners in the development. Again, this is why it can be more expensive, as a properly set up security company will cost much more monthly than a company that is not following the laws of the land. It all comes down to getting what you pay for.

The Pros and Cons of Condominiums vs. Private Clubs

One very good aspect of the registered condominium association is that the bylaws and rules and regulations are enforceable by CR law. As another example, say one owner is not paying his dues – after a short period of time, the admin can send legal notices that they are behind. If the owner does not pay up, then the association can legally file a lien on the owner. If the lien is not paid up within a certain period, then the association can start foreclosure proceedings against the property owner to collect what is due to the association. This also helps protect the integrity of the development, as well as the values of your investment.

In a regular, non-enforceable association (that “homeowners association” or private club we mentioned earlier), the fees tend to be much less because there are no teeth to make a person pay their share. Most of them are run by someone who is an owner in the development, but may live here full time and does not have a paid administrator on staff. These developments tend to have fewer amenities, regulations and rules. As an example, your neighbor could keep chickens on his property, even though the rules of the development state that no farm animals are allowed, because it cannot be legally held up or enforced unless the rules and regulations were officially registered with the government.

Listed below are some of the attributes of higher-priced versus lower-priced associations so you can easily spot the difference between the two:

Higher priced associations commonly have the following attributes: 

• More amenities to offer like community pools, tennis courts, and other common areas for nature enjoyment.
• 24/7 security guards, landscapers for common areas, employees or service companies to maintain the common amenities
• A paid administrator to handle paying bills and supervising employees and/or service companies.
• Paid Legal representation to endure the laws are being properly followed
• A Certified Public Accountant and/or financial bookkeeping representation
• Lower priced associations commonly have following attributes:
• Very little to no amenities to offer maybe just a community pool if that.
• Security may only be at night time if there is even any at all
• One of the owners in the development acts as the administrator or the developer is still controlling the association
• Common area maintenance is lacking if any.
• Rules and regulation may not be enforceable.
• No Legal Representative held on retainer.
• No CPA or Bookkeeper held on retainer.

To Be Prepared, You Need To Know What It’s Going To Cost

Now that you know what types of properties are available and how homeowners associations work, let’s take a look at how much it costs to own a home in Costa Rica.

Detailed below are the average costs of the different types of properties, along with the different levels of service included. Of course, a lot depends on your preferences and what you’re looking to own, but the basics are below.

Land and Home Sites

If your dream is to build a private home or an investment for the future as some investors are doing by building a spec home for sale, here’s a list of the basic costs based on a $100,000 dollar purchase of a home lot or parcel of land:

HOA Fees: Depending on the development and the amenities they have to offer the fees can range from $1,200 to $7,000 per year. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services.

Property Tax: On a $100,000 valued lot or land parcel, the annual tax will be $250 per year. The tax rate is .25%. To calculate multiply the assessed value by .25% ($100,000 by .0025). Check out our guide for more on how property taxes work in Costa Rica.

Maintenance: Depending on the size of the lot you can expect to pay $100 – $300 per year to cut and keep the lot clean.

Condominiums

If you, like many buyers that prefer to have a property to utilize right away and rent out when you are not using it, a condo may be the way to go. Here is an example of the carrying cost for a $300,000 condo.

HOA Fees: Again depending on the development and the amenities they have to offer the monthly fees can range from $158 – $750 per month. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services. Of course Condos in a lower price range and a lower end development the fees could be as low as $100.00 per month

Property Taxes: On a $300,000 assessed valued condo the annual property tax will be $750 per year, as stated before the tax rate is .25%. To calculate multiply the assessed value by .25% ($300,000 by .0025)

Electric Costs: Average monthly electric bill will be $150.00, of course if there is more usage the fee will be higher.

Water: Average monthly cost for water is $30.00

Cable TV and Internet: Combined together as a package deal will run $70 per month and up depending on any upgrades you choose.

Maintenance: Basic maintenance for the interior of a condo will be somewhere between $500 and $1000 per year but in most cases it is actually less. I always feel it is far better to estimate higher and be pleasantly surprised than the other way around and be disappointed.

Insurance: Most Condos have general insurance for the building built into the HOA fees, so if you want to insure the contents of your unit in case a water pipe breaks this will cost about $500 per year for normal coverage all depending on the value of the contents insured

Property Management: If you are not living in the property full-time, you will require a property manager to look after your property and pay your bills. If you have a Costa Rica bank account and can read enough Spanish to get by you can pay your own bills from the local bank’s web pages. The average fee for property management companies is between $90 and $150 per month depending on the size and type of property and the amount of work and detail you require. Maid service in Costa Rica is very inexpensive, between $20 and $40 per day depending on the size of the home.

Larger Luxury Houses

This can mean different things to different people but for this example, I am going to use a home valued at $500,000 dollars. For some, this is far from Luxury and to others, it could be considered a Mansion!

HOA Fees: And again, depending on the development and the amenities they have to offer, the monthly fees can range from $1,200 to over $7,000 per year. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services.

Property Taxes: As others listed above, the tax rate is the same, so on a $500,000 assessed valued Luxury Home, the annual property tax will be $1,250 per year, again the tax rate is .25%. To calculate multiply the assessed value by .25% ($500,000 by .0025)

Luxury Tax: Here in Costa Rica, there is a “Luxury Tax” on all residences. The real name of the tax is “Impuesto de Solidaridad”. It was instituted to help clean up the slums of San Jose so people do live in squalor. If the property has a constructed value, based on criteria from the tax administration, of over $230,000 dollars, then the luxury tax is applicable if below that point no tax is required. It all has to do with the products and items used to build the house. So for the average home of $500,000, the luxury tax will be about $1,000 per year average.

Electric Costs: Average monthly electric bill will be $250.00, of course if there is more usage the fee will be higher.

Water: Average monthly cost for water is $75.00 as a home of this size will have more bedrooms and more usage as well as having a pool to top off one or twice a month.

Cable TV and Internet: Combined together as a package deal will run $70 per month. Same as mentioned above.

Pool Service: Depending on the size of your pool and how often you like it to be cleaned you can expect the monthly fee for pool service to be between $50 and $120 per month and this usually includes the chemicals as well. Each Pool service company is slightly different.

Landscaping: Here as well depends on the size of your property and how much attention is needed to maintain a beautiful lawn and gardens. Average prices for landscaping are between $80 and $400 per month.

Insurance: Depending on the type of coverage you choose, homeowners insurance will be between $250 and $300 per $100,000 of value insured per year for normal coverage. There is also the option to purchase theft insurance for your property, personally I feel it is not worth the cost as you have to notify the insurance carriers every time the property is left vacant, that means even if you decide to go out for dinner while you are here enjoying your home in the tropics, you need to notify them.

Maintenance: Just like your main home, you will have maintenance costs. This is a reality of any property you own no matter here in Costa Rica or where you are from. Here you can expect to spend between $1,500 to 3,000 per year. Of course, it can be lower if pre-maintenance is done. As an example, just before the rainy season starts you should have your gutters cleaned out of any debris that may be in them, otherwise, you could see damage to your property.

Property Management: As stated above, if you are not living in the property full-time, you will require a property manager to look after your property and pay your bills. If you have a Costa Rica bank account and can read enough Spanish to get by, you can pay your own bills from the local bank’s web pages. The average fee for property management companies is between $125 and $150 per month depending on the size and type of property and the amount of work and detail you require. Maid service in Costa Rica as I mentioned above is very inexpensive, between $40 and $70 per day depending on the size of the home.

When thinking of HOA fees, I will be honest, some seem really high. But you have to dig deeper into just the fees and the total cost of owning. Considering that property taxes are so INCREDIBLY low at only .25% of the registered value ($250.00 USD per year for every $100,000.00 USD of registered value) when you add the two together, it’s most likely less than what you’re paying for property taxes back home alone.

Now, some of the reasons HOA fees are a bit higher is due to the fact that property taxes are so low. Let me explain a bit. Since the property taxes are so low, the government of course does not take in a lot of cash, and they direct that money towards schools, health and hospital services, police, taking care of the poor and paving major roadways, etc. Some services, like paving of development roads, are a lower priority so the owners chip in to do it. That is what we did at my development.

Security is another issue, which is why hiring private security guards is common, as the police force is not as large as cities in North America. Another one is water systems – since most developments are private gated communities, they have their own internal water systems, and guess who is maintaining that? THE OWNERS.

The True Cost of HOAs and Property Taxes in Costa Rica vs. The United States

When you look at the total cost of HOA fees and property taxes in Costa Rica, it’s most likely considerably lower than what you pay for property taxes alone. I will use my old condo as an example and my current home:

The monthly HOA fees were $525.00 per month, plus $50.00 per month towards the reserve fund for emergency items. That equaled $6,900 per year. On the other hand, my property taxes plus garbage collection added up to $480.00 per year. My total came to $7,380 per year. Trust me I did not live in a dump. I had a beautiful two-bedroom, two and half bath, 1300 square foot condo with an incredible ocean view from the living room, dining room, kitchen and master bedroom, and I was within walking distance to the beach.

My current home sits on a 1789 square meter lot, about a half acre. I have a 3-bedroom, 3.5 bath single floor plan home measuring 2400 square feet with a pool and an outdoor covered gazebo. My annual property taxes are $945.00 USD per year. I do not live in a guarded gated community but on a quiet public paved road, so I do not have to pay any HOA fees.

As a comparison, and Google it if you will (although things may have changed since this writing), a similar property like mine in Miami with the same attributes pays $864.00 per month in HOA fees. That is over $10,000 a year, then the property taxes on the same unit are over $6,900.00 per year, for a whopping total of over $16,900 per year.

So in reality, I’m paying less than half of a similar property in Miami. The best part is my purchase price was half of the example from Miami.

Additional Homeowner Costs

One last bit of information I feel is important and pertains to all types of properties here in Costa Rica is: if the property you own, whether it be a lot, condo, luxury home and even a car or a boat is held in a Costa Rican corporation, there are two additional fees to all of these properties. The corporate tax is $240.00 per year for a non-active corporation, which is classified as a corporation that is not actively doing business, and is not generating income.

If you happen to have an Active Corporation, as in one that is making money or doing some kind of business activity, then the annual corporate tax is $365.00 per year. In addition, there is also a Resident Agent fee that a local attorney will charge you to serve as the representative for receiving any legal notices sent by any government agency concerning your Costa Rica Corporation. This fee is usually around $350.00 per year and varies from legal firm to legal firm.

Of course, you can own any fee simple property in your own name, as well, and would not have the need to pay Corporate Tax.

In the end, the decision to live in a community with an HOA boils down to your individual needs and priorities. While some may appreciate the peace of mind and amenities that come with HOA living, others may prefer more freedom and flexibility. Whatever you choose, Costa Rica offers a variety of housing options to suit every taste and budget.