The Buying Process
Ocean Front Real Estate
Usage
In order to lease ocean front real estate the National Geographic Institute of Costa Rica must mark out the exact boarders of the land. You must present a development plan that has been approved by the local municipality as well. If you choose to lease the land without government or municipal endorsement, you may not be able to use your land the way you would like to. Some municipalities are more lenient than others. Some, especially in the Southern Zone, are very strict on enforcement of maritime land rights.
If the land you are choosing to lease has never has a zoning plan on file at the National Registry, you will be obligated to submit one to the Costa Rica Housing and Urban Development Department and the Costa Rica Tourism Board. The local municipality will also have to approve the new zoning plan.
For individual owners, usages are usually not very restricting. As far as size, landscaping, amenities and aesthetics go, you should find the usage rules to be uninviting. For developers with visions of unique and new activities and concepts, you may meet some resistance in the maritime zone.
The Buying Process
Ocean Front Real Estate
Taxes
Owners of Costa Rican real estate are obligated by law to pay an annual property tax to the local municipal authority as a percentage of the total value assigned to the lot. Every five years the property is reassessed and valued again. While Costa Rican law requires this assessment, the responsibility lies with the property owner for accomplishing this task.
Costa Rica property taxes are due annually and are 0.25% of the total taxable value of the property. Because this figure is so low, Costa Rican real estate is often bought as a pure investment given that the fee to hold it is so low.
The property owner uses two valuation parameters to obtain the taxable value of the real estate. The valuation table (Plano de Valores) is the first one and the second one is Building Characteristics (Tipologia Constructiva). The Technical Standardization Department of the Tax Office guides these two areas.
The valuation table is a matrix that aids in the calculation of the taxable value as a product of size, more specifically value per square meter. This is based on the region where the real estate sits, the special or unique characteristics of the land and infrastructure. Such factors can include but are not limited to: land use zonage (residential, commercial or industrial), services available (sewage, telephone, electricity, hot water), corner or middle lot, ocean view, mountain view, beachfront and other topographical features.
The official government news release "La Gaceta" contains all of the zoning information that is held in the Technical Norms Department of the Tax Office.
The building characteristics category measures the value of a structure using the materials used, design and depreciation. Throughout Costa Rica, the building characteristics measurement is constant for tax purposes. While the square meter value of the land varies on location, given a specific structure, its value will be the same.
Combining both assessments yields the taxable value of a property. A brief description of the land and is calculated value are presented to the Administrative Tax Department. If it looks outrageously low, they will send a representative out to make an adjustment. Often times their assessment will be punitively high so it is best to be reasonable with the estimates you submit.
Costa Rica Real Estate FAQ Index Catalog
Why Costa Rica Real Estate
- Stable government; Currency,Infrastructure,Values foreign investment, Protects foreign investment
- Investment security; excellent lending market, ROI, low tax rate, intrinsic value, insurable title/home
- Healthcare; high-quality, high tech, inexpensive, easy access, insurance
- Economic; stability, foreign investment, government, investment potential
- No ownership restrictions; valued by government, no restrictions, same rights as natives
- Proximity to the U.S.; 10 major North American cities with a 3-5 hour direct flight to Costa Rica
- Culture; high standard of living, friendliness to foreigners, education, low crime rate
- Nature; beaches, rainforest, protected lands and species, eco-tourism, diversity
The Buying process
- Finding a broker; certified, experience, track record, language, area knowledge
- Calculating value; comparative value, asking price, investment potential, true value, municipal
- Purchasing; incorporation, appraisals, home inspections, attorneys, contracts, survey map, registration, notary, taxes, titles, closing
- Financing; mortgages, documentation, banks, property protection, using retirement fund
- Types of properties; stand-alone house, apartments, gated communities, condominiums, timeshare
- Building; land & title, permits, size, utility of land, civil engineer, architect, construction, contractors
- Protecting the investment; insurance, making claims, property management
- Oceanfront real estate; defined, taxes, usage, foreign ownership
- Common & avoidable problems; liens & encumbrances, expropriation, environmental & squatters
------------------------------------------------------------------------------------------------------------------------------------
The Buying Process
Ocean Front Real Estate
Foreign Ownership
For a foreigner to obtain a concession they must have had legal residence in Costa Rica for a minimum of five years before applying for a lease. If you do not have five years of residence in Costa Rica, you can be up to a 50% investor in a beach front property.
Corporations are typically formed to buy Costa Rican real estate. Within the maritime zone, no corporation with shareholders can invest.
Any company with invested capital or shares provided by more than 50% foreign investment cannot lease concessionary lands either.
The Buying Process
Ocean Front Real Estate
Defined
The Shoreline Zone Law (Ley sobre la Zona Maritimo Terrestre)
The maritime zone extends 200 meters perpendicular to the shore from the high tide water level onto the shore. The 50 meters closest to the shore are public land in which no private development can be done with the exception of officially approved marinas and port facilities by the government. The next 150 meters are known as the concessionary zone. This land cannot be owned. You can lease the land for private real estate development for terms of five to twenty years. Typically the land in these zones are untitled. Ownership is held by the Costa Rican government and the local municipalities manage the concessionary zone for leasing and other usages.
Upon the expiration of the lease, any infrastructure is converted to possession of the municipal authority. While in possession, you can build with some restrictions. If the government grants you a concession, it will be filed in the National Registry under, Registro de Concesiones de la Zona Maritimo. There is an upfront fee and an annual fee that is much like a property tax for possession of concessionary land.
There is an exception for those who have the dream of ocean front real estate ownership in Costa Rica. There are a few properties that date back to the colonial times that were given special title by the King of Spain. These properties can be purchased and owned outright all the way down to the shore and up to 5 feet deep into the water. This type of properties is extremely rare and typically you will not find them available!
