A common question buyers have when purchasing property in Costa Rica is “what are the closing costs”. This is actually a very easy question to answer as the laws of Costa Rica dictate what the bulk of the closing costs are.
When purchasing a property the closing costs will be a percentage of either A) the agreed upon sale price or B) the legal registered value of the property in the Public Registry system, whichever number is higher. The government always wants their cut to be the higher percentage. The total closing costs should be no higher than 5% and can be as low as 3.85%.
Here is a detailed breakdown of the fees:
1) Attorney/Notary Fees: This is the fee that you will be charged by the attorney/notary that represents you in the transaction. The fee ranges from 1-1.5% of the A) the agreed upon sale price or B) the legal registered value of the property in the Public Registry system, whichever one is higher. This fee is for the attorney to do all the due diligence on the property to make sure you are purchasing a free and clear title with no liens, encumbrance, or annotations. The notary will also ensure that once the sale is completed, the new deed will be registered properly under your name or corporation. (Not all Costa Rican attorneys are notaries, to become a notary a person has to be a licensed attorney first)
2) Real Estate Transfer Tax : This tax is paid directly to the Costa Rica Government and is 1.5% of the registered value or the agreed upon sale price, whichever one is higher.
3) National Registry & Documentary Stamps: This fee will be .85% of the registered value or the agreed upon sale price, whichever one is higher.
Here is a further breakdown: National Registry Stamps (0.5%) Agrarian Fees: (0.15%) Fiscal Stamps, National Archive Fee, Costa Rica Bar Association Fees (Less than $20) Municipal Fee: (0.2%)
4) Escrow Fees: The escrow is the registered company that will hold the funds and disburse at closing. This is usually split 50/50 between buyer and seller. The fee the escrow agency charges depends on the amount of funds they are responsible for safe keeping. Average cost for both buyer and seller is about $550.00.
5) Wire Fees: Depending on the escrow company that is used for holding the funds, wire fees will be about $75.00 to disburse the funds after closing. Your bank may also charge you a fee for sending the funds to the escrow company. Check with your local bank.
6) Inspection Fees: When purchasing a finished property like a condo or a home, it is highly recommended to have a home inspection. This will run anywhere from $300 to $700 depending on the size of the property. This will be paid out at closing by the escrow agency, so no need to send fund for this ahead of time
7) Utility Transfer: If you choose to have your attorney transfer the utilities under your name or corporation it will be an additional cost, approximately $150.
8) Utility Deposit: You will also have to give a deposit to the utility companies, the deposit amount will be based on past usage, approximately $250.
9) Affidavit For Money Laundry: For closing, you will have to sign an affidavit for money laundering, depending on the law firm you use, the fee will be approximately $275.
10) Special Power Of Attorney: If you are not able to be present for the closing, you will have to have a Special Power of Attorney, the cost ranges from $200-$400.
11) Corporation: If you choose to put the property under a corporation, instead of your personal name it will run you about $700-$1200, depending on the law firm or type of corporation you set up. Something else to keep in mind is each year you must pay a corporate tax, register your shareholders and file a tax return. To learn more, check out this blog https://blog.costarican-american-connection.com/annual-taxes-and-filing-requirements-in-costa-rica/
12) Survey: When purchasing a house or a lot it is very important to get a licensed topographer to survey the property and make sure all the lot lines are correct. A comprehensive survey with markers all on points of the property will cost around $750. If you need to survey a large property, like a farm, the survey will be more expensive.
13) MISC FEES: A few additional fees that can be added into a closing are paying your new property taxes and HOA fees in advance.
VAT (13%): All services used in the closing of a property will include a 13% Value Added Tax. For each of the amounts listed above that are being provided as a service will have this additional tax added on.
The higher the value of the property the higher the closing costs will be. Just use 5% of the purchase price as a safe assumption as to what you will spend on your new home in paradise when you are looking at your budget. A small price to pay! If you have any questions, please reach out and I will be happy to assist. I can also help you run the numbers on a property you may be interested in!
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