The German website tropenwanderer.com published an interview with Tobias Dräyer, 34, a real estate professional who worked as a commercial clerk for the Valora Group in Switzerland and has been living in Costa Rica since 2008. Although the interview primarily addresses readers in German speaking countries in Europe, it may also be of interest to Englisch speaking people from other continents who consider relocating to Costa Rica. Here a translation.
Tobias, what brought you to Costa Rica?
A friend who visited his father for the first time in Costa Rica after 10 years. That was in 2004.
And then you stayed in the country?
No, I didn’t. At that time I was traveling in Costa Rica, Nicaragua, and Panama for about a year and then returned to Switzerland in 2005. But I knew back then I would emigrate to Costa Rica. Three years later I did.
Why Costa Rica?
Because of the people. The Ticos are very loving and warmhearted people, that really impressed me.
What do you do for a living in Costa Rica?
I work for Lothar Kahl Immobilien. Lothar Kahl is German and his company has been active in the real estate sector in Costa Rica for 25 years.
Foreigners can buy real estate in Costa Rica?
Yes they can. Unlike other countries, foreigners have the same rights when buying properties in Costa Rica than Costa Ricans. They can own property in their name or in the name of a company. They don’t need a local partner. However, there is one exception, the so-called maritime zone.
What is a maritime zone?
We are talking about beach property. Here is what happens: The first 656 ft measured horizontally from the high tide line is called the maritime zone. The first 164 ft are not available for ownership of any kind. For the next 492 ft a lease can be obtained. In this area you can built within the framework of municipal building regulations. We, at Lothar Kahl Immobilien, strongly advise anybody to consult an attorney before buying in this zone.
Does a buyer have to bring documents from his home country?
No, the entire purchase process is carried out here with documents in Spanish.
How does the money for buying a property come to Costa Rica?
The safest way, which also applies to the application for a residence permit, is through a lawyer’s escrow account. If the seller is an EU citizen who lives in Costa Rica but still has an account in the EU, the purchase price can also be paid in the EU country. Moreover, the banks in Costa Rica have implemented IBAN* in February 2017, which means a buyer can transfer euros to Costa Rica, which you must of course prepare with your bank. You cannot simply transfer a few hundred thousand euros or dollars to an account in Costa Rica.
What are the additional costs for buying a house?
A buyer will have to pay 3.6 percent of the sales price. It goes like this: The notary gets 1.25%, the real estate transfer tax is 1.5%, and the other fees (stamps etc.) are 0.85% of the sales price. These rates are regulated by law.
Is there a real estate tax in Costa Rica? And what is the annual cost?
Yes there is, property tax is 0.25 percent of the registered value of the property, levied by the respective municipality. So, if the value of a home is 50 million colones, about $89,000, you need to pay 125,000 colones or 222 dollars annually. This year, those who own only one house do not have to pay tax on the first 19 million colones. In our example, the value of the house would decrease to 31 million colones and the owner would pay 77,500 instead of 125,000 colones.
How much does a house in Costa Rica cost?
As everywhere in the world that depends on the region, location, size, and fixtures. Let me give you a few examples. We have a 1,722 ft2 house with pool for 239.000 dollars in the Central Valley, about 31 miles from San Jose, in rural and beautiful surroundings, on a plot of 61,128 ft2. Sun worshipers of course like the beach, maybe the Pacific coast. Here, in Samara, a house with pool and two rentable apartments, five minutes from the beach, sells for 299,000 dollars. Lovers of the Caribbean coast can buy a dream house at Playa Grande, with first-class interiors, in the middle of a forest, 656 ft from the finest sandy beach, for 425,000 dollars. In addition, there is a wide range of properties for drop-outs, or eco-freaks, I think of tilapa, mango or permaculture fincas, or people who still want to work a little, like run a smal B&B or a hotel, or investors interested in reforestation or tourist projects.
What are the difficulties for first-time buyers in Costa Rica?
The real estate market is confusing. You can find all kinds of „brokers“, those who promise fast money offering adventurous returns, bargain sellers working on “buy as fast as possible, this offer will be gone in no time”, and then the so-called Costa Rica experts.
Do you have an example?
Let’s take the so-called Costa Rica experts. These guys sold land to a Swiss citizen worth several hundred thousand dollars a year ago, land on an island that couldn’t even be registered in the National Registry. They told him he could make a lot of money by segregating the finca and then sell the lots at a very good profit. Since the lots had accress to the beach, he was told, he could build a marina without any problems. It remained an expensive dream, a nightmare. The winners were the so-called Costa Rica experts. Whether they acted with full intention or out of ignorance, who knows. Unfortunately this is not an isolated case, important is to find serious brokers and good lawyers.
Do you have a special tip for our readers?
Yes, you should get as much information about Costa Rica as possible, without any stress and deadlines. And, of course, a longer vacation in the country, or several ones in different regions, where you start making contacts with people, and Spanish courses.
And connect with other foreigners who live here.
Right, that can be helpful when you want to buy property. But be careful. You should not rely exclusively on the testimony of your own folks. I have just given you an example.
And as far as offers on the Internet are concerned, there is a lot of nonsense out there, for example, sellers who boast of their many years of experience in Costa Rica and who list properties in a way that should make any buyer suspicious, even a novice first-time buyer.
You should have all documents checked by a good lawyer before signing anything. If you don’t understand a document in Spanish, have it translated or consult an attorney that speaks your language.
Never buy under time pressure. And why not rent first if you are not sure. Also, location and surroundings of a property are important. If you buy and don’t like what you bought afterwards for whatever reason, the property must always be in conditions to be resold.
Act as you would in your home country, in short, use common sense, then nothing can go wrong.
*IBAN (International Bank Account Number, mandatory for the single euro payments area)