Property letting in Costa Rica

01How does the property letting process work in Costa Rica?

Residential letting in Costa Rica operates within the framework established by the Urban and Suburban Lease Law (Ley General de Arrendamientos Urbanos y Suburbanos), which clearly defines the entitlements and responsibilities of both landlords and tenants and aims to ensure equitable rental relationships. Gaining a thorough understanding of this framework before advertising your property is crucial — the legislation tilts decisively in favour of tenants and diverges markedly from the systems found in many other countries.

Attracting tenants in Costa Rica generally involves listing properties through domestic real estate portals, social media communities, property management firms, or personal networks. Landlords are well advised to screen applicants rigorously: Costa Rican and long-term prospective tenants may be asked to demonstrate financial stability through bank statements or payslips. Requesting references from prior landlords and a copy of the tenant’s national identity card (cédula) or passport is standard practice.

While verbal rental agreements carry legal weight, a written lease is strongly recommended to minimise the risk of disputes. Standard residential contracts run for three years and renew automatically unless one party formally serves notice to end the arrangement. In practice, verbal tenancies create considerable enforcement challenges, and most seasoned landlords and agents insist upon written documentation. In contrast to systems with centralised tenancy registers — such as the Residential Tenancies Board (RTB) in Ireland — Costa Rica maintains no national database for registering tenancies.

Every rental agreement should contain the full names and identification numbers of all parties involved, a thorough description of the property including its address and any furnishings provided, together with all other material terms. The agreement must be drawn up in Spanish to be enforceable, though an English translation can assist non-native speakers in understanding their obligations. Engaging a local solicitor to prepare or review the agreement is very strongly recommended.

Key provisions to incorporate include: the rent amount and currency; the payment due date and any permitted grace period; terms governing subleasing; responsibility for utility bills; conditions permitting early termination; and procedures for returning the security deposit. Unless the contract expressly prohibits subleasing, a tenant has the legal right to sublet — so include a clear prohibition unless you are willing to permit it.

02What types of rental arrangements are available in Costa Rica?

Costa Rican law recognises two principal categories of lease: residential and commercial. Within the residential sphere, two broad models exist — short-term lets and the standard minimum-term arrangement spanning three years. Each model carries distinct legal, fiscal, and regulatory obligations.

Long-term residential letting falls under Law No. 7527. The legislation imposes a compulsory minimum contract duration of three years. Should the parties omit to specify a term, or agree to a period shorter than three years, that clause is treated as void and the three-year duration is automatically applied. This arrangement is the most prevalent model among expat property owners seeking reliable, long-term occupants.

Short-term and holiday letting is defined and regulated under a separate legal framework. Costa Rica’s “Framework Law for Non-Traditional Lodging” governs short-term rentals, classified as rentals lasting between 24 hours and one year. Property owners listing short-term rentals on platforms such as Airbnb and VRBO must register with the Costa Rican Institute of Tourism (ICT) and satisfy specific requirements covering hygiene standards, electronic invoicing, and tax compliance. This law permits short-term rentals to operate within residential zones without a commercial licence, though local zoning rules may still impose restrictions.

The distinction between short-term and long-term letting carries significant tax implications. Short-term rentals of fewer than 30 days are subject to a 13% Value Added Tax (IVA) on top of income tax, a cost that vacation rental operators must factor into their pricing strategy. Long-term rentals are exempt from this VAT charge.

From a practical standpoint, long-term letting provides greater legal certainty and fewer ongoing compliance burdens, whereas short-term holiday letting can generate higher per-night revenues but demands active management, ICT registration, electronic invoicing, and monthly VAT submissions.

03What rental income can landlords expect, and how are rates set?

Costa Rican law permits landlords and tenants to negotiate the rental amount, currency, and payment frequency freely, with monthly payments being the predominant arrangement. There is no government-prescribed minimum rent for residential properties, meaning initial asking prices are driven by market conditions — location, property type, size, condition, and local demand all shape achievable rental figures.

One notable attraction of investing in Costa Rica’s real estate market is the prospect of strong rental yields, with investors in favourable locations sometimes achieving returns of up to 8%. Popular areas for expat landlords include the Central Valley (San José, Escazú, Santa Ana), Pacific coast beach communities (Tamarindo, Jacó, Manuel Antonio), and the Southern Zone (Uvita, Dominical).

Once a tenancy is established, rent increases are subject to tight statutory controls. Landlords retain freedom to set the initial rent, but subsequent increases are governed by law. Two distinct regimes apply depending on the currency used. For residential leases denominated in foreign currencies such as US dollars, the agreed rent remains fixed throughout the entire contract term and may not be increased. For contracts in Costa Rican colones, annual increases linked to the accumulated inflation rate over the preceding twelve months may be applied.

Where the inflation rate is 10% or below, the landlord may raise the rent by an equivalent proportion calculated using the Consumer Price Index published by the National Institute of Statistics and Census (INEC). Where accumulated inflation surpasses 10%, the Ministry of Housing and Urban Settlements (MIVAH) determines the permitted additional percentage, ensuring it falls neither below 10% nor above the annual inflation rate. Always consult the INEC website and the Ministry of Housing (MIVAH) for the latest official figures before implementing any increase.

For commercial properties, both parties have complete freedom — irrespective of the currency chosen — to agree the initial rent and annual increment. In practice, annual increases for commercial premises typically fall between 2% and 5%.

04Do landlords need to provide a furnished or unfurnished property in Costa Rica?

Costa Rican law imposes no requirement on landlords to furnish a rental property. Both furnished and unfurnished arrangements are common, and the appropriate choice depends largely on the location, the intended tenant profile, and the rental model being pursued.

In areas with significant expat populations and short-term visitor traffic — such as beach resorts and the more affluent suburbs of San José — furnished properties attract higher rents and are more appealing to tenants seeking an immediately habitable home. In residential markets where local tenants form the majority, unfurnished or partially furnished properties tend to be the standard, particularly for family accommodation.

For short-term and holiday lets, a fully furnished and well-equipped property is essentially indispensable to satisfy guest expectations and remain competitive on platforms such as Airbnb. This typically means providing white goods, kitchen equipment, beds, linen, and basic appliances. For long-term residential lets, it is customary to supply at minimum a stove, a water heater, and sometimes a washing machine, though this varies by property and rental tier.

Every rental agreement should include a thorough description of the property, its address, and any furnishings provided. Where a furnished property is being let, a comprehensive inventory signed by both parties at the commencement of the tenancy is strongly advisable. This document becomes critical when assessing any deductions from the security deposit at the tenancy’s end for damaged or missing items.

There is no distinct legal or tax classification based on whether a long-term residential letting is furnished or unfurnished. However, furnishings provided for a short-term holiday let may be treated as deductible business expenses when replaced or maintained — consult a local tax adviser for the rules currently in force.

05Do you need a licence or registration to let a property in Costa Rica?

The obligations you face differ considerably depending on whether you are operating a long-term residential tenancy or a short-term holiday rental.

Long-term residential landlords are not required to hold a formal landlord licence before renting out a property. They are, however, obliged to register with the Tax Ministry (Hacienda) and to issue electronic invoices to tenants for all rental payments. Non-compliance can expose landlords to tax penalties. Registration with the Dirección General de Tributación is therefore a practical necessity for all landlords regardless of residency status.

Short-term rental operators face considerably more extensive licensing obligations. Since 2021, Costa Rica has required all individuals or companies offering short-term tourist accommodation to register as service providers with the Costa Rican Tourism Institute (ICT), pursuant to Law No. 9742 and Executive Decree No. 43154. Operators must also register with the Tax Administration (Hacienda), issue electronic invoices, and submit regular tax returns.

Depending on the canton, short-term rental activity may be classified as a commercial service requiring a municipal business licence (patente). Where this applies, the patente must be obtained from the local municipality before commencing operations or placing any advertisements, and must be kept in good standing.

Operating a short-term rental without completing registration, or failing to update your record within one month of any change in circumstances, constitutes unlawful operation under the framework law. The ICT maintains a publicly searchable registry and shares its data electronically with the Tax Administration for enforcement and tax control purposes.

Foreign nationals who do not reside in Costa Rica are subject to the same requirements. Non-residents must comply with all registration and filing obligations, including obtaining a Special Tax Identification Number (NITE). Always confirm the latest requirements with the ICT (www.ict.go.cr) and the Ministerio de Hacienda (www.hacienda.go.cr).

06How do you obtain a landlord licence or register as a landlord in Costa Rica?

Registration requirements vary according to the rental model you are operating. The step-by-step process for each pathway is set out below. Procedures and fees are subject to change, so always confirm current requirements with the relevant authority before submitting any application.

For long-term residential landlords

1. Register as a taxpayer with the Dirección General de Tributación (DGT): The landlord must enrol in the Taxpayer Registry of the Department of Revenue (Registro Único de Contribuyentes de la Dirección General de Tributación) using form D-140, which is available online through the Ministerio de Hacienda portal at www.hacienda.go.cr.
2. Set up electronic invoicing: Following registration, you must enrol in Costa Rica’s electronic invoicing system (Comprobantes Electrónicos). All rental payments must be invoiced electronically. A local tax administrator or accountant can assist with the setup process.
3. Obtain a tax identification number (if non-resident): Non-resident property owners must appoint a local representative to manage tax affairs and secure a tax identification number (NIT) from the Costa Rican tax authorities.
4. File regular declarations: Property owners are required to submit monthly declarations of gross income using Form D-125, which can be completed online via the Ministry of Finance’s website.
5. File an annual income tax return: The deadline for filing income tax returns is 15 March for all Costa Rican taxpayers. Consult a local accountant to confirm the current filing schedule.

For short-term / holiday rental operators

1. Register with the ICT Non-Traditional Rental Registry: Short-term rentals must be registered with the Costa Rican Tourism Institute (ICT) in the Non-Traditional Rental Registry before commencing operations. Registration is completed online and the ICT issues an inscription resolution and user code upon approval. The ICT registration form is available at www.ict.go.cr. The electronic form is currently available in Spanish only and requires detailed property information.
2. Register with the Tax Administration (Hacienda) and obtain a NITE if non-resident: Complete form D-140 with the Dirección General de Tributación and, if applicable, obtain your Special Tax Identification Number (NITE) from the DGT. This enables you to file VAT and income tax returns.
3. Obtain a municipal business licence (patente) if required: Verify with your local municipality whether your canton classifies short-term rental as a commercial activity necessitating a patente. Requirements and fees differ between cantons — contact your local municipality directly to confirm.
4. Set up electronic invoicing: Landlords are required to issue electronic invoices for all rental income, with the applicable sales tax amount clearly indicated. Your tax administrator or accountant can assist with enrolment.
5. Register for VAT and file monthly returns: Registration as a taxpayer in Costa Rica is required once you begin supplying goods or services subject to VAT. There is no minimum registration threshold — once short-term accommodation services commence, you should register immediately.
6. Stay compliant with ICT updates: Failure to update your ICT registration within one month of any change in property details or ownership constitutes unlawful operation under the framework law. The ICT shares data electronically with the Tax Administration for enforcement purposes.

As of 2025, ICT registration carries no fee. Municipal patente fees vary by canton and must be confirmed directly with your local municipality. Failure to register as a taxpayer when legally required to do so may attract a fine of 215,500 colones per month, rising to a maximum of 1,293,000 colones. Always verify current fees and procedures with the ICT and Hacienda before proceeding.

07What are the rules around deposits in Costa Rica?

A landlord is entitled to request a refundable security deposit from a tenant to cover potential damage or outstanding invoices. For residential rentals, the customary deposit amount is equivalent to one month’s rent; commercial rentals are not subject to any statutory cap.

No legal ceiling exists on the size of a security deposit, but any advance rent payment is limited to one month’s rent. It is common in practice for tenants to pay the first and last month’s rent together with the security deposit at the time of moving in.

Unlike the mandatory deposit protection schemes operating in countries such as the UK and Ireland — where deposits must be held in a government-approved third-party custodial arrangement — Costa Rica has no equivalent tenancy deposit protection authority. Deposits are generally held directly by the landlord, making it all the more important that the terms governing the deposit are documented clearly within the lease.

Both parties should ensure the lease contract sets out the purpose of the security deposit and the procedure for its repayment in full. The deposit is ordinarily returned within 30 days of the tenant surrendering the premises, once utility bills have been settled and the inventory has been checked.

If a tenant terminates the rental arrangement before the lease term expires, the security deposit will typically be forfeited. Most agreements provide that the deposit is returned only where the first year of the tenancy has been completed and at least 30 days’ notice has been given to the landlord. Deposit disputes are among the most frequently encountered conflicts in Costa Rican tenancies — a carefully worded agreement and a signed inventory completed at move-in offer the best protection for both parties.

08Who is responsible for maintenance and repairs in Costa Rica?

When renting out real estate, a landlord is legally required to ensure that the tenant can use and enjoy the property in a satisfactory condition. Over the course of the tenancy, deterioration may necessitate remedial work. The law places the burden of carrying out necessary repairs — those considered essential to maintaining the property in good order — squarely on the landlord.

Tenants, in turn, must use the property in accordance with the terms of the lease and attend to minor day-to-day maintenance. The practical allocation of responsibilities broadly mirrors that found in other jurisdictions: structural repairs, major systems (plumbing, electrics, roofing), and anything affecting habitability are the landlord’s concern, while routine upkeep and minor fixes are the tenant’s. Any damage attributable to the tenant that goes beyond ordinary wear and tear remains the tenant’s financial liability.

Where the property falls into disrepair, the tenant has the right to demand that repairs be carried out and may offset the cost of those repairs against the rent. This right to deduct repair costs from rent payments is a notable feature of the Costa Rican framework and one that distinguishes it from many other rental systems. It underlines why landlords should respond to maintenance requests promptly and in writing.

The landlord bears responsibility for local property taxes and, where applicable, the Luxury Home Tax. In the case of condominium properties, it is particularly important to specify in the contract which party is responsible for homeowners’ association (HOA) fees and whether the rental price is inclusive of them.

Costa Rica actively promotes mediation as a means of resolving rental disputes. The process involves a neutral third party facilitating dialogue between landlord and tenant and is typically faster and less costly than court proceedings. Many local municipalities offer mediation services at little or no charge.

09How are letting agents used in Costa Rica, and what do they charge?

Letting agents and property management companies are widely used across Costa Rica and fulfil a vital role for both resident and overseas landlords. Their services commonly include marketing properties, vetting prospective tenants, preparing lease agreements, collecting rent, coordinating maintenance work, and managing ongoing tenant relationships.

For short-term holiday rentals, specialist property management companies take on additional functions such as managing listings on platforms like Airbnb, VRBO, and Booking.com, handling guest communications, overseeing cleaning schedules, and providing tax filing assistance. This support is especially valuable for foreign owners who are unable to oversee their property on the ground.

Unlike certain markets — such as the UK, where the Tenant Fees Act 2019 prohibits landlords and agents from levying most charges on tenants — Costa Rica has no equivalent legislation restricting or regulating fees that agents may charge to either landlords or tenants. All fees are commercially agreed.

For long-term residential lettings, agents typically charge the landlord a one-off finder’s fee equal to one month’s rent upon successfully placing a tenant. For comprehensive property management services — covering ongoing rent collection, maintenance coordination, and tenant liaison — monthly management fees generally range from 8% to 12% of the rent received, though this varies by firm and location. As of 2025, market rates are not regulated, so verify current figures with local agents before committing.

For short-term holiday rentals, all-inclusive management packages covering marketing, guest services, cleaning coordination, and tax compliance can attract management fees of 20% to 30% of rental income. Always obtain a written management agreement that clearly defines the scope of services, the fee structure, and the handling of expenses. Guidance on reputable agents and professional standards can be sought from the Costa Rica Real Estate Chamber (CCCBR).

10What taxes apply to rental income in Costa Rica?

Every individual or entity receiving income from a Costa Rican source — including rental income — is required to declare and pay income tax on those earnings. The applicable rules differ materially depending on your residency status and the type of rental model you operate.

Resident landlords are taxed on rental income under a progressive rate structure. As of 2025, the first 3.8 million colones (approximately $7,600 USD) of annual rental income is exempt from tax. Income tax on rental receipts above this threshold ranges from 10% to 25% — for instance, income between 3.8 million and 5 million colones is taxed at 10%, while earnings exceeding 18 million colones attract the top rate of 25%. Always confirm the current brackets with the Ministerio de Hacienda, as thresholds are revised periodically.

Non-resident landlords are subject to a different regime. Non-resident owners who let property in Costa Rica pay a flat rate of 15% on the gross rental income received. No deductions for expenses are available to non-resident landlords, so tax is calculated on the total rental amount before any costs are subtracted — a significant difference from the position of resident landlords, who may claim eligible expenses.

For resident landlords liable to capital income taxation, rental income qualifies as real estate capital income and is taxed at a flat rate of 15%, with a standard deduction of 15% of annual gross rental income permitted, resulting in taxation on 85% of gross rental receipts. Consult a local tax adviser to establish which regime applies to your particular circumstances.

Allowable deductions for resident landlords include mortgage interest, property insurance premiums, maintenance expenditure, and management fees — all of which are fully deductible if properly evidenced through electronic invoices and bank transfer records consistent with your tax filings. Depreciation is also a valuable allowance: Costa Rica permits residential rental properties to be depreciated over 50 years. As an illustration, a residential property valued at $200,000 (excluding land) could generate an annual depreciation deduction of $4,000.

Short-term let VAT: Short-term rentals of fewer than 30 days are subject to a 13% Value Added Tax (IVA), which represents a significant additional cost for vacation rental operators. Long-term rentals remain exempt from this charge. Airbnb collects the 13% VAT directly from guests in Costa Rica and remits it to the tax authorities; however, this arrangement does not relieve the host of the obligation to declare rental income for income tax purposes.

Municipal property tax: An annual municipal property tax is levied by municipalities at a flat rate of 0.25% on the cadastral value of real estate. Payment may be made annually, semi-annually, or quarterly, depending on the municipality concerned.

Luxury tax: The luxury tax — also known as the solidarity tax — is an additional property levy applied to high-value residential properties, with proceeds directed towards housing programmes for lower-income families. As of 2025, it applies to properties valued above approximately 364 million colones (around $728,000 USD).

The Costa Rican tax year for rental properties runs from 1 October to 30 September. Property owners must file monthly declarations of gross income using Form D-125. Quarterly tax instalments fall due on 20 February, 20 May, 25 August, and 20 November. Given the particular complexity for non-resident owners, always seek advice from a qualified local tax adviser and consult the official Ministerio de Hacienda website at www.hacienda.go.cr for current rates and filing requirements.

11What are the rules around ending a tenancy or evicting a tenant in Costa Rica?

Costa Rica’s rental legislation is notably protective of tenants when it comes to ending a tenancy, and landlords should factor this into their planning. Termination provisions should precisely set out the conditions under which early lease termination may occur. Tenants are required to give at least three months’ notice before vacating. Landlords may only bring a tenancy to an end for specific reasons prescribed by law, such as persistent non-payment of rent or deliberate damage to the property.

Upon expiry of the contract term, the lease automatically renews for a further three years unless the landlord has provided three months’ written notice of their intention not to renew. Open-ended terms are not permitted except where the arrangement is structured as a full-service vacation or monthly rental within a distinct category.

Grounds on which a landlord may terminate a tenancy or decline renewal include non-payment of rent, causing material damage to the property, subletting without consent, and using the premises for a purpose other than that agreed. Eviction for non-payment requires adherence to a formal legal process — a landlord may not simply change the locks or remove a tenant’s belongings unilaterally.

Costa Rica operates specialised housing courts known as Juzgados de Vivienda that deal with rental disputes. These courts process matters more swiftly than general civil courts, but proceedings can still span several months. To initiate legal action, the aggrieved party must lodge a formal complaint with the appropriate housing court.

If the judge finds in the landlord’s favour, an eviction order is issued. Should tenants fail to leave voluntarily, landlords may request police assistance to enforce the court order. This process ordinarily takes between 3 and 6 months, and more complicated cases may take considerably longer.

It is worth noting that some tenants pay the first month’s rent and deposit, then cease making payments, relying on the length of the eviction process as a buffer. At the point an eviction order takes effect, the tenant simply vacates. This dynamic makes rigorous tenant screening and a meticulously drafted lease especially important. Landlords should issue written warnings that late payments will not be tolerated before commencing any eviction process, to prevent a pattern of tardiness from being construed as acquiescence.

12What should expat landlords know about managing property remotely in Costa Rica?

Managing a rental property from abroad in Costa Rica is a common arrangement, but it demands careful legal and administrative groundwork. The regulatory environment has grown progressively more demanding, and non-compliance — even unintentional — can result in fines, tax penalties, or charges registered against your property.

Power of attorney: As a non-resident, granting power of attorney to a local attorney or legal team is essential, since digital signature credentials are restricted to Costa Rican citizens and residents. The power of attorney should be conferred on a qualified Costa Rican lawyer who can act on your behalf for tax filings, legal proceedings, and administrative matters.

Tax withholding and filing obligations: Non-resident property owners face additional complexities when reporting rental income. They must designate a local representative to manage tax affairs and obtain a tax identification number (NIT) from the Costa Rican tax authorities. Non-residents are taxed exclusively on their Costa Rican-source income, though obligations may simultaneously arise in their country of residence — making it essential to understand any applicable tax treaties to guard against double taxation.

Electronic invoicing requirements: Platforms such as Airbnb and Booking.com now transmit their data directly to tax authorities, and tenant payment records are already captured within the system through electronic invoicing obligations. Many non-resident investors fall into difficulty by failing to maintain power of attorney arrangements or neglecting to file required digital disclosures through a local legal team, resulting in penalties and encumbrances on their properties.

Property management companies are of particular value to landlords managing from overseas, handling day-to-day tenant relations, maintenance oversight, rent collection, electronic invoicing, and tax compliance. Any management company you engage should be properly registered, experienced in dealing with clients across borders, and capable of providing transparent reporting. You can check credentials through the Costa Rica Real Estate Chamber.

Repatriating rental income: Costa Rica imposes no restrictions on transferring rental proceeds abroad, but you must ensure all local tax obligations have been discharged before remitting funds. Your bank or financial adviser can advise on the most efficient international transfer method. Your home country may also have a tax claim on this income — always seek advice from a professional with expertise in both jurisdictions.

The National Registry database tracks whether your property taxes and rental compliance are in order, and any outstanding obligations will come to light during lender or buyer due diligence. Maintaining full compliance from the outset is far less burdensome than rectifying accumulated arrears at a later stage.

13Frequently asked questions