Costa Rica – Property Taxes

What taxes and fees apply when buying a property in Costa Rica?

Purchasing real estate in Costa Rica brings with it a number of compulsory taxes and professional charges that must be settled at the time of closing. Buyers can expect to spend somewhere between 1.25% and 2.5% of the property’s value on legal and closing costs alone, encompassing attorney fees, notary charges, government registration costs, and transfer taxes. Once all these components are combined, a planning figure of 3–4% of the purchase price is realistic for most residential transactions.

Transfer tax: The property transfer tax is set at 1.5% of the sale price or the cadastral value — whichever of the two figures is greater. This is conceptually similar to stamp duty in the UK or provincial transfer taxes in Canada, though the rate is generally lower than those systems. The buyer conventionally bears responsibility for this tax, though the parties may negotiate a different arrangement. Settlement of this tax is a prerequisite for officially recording the ownership change in the Public Registry.

Notary fees: Every property transaction in Costa Rica must be documented by a notary public, who is simultaneously a qualified attorney. Costa Rican notaries are empowered to record property transactions directly, and the fees they may charge are set by law. Notary and attorney fees typically represent the single largest professional cost involved in a property purchase and are generally calculated as a percentage of the transaction value.

Registration fees and stamp taxes: Certain minor stamp taxes exist, though the general stamp duty previously applicable to agreements and contracts has been abolished. Registry fees are payable to the Registro Nacional to formally inscribe the title transfer. While modest in amount, they should be included in any budget alongside the transfer tax and notary charges.

Legal due diligence: A competent local attorney will search the title, verify ownership records, and establish that there are no outstanding liens, encumbrances, or unpaid taxes on the property — a vital step in protecting your investment and ensuring that ownership passes to you cleanly.

Worked example: approximate transaction costs on a $250,000 residential property (as of 2025)

Always confirm current fee schedules with a locally qualified Costa Rican attorney and the Ministerio de Hacienda before proceeding. The figures above are illustrative estimates as of 2025.

What taxes and fees apply when selling a property in Costa Rica?

Vendors in Costa Rica face a relatively limited set of mandatory obligations at the point of sale, although certain costs are open to negotiation between the parties. The principal costs to account for are the seller’s share of the transfer tax (if agreed), any capital gains tax liability (addressed in the following section), real estate agent commission, and legal fees.

Transfer tax allocation: A transfer tax of 1.5% of the property value is involved in every ownership change. By convention, this is often split equally between buyer and seller, though the division is not fixed and may be agreed differently in any given transaction. Sellers should clarify the allocation with their legal adviser before committing to terms.

Estate agent commission: Costa Rica does not maintain a regulated real estate licensing framework comparable to those in many other countries. Consequently, agent commissions vary, though sellers typically pay somewhere in the range of 5% to 6% of the sale price. This is broadly in line with agent fees in the United States, though higher than the norms seen in parts of Europe. Commission arrangements should always be confirmed in writing prior to listing a property.

Legal fees: Sellers will generally contribute toward the notary and legal costs of preparing the transfer deed, though the precise split is a matter for negotiation. Sellers should also budget for independent legal counsel on top of any shared closing expenses.

Capital gains tax: For many sellers, this represents the most significant potential cost at disposal. It is covered in full in the section that follows, and should be factored into net proceeds calculations long before a sale price is agreed.

Is capital gains tax payable on property sales in Costa Rica?

Since 19 July 2019, Costa Rica has levied a capital gains tax. Gains realised by resident or non-resident individuals on the disposal of capital assets — such as a second home or investment property — are now subject to a 15% tax on any profit. Before that date, capital gains on property were broadly untaxed, making the 2019 reform a landmark change for property investors.

How the gain is calculated: The taxable gain is determined by subtracting the original acquisition cost — together with the value of any capital expenditure and improvements made during the period of ownership — from the final sale price. The 15% rate applies to any positive difference that results. Capital losses may be carried forward and offset against future taxable gains.

Primary residence exemption: Owners who sell their principal home in Costa Rica are not liable for capital gains tax, regardless of the size of the profit. To qualify as a primary residence, you must be able to demonstrate that you occupied the property for at least 183 days in each year.

Pre-July 2019 properties — transitional option: A special provision exists for properties acquired before 1 July 2019, when the current capital gains legislation came into force. If you purchased an investment or non-primary residential property before that date, you may choose between paying either the 15% capital gains tax on the profit or a flat rate of 2.25% applied to the total sale price. For instance, if a property bought for $250,000 some years ago is now sold for $500,000, the flat option would produce a tax charge of $11,250 (2.25% of $500,000), compared with $37,500 under the 15% rate applied to the $250,000 gain.

Rules for non-residents: Costa Rica’s capital gains tax applies to any transaction involving assets situated within the national territory, irrespective of whether the seller is a resident or a non-domiciled individual or entity. Where the property is owned by a person or legal entity not legally domiciled in Costa Rica — including foreign corporations, trusts, or similar structures — the buyer is required to withhold 2.5% of the sale price as a prepayment toward any capital gains tax due and remit it to the tax authority. Public notaries must confirm this requirement has been satisfied before the transfer can be recorded in the national registry.

Business properties: Commercially operated assets, including vacation rentals, are subject to a higher tax rate of 30%. This elevated rate applies to income-producing assets. Sellers of properties used for commercial purposes should take specialist advice, as the applicable rate depends on how the property has been classified and operated.

Worked example (investment property purchased after July 2019):

• Purchase price: $200,000
• Capital improvements during ownership: $20,000
• Sale price: $320,000
• Taxable gain: $320,000 − ($200,000 + $20,000) = $100,000
• CGT at 15%: $15,000

Always consult the Ministerio de Hacienda or a locally qualified tax adviser for current figures and to confirm which category applies to your property.

Are there annual property taxes in Costa Rica?

The annual property levy in Costa Rica, officially known as the Impuesto sobre Bienes Inmuebles (IBI), is a principal revenue source for local governments and helps fund municipal services and infrastructure. The ongoing tax burden on property ownership is among the lightest in Latin America, making Costa Rica especially appealing to long-term investors and retirees when compared with countries such as France, Spain, or the United States, where recurring property taxes are considerably more substantial.

Standard municipal property tax (0.25%): The municipal property tax is levied on all properties at a uniform rate of 0.25% of assessed value and is collected by the municipality in which the property is located. This flat rate applies consistently across all 82 municipalities in the country. As an illustration, a property with a registered value of $300,000 would generate an annual tax bill of $750 — a modest sum compared with equivalent obligations in many other countries.

How the assessed value is set: The tax base is the registered value of the property. Every three years, owners are required to submit a declaration of their property’s value to their local municipality. Failure to do so may result in the municipality assigning its own estimate, which could exceed the actual market value. Submitting a declaration on time — ideally backed by a certified appraisal — is therefore strongly advisable.

Payment schedule: Property owners may pay annually — often with a discount for early settlement — or in quarterly instalments falling due on 31 March, 30 June, 30 September, and 31 December. Overdue payments may attract interest charges of up to 1% per month, and some municipalities offer additional incentives for lump-sum payment.

Luxury / Solidarity tax (Impuesto Solidario): The Impuesto Solidario para el Fortalecimiento de Programas de Vivienda is a supplementary levy targeting high-value residential properties whose construction value exceeds approximately ₡150 million (around $275,000 as of 2025). Collected by the Ministry of Finance, this progressive tax ranges from 0.25% to 0.55% depending on the applicable value band. A key feature is that the threshold and tax base are calculated on construction value alone — not total property value — meaning the land component is excluded from the assessment.

Corporation annual fee: Where property is held through a Costa Rican company, an annual corporate fee applies, ranging from $150 for an inactive company to $300 for an active one, collected by the National Registry. Since corporate ownership structures are widely used among expatriates, this recurring charge is an important item to incorporate into annual budget planning.

Typical annual costs at a glance (as of 2025):

The figures above are for illustrative purposes. Always verify the current luxury tax threshold and bands with the Ministerio de Hacienda.

How is rental income from property taxed in Costa Rica?

Whether resident or non-resident, landlords deriving rental income from Costa Rican property are liable for Costa Rican income tax on those earnings. The system operates on a territorial basis, meaning only income that originates within Costa Rica is subject to tax, regardless of where the owner is domiciled.

Standard rate and deduction: Rental income falls within the category of real estate capital income and is taxed at a flat rate of 15%. A standard deduction equivalent to 15% of annual gross rental receipts is permitted, so tax is effectively charged on 85% of gross income. This simplified deduction removes the need for detailed expense itemisation, making compliance more manageable for landlords operating on a smaller scale.

Registration requirement: Landlords must establish a Permanent Establishment (PE) and report rental income in an annual tax return. Those intending to let property should register with the Ministerio de Hacienda / Dirección General de Tributación before receiving their first rental payment.

Non-residents: Non-resident individuals are taxed in Costa Rica solely on income arising from Costa Rican sources. Spouses are assessed independently. Rental income earned by non-residents is subject to the same flat rate of 15%, without the additional surcharges or differential rate brackets that some countries — such as France or Spain — impose on non-resident landlords.

Short-term rentals (Airbnb and similar platforms): Income from short-term lettings in Costa Rica is taxed at progressive rates of 10% to 25%. Owners renting through platforms such as Airbnb are also required to charge and remit 13% VAT (IVA). This VAT obligation marks a key difference between short-term and long-term letting: long-term residential leases (typically those of 30 days or more) are generally not subject to IVA, whereas tourist and holiday rentals are classified as a commercial service and attract the standard 13% rate. Anyone operating a vacation rental must register as a VAT taxpayer.

Practical note: Where property is held through a Costa Rican company and the company collects rental income, corporate income tax rates of up to 30% may apply rather than the individual flat rate of 15%. It is worth seeking qualified advice before selecting an ownership structure for a rental investment, given the significant tax implications involved.

Does inheritance tax apply to property in Costa Rica?

Costa Rica levies no tax on inherited property. This places it in an advantageous position relative to many European countries — Spain, for example, can impose inheritance tax at rates exceeding 30% depending on the region and the heir’s relationship to the deceased, while France applies progressive rates on non-direct heirs. In Costa Rica, property received through an estate passes to beneficiaries entirely free of any national inheritance or estate duty.

Probate and registration costs: Although no inheritance tax is charged, the legal and administrative process of transferring property through an estate does involve costs. Beneficiaries will need a Costa Rican attorney to oversee probate, effect the title transfer at the National Registry, and settle any associated registration and notary charges. These are procedural expenses rather than a tax on the inheritance itself.

Non-resident and foreign heirs: The absence of inheritance tax applies equally to heirs who live abroad or hold foreign nationality. No additional charge is imposed on property inherited by someone not resident in Costa Rica. That said, the probate process for non-resident heirs can be more involved and time-consuming, particularly where documents must be translated or authenticated. Appointing a local attorney to manage the process on their behalf is advisable.

Tax treaties: Costa Rica has concluded double taxation agreements with Spain, Germany, Mexico, and the United Arab Emirates, as well as a Multilateral Agreement on Tax Information Exchange. These treaties relate principally to income and business taxes rather than inheritance matters, but heirs from any of these countries should confirm their position with a qualified adviser in both Costa Rica and their home country. Those inheriting from countries outside this list should also check whether their own jurisdiction taxes foreign assets received by inheritance, independently of Costa Rican law.

Does gift tax apply to property transfers in Costa Rica?

Costa Rica does not impose any tax on gifts or lottery winnings. Consequently, transferring property as a gift during one’s lifetime produces no gift tax liability in Costa Rica, regardless of the property’s value or the relationship between the parties. This is notably more generous than many other countries — for instance, the UK’s “potentially exempt transfer” rules can trigger inheritance tax if the donor dies within seven years of the gift, while France and Spain levy gift taxes that can be significant for recipients who are not close relatives.

Transfer costs still apply: The absence of gift tax does not mean a property gift is cost-free. A lifetime transfer of real property remains a legal change of ownership and will attract the standard 1.5% property transfer tax, notary fees, and National Registry registration costs in exactly the same way as a conventional sale. The transaction must be formally executed before a Costa Rican notary-attorney and lodged with the Registro Nacional.

Capital gains consideration: It is worth bearing in mind that gifting a property may nonetheless carry capital gains tax implications depending on the circumstances. Where the property being given away is an investment asset (not the donor’s primary residence) and was acquired after July 2019, the deemed disposal could in principle trigger a CGT analysis. A locally qualified tax adviser should be consulted before gifting any high-value real estate to ensure the transaction is structured appropriately.

Are there any tax advantages or incentives for buying property in Costa Rica?

Costa Rica provides a number of structural tax benefits that work in favour of property owners, investors, and those seeking to establish residency. While there are no blanket first-time buyer tax credits of the kind offered in some jurisdictions, the overall tax environment is genuinely advantageous.

No inheritance or gift tax: As described above, property may pass by death or by lifetime gift without triggering any Costa Rican inheritance or gift tax. For long-term estate planning purposes, this is a considerable advantage.

Primary residence CGT exemption: The capital gains tax regime includes a meaningful exemption for those selling their main home. Owners who dispose of their principal residence pay no capital gains tax, regardless of the amount of profit made. For those who intend to relocate and establish their primary home in Costa Rica, this can represent a very substantial saving.

Low annual property taxes: The 0.25% annual rate places Costa Rica among the countries with the lowest ongoing property tax obligations in Latin America. By way of comparison, France’s taxe foncière can amount to 0.5%–2%+ of market value, Spain’s IBI typically falls between 0.4% and 1.1%, and median effective rates in the United States often exceed 1% of market value.

Free Trade Zones and investment regimes: Costa Rica operates a CINDE (Costa Rican Investment Promotion Agency)-backed Free Trade Zone (Zona Franca) programme offering significant corporate tax exemptions to qualifying businesses. Although this is primarily directed at commercial and industrial investors rather than residential buyers, developers working on tourism or commercial real estate projects within qualifying zones may be eligible to benefit.

Rentista and Pensionado residency programmes: Costa Rica’s residency schemes for retirees (Pensionado) and passive income recipients (Rentista) do not in themselves grant property tax exemptions, but they confer legal residency status, which can simplify property administration, banking, and tax compliance. Legal residents may also find it more straightforward to register as taxpayers for rental income purposes.

Territorial tax system: Costa Rica taxes only income earned within its borders. Income generated abroad — from foreign rental properties, overseas investments, or foreign employment — falls outside the scope of Costa Rican taxation. For those with significant income sources outside Costa Rica, this territorial approach offers a meaningful structural advantage compared with countries operating worldwide taxation systems.

Do different rules apply to foreign buyers or non-residents purchasing property in Costa Rica?

One of the most compelling features of the Costa Rican property market for international purchasers is the absence of restrictions on foreign ownership of real property. Foreigners enjoy substantially the same rights as Costa Rican nationals when it comes to purchasing, owning, selling, and inheriting property.

Equal ownership rights: Costa Rica’s property ownership laws are stable, and the market has long been regarded as welcoming to international buyers. There are no foreign buyer surcharges, no category restrictions on the type of property that can be purchased, and no requirement to obtain government approval before buying. This stands in contrast to countries such as New Zealand, which restricts foreign purchases of existing homes — making Costa Rica notably accessible by international standards.

Corporate ownership structure: Holding property through a Costa Rican corporation — a sociedad anónima (SA) or sociedad de responsabilidad limitada (SRL) — is a widespread practice among expatriate buyers. It can offer benefits such as simplified ownership transfer (by transferring company shares rather than the property itself), potential asset protection, and more straightforward estate planning. However, it also entails annual corporate fees and reporting obligations. While it is possible to hold property in Costa Rica in your own name, many expatriates choose a corporate structure, and proper legal advice is essential whichever route you take.

Non-resident CGT withholding: When a non-resident owner sells a Costa Rican property, a withholding of 2.5% of the sale price applies. If this amount has not been reported and remitted to the Ministry of Finance, the National Registry will decline to register the transfer of ownership. Non-residents selling property must therefore ensure that the withholding obligation is properly addressed at the time of closing.

Tax registration for non-residents: The Costa Rican tax authorities have confirmed in published rulings that, where both buyer and seller are non-residents, the non-resident vendor must obtain a special tax identification number and register as a taxpayer in Costa Rica for the purpose of reporting and paying capital gains tax.

Maritime Zone (ZMT) properties: A significant restriction does apply to properties situated within the Maritime Terrestrial Zone — the coastal strip extending 200 metres from the high-tide line. Only Costa Rican nationals and companies with at least 50% Costa Rican ownership may hold concession rights in the public zone (the innermost 50 metres are inalienable public land). Foreign buyers may hold concessions in the restricted zone (50–200 metres), but must do so through a qualifying ownership structure. Specialist legal advice is essential before purchasing or leasing any coastal concession property.

How to apply and register as a foreign buyer — step by step:

1. Engage a Costa Rican real estate attorney: Your attorney will conduct a title search through the National Registry (Registro Nacional) to verify clear title, identify any encumbrances or liens, and confirm the property’s legal status.
2. Obtain a tax identification number (NITE or cédula): Non-residents purchasing property should register with the Dirección General de Tributación to obtain a tax identification number, required for official property registration.
3. Decide on ownership structure: Decide whether to purchase in your own name or through a Costa Rican corporation. Your attorney can advise on the most suitable structure for your circumstances.
4. Sign a purchase agreement (promesa de compraventa): This preliminary contract sets out the agreed terms, price, and timeline. A deposit (typically 10%) is usually held in escrow.
5. Complete due diligence: Verify planning permissions, confirm no outstanding property taxes or municipal debts, and check that the cadastral map matches the registered boundaries.
6. Execute the transfer deed (escritura pública): The transfer document is drafted and executed before a Costa Rican notary-attorney, who is responsible for authenticating the transaction.
7. Pay transfer tax and fees: Transfer tax (1.5%), notary fees, and registry fees are paid at or before closing.
8. Register the title transfer: Your attorney submits the executed deed to the National Registry for inscription. The property is legally yours once registered. Current processing times at the Registry can vary; ask your attorney for the latest estimate.

For official guidance, consult the Registro Nacional and the Ministerio de Hacienda.

Frequently asked questions

How much should I budget for buying costs on top of the purchase price?

Purchasers should set aside an additional 3–4% of the property value to cover closing costs, which include the transfer tax, notary fees, legal due diligence, and registry charges. Before exchanging any contracts, ask your attorney for a detailed, itemised cost breakdown reflecting your specific transaction.

Is there really no inheritance tax on property in Costa Rica?

That is correct — Costa Rica imposes no tax on inherited property, and this applies to residents, non-residents, and foreign heirs alike. Bear in mind that the probate process and re-registration of title will still involve legal costs, and your own home country may separately tax assets received from abroad — so it is worth seeking advice in both jurisdictions.

Do I have to pay capital gains tax if I sell my home in Costa Rica?

No capital gains tax applies to the sale of a primary residence in Costa Rica. The exemption is available regardless of the size of the profit, provided you can demonstrate that the property genuinely served as your main home — which requires proof of occupation for at least 183 days per year.

Can I own property in Costa Rica as a non-resident foreigner?

Yes. Foreign nationals are entitled to own real estate in Costa Rica on essentially the same terms as citizens, without any surcharges or restrictions applying to standard residential or commercial property. The notable exception involves properties within the Maritime Terrestrial Zone, where coastal concession rules are considerably more complex. Always retain a locally qualified attorney before purchasing any coastal property.

How is Airbnb rental income treated differently from long-term rental income?

Income from short-term lettings in Costa Rica — such as through Airbnb — is taxed at progressive rates of 10% to 25%, and owners are also required to charge and remit 13% VAT to the authorities. Long-term residential leases (generally of 30 days or more) are typically treated as passive capital income taxed at a flat 15% with a 15% standard deduction and are not ordinarily subject to VAT. Consult a local tax adviser or the Ministerio de Hacienda to establish your specific obligations before commencing any letting activity.

What is the luxury property tax and does it apply to me?

The Impuesto Solidario is a supplementary levy on high-value residential properties whose construction value surpasses approximately ₡150 million (around $275,000 as of 2025). It is assessed on construction value only — the land component is excluded — and is charged at progressive rates between 0.25% and 0.55%. It operates alongside, and is separate from, the standard 0.25% municipal property tax. Check the prevailing threshold with the Ministerio de Hacienda, as it is revised from time to time.

Are there any tax treaties between Costa Rica and other countries that affect property owners?

Costa Rica has concluded double taxation agreements with Spain, Germany, Mexico, and the United Arab Emirates. These treaties deal principally with income taxes rather than inheritance or gift matters. If you receive rental income from a Costa Rican property and are tax-resident in another country, check whether a treaty exists to prevent double taxation on those earnings. Where no treaty applies, a foreign tax credit may be available in your country of residence — consult a qualified adviser in both jurisdictions.

How and when do I pay the annual property tax?

Property owners may choose between annual payment — often with a discount available for early settlement — or quarterly instalments due on 31 March, 30 June, 30 September, and 31 December. Importantly, most municipalities do not issue payment reminders by post, email, or any other means, so owners must take responsibility for tracking deadlines themselves. Payment can typically be made at the local municipal office or, increasingly, via online platforms. Non-resident owners frequently appoint a local property manager or accountant to handle payments on their behalf.