Real Estate in Costa Rica for Expats: A Strategic Asset for Wealth Protection
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Contents
- Can Foreigners Own Property in Costa Rica?
- Strategic Locations for Privacy, Safety, and Future Value
- The Central Valley
- The Gold Coast (Guanacaste)
- The Southern Zone
- Overlooked Gems: Arenal and Lake Region
- Using Offshore Entities to Own Property
- #1: Asset Protection Benefits
- #2: (Some) Privacy Benefits
- #3: Estate Planning Advantages
- How to Set Up an Offshore Structure
- Tax Implications for US Citizens
- The Real Estate Buying Process in Costa Rica
- Risks and Rewards of Costa Rican Real Estate
- Good Things About Owning Property in Costa Rica
- Risk Factors to Consider
- Strategic Integration with Your Wealth Protection Plan
- Practical Next Steps
- Protecting Wealth Through Property
Many of our clients ask us about real estate in Costa Rica for expats, and for good reason: the country has long been a dream destination for expats seeking sunshine, natural beauty, and a relaxed lifestyle.
But it’s easy to miss that Costa Rican real estate is more than just nice places to live – it can also be a powerful tool in your international wealth protection plan.
In this article, we’ll explore why that is.
Can Foreigners Own Property in Costa Rica?
Costa Rica welcomes foreign investors with open arms. As an expat, you can own property with the same rights as locals. This makes Costa Rica one of the most foreigner-friendly real estate markets in Latin America.
The only significant restriction applies to beachfront property. Costa Rica’s Maritime Zone Law protects the first 200 meters of land from the high tide line. The first 50 meters are public land and can’t be owned or leased by anyone. The next 150 meters are known as the concession zone—this land can be leased from the local municipality under a long-term agreement.
But there’s a catch: foreigners can’t lease this land directly unless they’ve been legal residents for five years or more. Otherwise, a Costa Rican citizen or Costa Rican-controlled corporation (with at least 51% local ownership) must hold the concession.
So while beachfront property in the concession zone may look like ownership, it’s really a government lease – and it comes with extra rules foreign investors need to navigate carefully.
What’s important to note: You don’t need residency or citizenship to buy property in Costa Rica. You can purchase land or buildings on a tourist visa, giving you a lot of flexibility when planning your international wealth protection strategy.
Strategic Locations for Privacy, Safety, and Future Value
When looking at real estate in Costa Rica, location matters not just for lifestyle but also for asset protection and appreciation potential.
Here are some strategic areas to consider.
The Central Valley
The Central Valley, home to the capital, San José, and surrounding towns like Escazú (known as the “Beverly Hills” of Costa Rica) and Atenas, offers:
- Proximity to international banking centers.
- Modern healthcare facilities.
- More stable property values than tourist hotspots.
- Lower risk of climate-related threats.
- Cooler, spring-like climate year-round.
Escazú in particular has become a hub for wealthy expats and features high-end housing with excellent security systems.
The Gold Coast (Guanacaste)
This northwestern region includes popular areas like Tamarindo and Playa Flamingo, offering:
- Stunning beaches and resorts.
- Strong rental income potential.
- Major appreciation in recent years.
- Proximity to Liberia International Airport.
- Growing expat communities.
Property values here have seen significant growth since improved infrastructure made the area more accessible.
The Southern Zone
Areas like Dominical and Ojochal provide:
- More privacy and seclusion.
- Lush jungle environments.
- Lower density development.
- Potentially higher future appreciation as infrastructure improves.
- More affordable options than the more developed north.
This region represents a longer-term investment play as infrastructure continues to develop.
Overlooked Gems: Arenal and Lake Region
The areas around Lake Arenal offer:
- Spectacular views.
- Lower property prices than coastal areas.
- Cooler temperatures.
- Lower humidity.
- Privacy and distance from tourist crowds.
These areas tend to be overlooked by casual investors, creating opportunities for savvy buyers.
Using Offshore Entities to Own Property
One of the most powerful wealth protection strategies when buying real estate in Costa Rica is holding the property through an offshore entity rather than in your personal name. This approach offers several benefits.
#1: Asset Protection Benefits
Owning property through a corporation (Sociedad Anónima, or SA) or Limited Liability Company (Sociedad de Responsabilidad Limitada, or SRL) creates a legal separation between you and the asset.
This can help protect your property from:
- Personal lawsuits in your home country.
- Creditor claims.
- Probate complications.
#2: (Some) Privacy Benefits
Using a Costa Rican corporation to hold property can offer a degree of privacy – at least on the surface. Public land records list the corporation as the owner, not your personal name. For many of our clients, that layer of separation is a welcome buffer against nosy neighbors, ex-business partners, or opportunistic litigants.
But don’t mistake that for full anonymity. In recent years, Costa Rica has strengthened its transparency rules. Corporations must now report their ultimate beneficial owners (UBOs) to the Central Bank, and that information is accessible to tax authorities and financial institutions under global information-sharing agreements.
In short: yes, there are privacy benefits. Your name won’t appear in a casual title search. But Costa Rica, like much of the world, no longer supports secrecy in the strictest sense. Property ownership here can still offer smart strategic separation – but not invisibility.
#3: Estate Planning Advantages
A corporate structure makes it easier to include the property in a broader international estate plan as well as create succession plans that function across borders. Keep in mind, though, that only a Costa Rican Fideicomiso provides an ironclad method to avoid probate.
How to Set Up an Offshore Structure
You have several options for creating a legal entity to hold Costa Rican property:
- Costa Rican Corporation or LLC (SA or SRL): These local entities are relatively inexpensive to set up and maintain.
- Offshore LLC: Jurisdictions like Nevis or Belize offer strong asset protection. These entities can own Costa Rican property indirectly, often by holding shares in a Costa Rican SA. However, for US taxpayers, we typically advise against using an SA due to CFC (Controlled Foreign Corporation) rules, which can complicate tax matters and potentially expose clients to double taxation – an issue that cannot always be mitigated through foreign tax credits. Proper tax structuring is essential to avoid unnecessary IRS scrutiny.
- International Trust: For more complex estates or high-value holdings, a trust can own the shares of your property-holding company. This approach can help you avoid probate, plan for succession, and build multigenerational control into your asset strategy.
Depending on your situation, it may be possible to incorporate your Costa Rican property into your existing domestic plan (i.e. living trusts and/or domestic LLCs).
Before making any purchases, be sure to talk to your advisor about which structure best fits your overall wealth protection strategy in the most tax-efficient and cost-efficient way possible. If you don’t currently have one, this is something we can help you with here at The Nestmann Group.
Tax Implications for US Citizens
For US citizens, owning Costa Rican real estate comes with specific reporting requirements and tax considerations that are crucial to understand before investing.
#1: FBAR and FATCA Reporting
Owning real estate in Costa Rica brings important US tax considerations. If you’re a US person, you’re required to report certain foreign financial assets – even if they’re held in the name of a Costa Rican company.
- Foreign Bank Account Report (FBAR): If the total value of your foreign financial accounts exceeds $10,000 at any point during the year, you must report them – even if they’re corporate accounts where you have signature authority.
- Foreign Account Tax Compliance Act (FATCA) Form 8938: If your combined foreign assets exceed $50,000 (single filer, higher for joint filers), you may also need to file IRS Form 8938. This includes ownership of Costa Rican corporations or trusts that hold property. Failing to report can trigger steep penalties. These forms are informational – not tax payments – but skipping them is not an option.
However, it’s worth noting that real estate itself is not reportable under these two compliance regimes. But any account (e.g. bank accounts) is if they meet the dollar minimums.
#2: Property Tax Benefits
Costa Rica’s annual property tax is just 0.25% of the registered value – far lower than the 1–2% rates common in many US states. For most properties, that’s the only tax you’ll owe.
However, there’s a separate “luxury tax” on high-end homes used for residential purposes. As of 2025, it applies to homes with construction values over roughly $290,000.
The tax is progressive and caps out at 0.55% – but only on the portion of the value above the threshold. This additional tax doesn’t apply to raw land, rentals, or commercial property.
#3: Income Tax Considerations
If you generate rental income from your Costa Rican property:
- Taxed at 12.75% in Costa Rica: Based on 15% of 85% of gross rental income – no itemized expenses required.
- Must be reported to the IRS: US citizens are taxed on worldwide income, no matter what structure you use to hold the property. If an SA earns a profit and doesn’t distribute it, the owner will still have to pay tax.
- Foreign tax credits reduce overlap: With some notable exceptions, credits for Costa Rican taxes help avoid double taxation.
- Depreciation allowed – over 30 years: Foreign properties use the IRS’s Alternative Depreciation System.
- Use USD for reporting: All figures must be converted using applicable exchange rates.
Proper structuring keeps this income compliant – and potentially tax-efficient.
#4: Capital Gains Tax Planning
When selling Costa Rican property:
- Costa Rica imposes a 15% capital gains tax: Applies to most property sales, except for primary residences, which may be exempt.
- US citizens must report the gain to the IRS: The US taxes worldwide income, including foreign property sales.
- Foreign tax credits can offset US taxes: Taxes paid to Costa Rica can reduce your US tax liability, preventing double taxation.
- Timing the sale can impact tax liability: Selling in a low-income year or holding the property long-term may reduce taxes.
The Real Estate Buying Process in Costa Rica
The process of buying property in Costa Rica is relatively straightforward, though it differs in some respects from what you might be used to in the US.
#1: Finding the Right Property
Unlike the US, Costa Rica doesn’t have a unified Multiple Listing Service (MLS). This means you’ll need to:
- Work with several real estate agents.
- Research independently online.
- Visit properties in person if possible.
- Network with expat communities.
- Consider hiring a buyer’s agent to represent your interests.
When searching for property, be aware that there are three main types of property ownership in Costa Rica:
- Fee Simple Title: Full ownership – just like in the US. Most titled properties fall into this category and offer the strongest legal protections.
- Concession Property: Previously mentioned properties found within 50–200 meters from high tide. These are long-term government leases, not true ownership. Extra rules and approvals apply – foreigners without residency or local participation can’t hold the lease directly.
- Rights of Possession: Untitled land where someone claims ownership through long-term use. These claims may be legal under Costa Rican law, but they’re risky and hard to verify. Foreigners should avoid them unless advised otherwise by a trusted attorney.
#2: The Role of a Good Attorney
In Costa Rica, working with a qualified attorney who specializes in real estate is not just advisable – it’s essential. As part of our international wealth protection services, you’ll have access to the best legal expertise available.
The attorneys we work with:
- Are fluent in both English and Spanish.
- Have specific experience working with foreign buyers.
- Possess deep knowledge of the region where you’re purchasing.
- Are independent and have no affiliation with the seller or developer.
Together with our attorney partners, we handle all aspects of due diligence, contract drafting, and registration to protect your investment. Curious? Feel free to get in touch.
#3: Due Diligence is Critical
Before making an offer, ensure thorough due diligence, including:
- Title search at the National Registry (Registro Nacional).
- Boundary verification (cadastral survey).
- Confirmation of utilities and access rights.
- Environmental restrictions check.
- Verification of property tax payments.
- Inspection for structural issues.
- Check for any liens or encumbrances.
- Verification of zoning regulations.
- Confirmation of water availability and rights.
- Review of homeowners’ association rules (if applicable).
Pro tip: Never buy property without a complete title search by a qualified attorney. Costa Rica’s property registration system is generally reliable, but issues can still arise.
#4: Understanding Property Values
Costa Rican real estate is typically priced in US dollars, not colones (the local currency). Property values vary dramatically based on:
- Location (beachfront vs. mountain vs. urban).
- Views (ocean views command premium prices).
- Infrastructure (roads, utilities, internet access).
- Proximity to amenities and services.
- Construction quality and age.
- Size of land and usable area.
- Development potential.
- Rental income history (for investment properties).
Unlike in North America, there’s no central database of comparable sales, making it challenging to determine fair market value. This makes working with honest, experienced professionals even more important.
#5: The Costa Rican Real Estate Purchase Process
Once you’ve found your ideal property:
- Make an offer, usually through a purchase agreement (carta de oferta).
- Negotiate terms and conditions.
- Pay a deposit (typically 10%) into an escrow account.
- Complete due diligence (typically 30-60 days).
- Draft and review the final purchase contract.
- Sign the transfer deed (escritura) before a Costa Rican notary.
- Pay the balance of the purchase price.
- Register the property at the National Registry.
- Transfer utilities and services to your name.
The entire process typically takes 60-90 days from initial offer to closing, though complicated transactions may take longer.
#6: Understanding Closing Costs
Closing costs in Costa Rica typically include:
- Transfer tax (1.5% of the registered property value).
- National Registry fee (0.5%).
- Documentary stamps (approximately 0.30%).
- Legal fees (1-2%, depending on complexity).
- Escrow fees (if using an escrow service).
- Notary fees.
In total, closing costs typically amount to around 3.5-4.3% (though sometimes as high as 6%) of the purchase price and are usually paid by the buyer. However, this is negotiable between buyer and seller.
#7: Special Considerations for New Construction
If you’re buying pre-construction or newly built property:
- Verify that the developer has all necessary permits.
- Check the developer’s track record and completed projects.
- Understand what’s included in the price and what’s extra.
- Get all promises in writing, not verbal assurances.
- Consider hiring an independent inspector during construction.
- Structure payments to coincide with construction milestones.
- Include penalties for delays in the contract.
Risks and Rewards of Costa Rican Real Estate
Like any big purchase, buying property in Costa Rica has both good and bad points. It’s smart to understand these before you jump in.
Good Things About Owning Property in Costa Rica
Your Money Isn’t All in One Basket
When you buy property in Costa Rica, you move some of your money outside your home country. This is called jurisdictional diversification – like not putting all your eggs in one basket. If something bad happens in your home country’s economy, you still have assets somewhere else.
Partial Hedges Against Dollar Problems
Even though people buy and sell Costa Rican real estate using US dollars, owning property there helps protect you if the dollar loses value. Property is real – it’s something you can see and touch. It will still be worth something even if paper money isn’t worth as much.
Protection Against Inflation
When prices go up and money buys less (inflation), hard assets like property often keep their value better than cash. Owning physical property in a stable place makes a lot of sense.
Appreciation Potential
Properties in certain areas of Costa Rica (like Guanacaste and Nicoya Peninsula) have consistently appreciated at significant percentages over recent years.
Quality of Life Benefits
Unlike purely financial assets, real estate provides tangible lifestyle benefits:
- A physical place to visit, live, or retreat to.
- Potential retirement location.
- Vacation property for family and friends.
- Connection to a community and culture outside your home country.
Risk Factors to Consider
Infrastructure Reliability
While improving, Costa Rica’s infrastructure still faces challenges that potential buyers should be aware of:
- Electricity: While Costa Rica has a lot of renewable energy, power outages can occur, particularly during the dry season when hydroelectric capacity is strained. In 2024, the country implemented electricity rationing due to severe drought conditions.
- Internet connectivity: While major towns have reliable high-speed internet, rural areas may have limited options or lower speeds. Starlink is becoming an option in more remote locations.
- Road conditions: Major highways are well-maintained, but secondary roads may be unpaved or poorly maintained. During the rainy season (May-November), some areas may have temporary access issues.
- Water systems: Most properties connect to municipal water, but service interruptions can occur during dry seasons. Properties often include water storage tanks (tinacos) as backup.
- Waste management: Recycling and waste disposal systems vary significantly by municipality. Some areas have limited services.
For these reasons, having backup systems (generators, water tanks, satellite internet) is advisable for properties outside major urban centers.
Legal System Considerations
Costa Rica’s legal system functions well, but has important differences that foreign buyers should understand:
- Pace of proceedings: Legal matters move more slowly than in the US. Property disputes can take years to resolve through the court system. Probate proceedings can take up to a decade in the worst cases.
- Property rights: While generally strong, squatter rights exist under certain circumstances. Properties should be regularly inspected if left vacant.
- Environmental regulations: Costa Rica has strict environmental laws that can affect property use and development. These regulations can change, potentially affecting property values or development potential.
- Building permits: The process for obtaining construction permits can be complex and time-consuming.
- Consumer protection: While improving, consumer protection laws may not be as robust as in North America or Europe.
Community Dynamics
Understanding local communities and cultural factors is important for both investment potential and quality of life:
- Expat presence: Some areas have large expat populations, providing a familiar community but potentially less authentic cultural experience.
- Local integration: Areas with predominantly local populations may offer a more authentic experience but require stronger Spanish language skills.
- Development patterns: Future development plans can significantly change an area’s character and property values.
- Tourism trends: Areas heavily dependent on tourism may experience seasonal fluctuations in rental demand and services.
- Natural risks: Different regions face varying levels of risk from hurricanes, earthquakes, flooding, or landslides.
- Security considerations: While Costa Rica is generally safe, security concerns vary by location. Urban areas may have higher petty crime rates, while remote areas may have less police presence.
Spending time in an area before buying helps you understand these dynamics and determine if a location is the right fit for your needs and expectations.
Strategic Integration with Your Wealth Protection Plan
To maximize the tax benefits and cost efficiency of Costa Rican real estate within your broader wealth protection strategy, feel free to get in touch, or consider these approaches.
Geographic Diversification
Costa Rican property should be just one element in a geographically diverse portfolio that might include:
- Your home country real estate.
- Investments in other stable jurisdictions.
- Financial assets in multiple countries.
- Business interests across different regions.
This diversification helps protect against country-specific risks.
Asset Class Diversification
Real estate should complement other asset classes in your portfolio:
- Precious metals.
- Stocks and bonds.
- Business interests.
- Intellectual property.
- Alternative investments.
The right mix depends on your risk tolerance and financial goals.
Crisis Planning
Costa Rican property can serve as:
- A physical retreat during crises.
- A source of income independent from your home country’s economy.
- A backup residence if political or economic conditions deteriorate elsewhere.
- A storage location for certain physical assets.
Long-term Estate Strategy
Consider how Costa Rican property fits into your legacy planning:
- Will you pass it to heirs?
- Could it be sold to fund other aspects of your estate?
- How does it fit with your charitable goals?
- Does it provide a lifestyle option for future generations?
These considerations should inform how you structure the ownership, which isn’t just a legal box to be checked. It’s a potential make-or-break for your offshore situation.
For instance, not too long ago, a client asked for help to make sure his heirs wouldn’t need to go through the long and costly probate process in Costa Rica. After evaluating various options, including an expensive Costa Rican fideicomiso trust, we proposed a more efficient solution.
By structuring the property ownership through a US entity in combination with a local Costa Rican SRL, we provided the client with a cost-effective way to avoid probate while maintaining flexibility and protecting their assets.
This solution fit well into their existing US estate plan and will ensure a smooth transition of assets when the time comes.
Practical Next Steps
If you’re considering Costa Rican real estate as part of your wealth protection strategy, here are some practical steps to take:
- Research areas that match both your lifestyle preferences and strategic goals.
- Visit Costa Rica to experience potential locations firsthand.
- Consult with a Nestmann Associate about the optimal ownership structure.
- Establish banking relationships in Costa Rica.
- Build the network you’ll need to make your investment successful.
- Integrate Costa Rican property into your broader wealth protection plan.
Protecting Wealth Through Property
Buying property in Costa Rica isn’t just about getting a nice beach house. It can also be a smart way to protect your money.
When you know the basic rules about owning property there, you can enjoy both a great lifestyle and financial benefits while avoiding common headaches. Costa Rica has been peaceful for many years, has no army, and treats property owners well. That’s why so many expats choose it.
But that doesn’t take away from the importance of doing things the right way, the first time. Failing to do so puts your property at risk.
Think of your Costa Rica purchase as part of your bigger money picture. How does it fit with your other investments? Does it help spread out your risk? Will it help you reach your long-term goals? How tax-efficient and cost-efficient will it be? Even the prettiest house won’t help your finances if you don’t set it up right from the beginning. It’s much easier to get everything structured correctly before you buy, not after problems pop up.
Want to see how Costa Rican real estate could work for you?
Just ask to talk with a Nestmann Associate or join our premium asset protection intelligence service below for expat strategies, offshore insights, and more.
We’ve helped thousands of Americans protect their money across borders since 1984, and we can help you make smart choices, too.
To your prosperity.
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