Embarking on a real estate transaction in Costa Rica involves various fees and taxes that contribute to the overall cost of property acquisition. It’s essential to comprehend these costs to make informed financial decisions. Here’s a comprehensive breakdown of the expenses associated with buying property:
Notary Services: 1% – 1.25%
Negotiable but Guided by Law:
Negotiability: While fees for notary services are somewhat negotiable between parties, there are legal guidelines in place. The range typically falls between 1% and 1.25% of the property’s value.
Minimum Fees Set by Law:
Legal Constraints: By law, the local Bar Association establishes minimum fees for notary services. Although quotes below 1% might be presented, such offers would be in violation of legal standards.
Additional Legal Services:
Beyond Notary Fees: Notary fees cover the essential transfer process, but additional legal services, like due diligence, contract revisions, and translations, may incur extra charges based on the lawyer’s hourly rates or predetermined fees.
Stamps and Taxes for Property Registration: 0.75% – 0.8%
Registration Costs:
Percentage of Property Value: Stamps and taxes associated with registering the property typically range between 0.75% and 0.8% of the property’s value.
Property Transfer Tax: 1.5%
Transaction Value Dependency:
Fixed Percentage: The property transfer tax is a fixed percentage of the transaction value, amounting to 1.5% of the total value.
Shares Purchase Exemption:
Applicability: If the property is acquired through the purchase of shares in a corporation rather than the property itself, the property transfer tax does not apply.
Total Fees and Expenses: 3.25% – 3.55%
Comprehensive Overview:
Aggregate Transaction Costs: Considering notary fees, stamps and taxes for property registration, and the property transfer tax, the total fees and expenses typically range from 3.25% to 3.55% of the property’s value.
Fee Distribution: Negotiable
Potential Split:
Buyer-Seller Dynamics: Fees and taxes are often divided between the buyer and seller. However, the distribution depends on various factors, such as the transaction size and nature, and becomes a point of negotiation during the transaction process.
Bargaining Chip:
Negotiation Leverage: The allocation of fees can be used as a bargaining chip during negotiations. Whether the buyer or seller covers certain costs can be determined based on mutual agreement and the specifics of the transaction.
Understanding these cost components allows prospective buyers to plan and budget effectively for the overall expenses associated with purchasing property in Costa Rica. Additionally, recognizing the negotiation flexibility in fee distribution provides room for optimizing financial arrangements during the transaction process.