How about closing costs in Costa Rica?

The general custom is for the buyer and seller to share equally in the closing costs. this can be modified by agreement and usually depends upon the particular transaction. Closing costs involve three things: government taxes and fees, notary fee, and mortgage costs, if any.

[A] Government Transfer Tax and Registration Fees

(1) Real Estate Transfer Tax. – The government collects a property transfer tax (Impuesto de Traspaso) which is equal to 1.5% of the registered value of the property. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid.

(2) Documentary Stamps – The government also requires that documentary stamps be affixed to the deed. These stamps include the following: Municipal Stamp: (Timbre Municipal); Legal Bar Association Stamp (Timbre del Colegio de Abogados); Agricultural Stamp (Timbre Agrario); National Archives Stamp (Timbre del Archivo Nacional); Fiscal Stamp:(Especie Fiscal). The Public Registry also imposes its own tax of .05% on documents presented for recordation to the Public Registry. (Derechos de Registro)

To rent or buy this 54 minute video with Costa Rica Attorney Roger Petersen please visit our Video On Demand page here.

[B] Notary Fees.

The Notary that drafted the contract for sale and carried out the closing on the property transfer is entitled to a Statutory Fee. For many years that statutory fee has been 1.25% of the value of the transaction. However, in August of 2005 the Executive Branch approved Executive Decree No. 32493 which sets forth the new schedule of fees for Attorney’s and Notaries in Costa Rica (Arancel de Honorarios por Servicios Profesionales de Abogacía y Notariado).

The statute mandates that Notaries abide by the miminum fees established by statute. The minimum for all acts and contracts that are authorized by a Costa Rican Notary Public the fee schedule is based upon the actual value of the transaction involved according to the following minimum schedule:

• Up to 10 million Colones = 2%
• On the excess of 10 million Colones and up to 15 Million Colones = 1.5%
• On the excess of 15 million Colones and up to 30 million Colones = 1.25%
• On the excess of 30 million Colones 1%

The law also states that for acts or contracts that are complex in nature may result in a 50% surcharge from the above.

[C] Mortgage costs. It is customary for the person who is receiving financing to pay the costs of drafting and registering the mortgage instrument. A mortgage can be created simultaneously at the time of sale by adding a mortgage clause in the transfer deed. Or, a separate mortgage instrument can be drafted.

A mortgage document pays registration fees of 1.00 Colon for every 1,000 Colones. The mortgage document also pays documentary stamps. The Notary Public will also charge for drafting the mortgage instrument according to the same statutory Notary Fee schedule indicated above.

Costa Rica Attorney Video: To watch this short video with Attorney Roger Petersen about the real estate buying process, please click on the small black triangular Play button below and allow a few seconds for the video to begin.

Costa Rica Attorney Video Interviews. To help educate and protect you with your real estate investments in Costa Rica, you can enjoy the following interviews with Attorney Roger Petersen and Attorney Rick Philps online at:

• Costa Rica Real Estate – Foreigners OK To Buy with FREE online video interview.
• Costa Rica Legal Guide. FREE online video interview with Attorney Roger Petersen.
• Costa Rica Corporations – Why Pay More For Less? With FREE online video with Attorney Rick Philps
• Costa Rica Residency Categories Explained – With FREE online video interview with Attorney Rick Philps
• Costa Rica Property Taxes – When Scott officially complained that his property tax bill was too low… FREE online video interview with Attorney Roger Petersen.
• Buying or Building Real Estate in Costa Rica? Here is What You Need To Know? Part I with FREE online video interview with Attorney Roger Petersen.

The buyer should be aware that Costa Rican real estate transactions commonly operate on a two-tiered system. Since Costa Rican properties have a low property tax appraisal base in relation to market value, it has been a customary practice to run property sales through at the registered value, which may be substantially less than the actual sales price of the property.

Prior to engaging in this practice your Attorney should advise you of the potential risks and consequences of doing so. Although there is currently no capital gains taxes in Costa Rica (unless your habitual business is real estate transactions) this could change in the future and then reporting a low sale could end up being the property basis for calculating the capital gains tax in the future.

Registration of the transfer deed.

Once all the fees have been paid, it is the obligation of the Notary who drafted the transfer deed to ensure that the deed is presented (anotado) and registered (inscrito) in the Property Section of the Public Registry.

I have stressed the words presented and registered to highlight the importance of following up with the notary to ensure registration. Although presentation guarantees your priority (i.e., first in time, first in right), it does not automatically guarantee registration.

The Public Registry will not register a transfer deed unless all taxes and registration fees are included. Any prior instruments that encumber the property (i.e., mortgages, liens, judgments, etc.) must be lifted before or simultaneously when your transfer deed will be registered.

Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry with 45 to 60 days after presentation.

It is therefore important to follow up with the notary to ensure registration, otherwise you will run into problems in the future when you decide to resell the property and find out that your sale was not registered.

You can read part three of Buying or Building Real Estate in Costa Rica? Here is What You Need To Know?

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Written and copyright by Attorney at Law – Roger A. Petersen. Roger has been an attorney since 1992 and is a member of both the Costa Rican and Florida Bar. He practices law in San José, Costa Rica and is the author of the best-selling book The Legal Guide To Costa Rica which you can order from Barnes & Noble here or from Amazon.com here. Attorney Petersen’s website can be found at Petersen & Philps Law Offices.




To speak with Attorney Roger Petersen about hiring him as your Costa Rica attorney, please contact him using the information below:

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.