How to Buy a Vacation Home in Costa Rica

Imagine having the lush cloud forest of Monteverde on your doorstep or stepping out into the fresh ocean air of Tamarindo as you take in the setting sun. Known for its natural beauty and unmatched tranquility, there’s no better place to unwind and forget about the stress of everyday life than Costa Rica.

Offering a wealth of stunning villas overlooking endlessly green landscapes, Costa Rica is the ideal location to purchase a second home. Immerse yourself in its rich coffee culture and explore breathtaking national parks as you discover exactly why Costa Rica is one of the world’s happiest countries.

Costa Rica places no restrictions on foreign ownership, is relatively affordable and has low property taxes compared to many other vacation destinations. We’ll explore some of the best locations and what each has to offer, factors to consider, the buying process, and alternatives to traditional vacation home ownership.

Why Costa Rica for a Vacation Home?

Costa Rica offers vacation homebuyers far more than beautiful landscapes, affordability and a vibrant, welcoming culture. Buyers will find a range of reasons why this is an ideal place to invest in a second property.

Costa Rica’s Political and Economic Stability

Unlike many of its Latin American neighbors, Costa Rica has a long history of peaceful democracy and economic stability. The country has demonstrated a commitment to its citizens by providing free public education since 1869, public healthcare, a social security system and investments in infrastructure. Costa Rica abolished its army in 1948 and established national parks beginning in 1970 to protect its rich biodiversity.

These societal investments and political stability fostered a reliable and growing economy, which is a big part of what makes the country so appealing to high-end investors. The expat community here has significantly expanded in recent years, especially among affluent individuals who are attracted by the nation’s relative safety and reliable infrastructure (roads, utilities, healthcare, clean water, internet, etc.).

(To get a sense of what vacationing in Costa Rica is like, explore our guide, Three Perfect Days in Costa Rica!)

Costa Rica’s Vacation Lifestyle and Natural Assets

Costa Rica is one of the world’s most biodiverse places, hosting 5% of the world’s biodiversity despite making up only .03% of its entire landmass. The country has long recognized the need to protect its natural spaces, native species, and exotic wildlife, so conservation efforts have been in place for decades. As a result, the country’s lush, beautiful rainforests, stunning beaches, turquoise waters, and dramatic volcanic landscapes provide endless opportunities for residents and visitors to enjoy outdoor activities.

From surfing to snorkeling, fishing, hiking, kayaking, paddleboarding, boating, ziplining, and wildlife viewing, adventure seekers will find plenty to do. If relaxing by the pool or on the beach sounds more appealing, Costa Rica offers plenty of places to do that, too! Those interested in elevated culinary experiences will also find plenty of upscale restaurants and lounges in the larger, more developed communities. Costa Rica’s diverse topography, including mountains, creates many microclimates, so if coastal areas begin to feel too warm, you can head into the mountains for cooler weather.

Costa Rica’s Low Taxes and Legal Advantages

Costa Rica has attractive tax rates compared to many vacation destinations, typically about 0.25% of a property’s value. Real estate sales can incur capital gains tax on any profit earned, but the rate depends on the details of the property. You should consult a reputable Costa Rican tax attorney to go through the details of your specific situation. U.S. sellers may be able to avoid double taxation by claiming a U.S. foreign tax credit. Again, make sure to consult a tax advisor for your specific situation. Costa Rica also offers many tax benefits to foreign residents, such as potential deductions for property maintenance and management costs.

Foreign investors can buy real estate here without having to apply for residency or citizenship and have the same ownership rights as citizens. You can purchase property directly in your own name here; however, many investors form a corporation such as a Sociedad de Responsabilidad Limitada (SRL) or a Sociedad Anónima (SA), which are similar to a U.S. LLC, and purchase through that. Purchasing through an SRL or SA offers several benefits, including tax advantages on rental income and capital gains, enhanced decision-making flexibility, simplified estate planning, and personal liability shields.

Costa Rica’s Strong Luxury Real Estate Market

As noted earlier, Costa Rica has become popular with high-net-worth (HNW) buyers, which has created a demand for luxury properties. Many newer luxury homes are designed with sustainability in mind, combining eco-friendly features like solar panels and energy-efficient designs with upscale amenities such as infinity pools, lavish terraces, helipads, and smart home technology. Costa Rica’s booming tourism industry attracts visitors from around the globe, so if you plan to rent your vacation home, occupancy and average price-per-night rates are strong year-round.

Where in Costa Rica to Buy a Vacation Home?

Most luxury vacation communities lie along Costa Rica’s Pacific coastline in the Guanacaste Province, although some buyers opt for homes on Costa Rica’s more laidback Caribbean coast in towns like Puerto Viejo. The Caribbean coast lacks some of the high-end amenities and easy accessibility found in other parts of the country. Here are the most popular areas for second-home investors:

Northern Pacific Coast

The Guanacaste Province is among the most appealing places for vacation homes for foreign investors, as it has a major international airport in Liberia and robust infrastructure. The Guanacaste Province offers some of Costa Rica’s best features, including idyllic sandy beaches, tropical rainforests, volcanoes, and national parks. The region offers several luxury resorts and vacation home communities, such as Tamarindo, Playas de Coco, Playa Hermosa, Papagayo Peninsula, Las Catalinas, and Playa Flamingo. Nosara, a coastal town on the Nicoya Peninsula, has experienced recent growth due to its more tranquil, wellness-centric vibe.

Central and South Pacific Coast

Located a few hours’ drive from the capital, San Jose, Costa Rica’s Central and South Pacific coasts offer several smaller vacation home communities. Towns such as Manuel Antonio, with access to the world-famous Manuel Antonio National Park, offer a European/international feel with art galleries, shopping and dining. The Pez Vela Marina in nearby Quepos adds easy access to offshore fishing and diving. Jaco and Playa Herradura are other options with popular amenities such as golf, dining and resort-style living.

Central Valley

If being surrounded by breathtaking volcanic mountains and lush, green valleys sounds more appealing than a beach town, vacation home buyers will find luxury properties in Costa Rica’s Central Valley. This region offers a milder, cooler climate and access to nature while still providing upscale amenities and a modern infrastructure. You’ll find many elegant, gated communities in towns like Escazu and Santa Ana.

Steps to Buying a Vacation Home in Costa Rica

As with any foreign real estate investment, you’ll want to work with trusted local partners who understand Costa Rica’s processes, fees and legal considerations. Unless you’re completely fluent in Spanish, you’ll also want to work with bilingual local partners.

Here’s an overview of buying property in Costa Rica:

Consider your needs and desires: Costa Rica offers a wide range of vacation homes, from oceanfront villas to mountain retreats, luxury condos and gated communities. Research communities to determine which ones provide the amenities and services (e.g., hospitals, supermarkets, airport proximity, etc.) most important to you. Your needs may differ depending on whether you’re buying the home only for personal use or planning to rent it.
Secure financing: Securing a mortgage with a local bank can be tricky and pricey, so it’s better to explore other options such as paying cash, using your primary home’s equity, owner financing or financing through a developer if it’s a planned community.
Hire a local real estate agent and an attorney: Vacation home communities differ in what they offer, so it’s best to work with an agent who understands the local market. Agents should be registered with the Superintendencia General de Entidades Financieras (SUGEF), the public entity that oversees national finances. Most professional agents also belong to a national or regional association, such as the CCBR (Costa Rican Real Estate Association) or CRGAR (Costa Rican Guanacaste Association of Real Estate). It’s wise to hire a real estate attorney who is also a notary, as this will expedite the buying process and assist with due diligence.
Make an offer: Your agent will help you determine a fair but competitive offer, and after negotiations are finalized, your attorney will write a formal purchase-sale agreement. You’ll be expected to pay a deposit, typically 10% of the sale price, which will be held in escrow and then applied to the purchase price at closing.
Conduct due diligence: Your attorney will conduct a title search, uncover any potential issues or risks, investigate environmental and zoning regulations, ensure access to utilities, and help you understand your taxes and fees. A thorough building inspection should also be conducted as part of the due diligence process.
Close the deal: Expect the entire closing process to take 30 to 60 days. You’ll pay closing costs and property transaction fees, such as legal and notary fees, typically around 4% to 5% of the purchase price.

Costa Rica Vacation Home Ongoing Ownership Costs & Management Considerations

Owning a vacation home in Costa Rica comes with ongoing costs and some hidden responsibilities that you’ll need to consider:

Taxes and insurance: Be prepared to pay insurance and property taxes, including a sliding scale luxury home tax that ranges from 0.25% to 0.55% on homes valued over about $290,000.
Utilities: You’ll need to pay for gas, water, electricity, and WiFi, even when you’re not using the home. Electricity rates are relatively high in Costa Rica.
HOA fees: Most planned communities and condos charge HOA fees that cover maintenance, landscaping and security around the property.
Property management fees: Even in a planned community with HOA fees, you will need to hire a property manager to help with maintenance and housekeeping within your home. Plan for seasonal maintenance and potential repairs, especially in risk-prone areas.
Local permits and fees: If you rent your home, be prepared to pay taxes, including a 13% – 15% Value-Added-Tax (VAT) and taxes on rental income.

While Costa Rica is more affordable than many other desirable vacation destinations, you’ll want to compare the costs and potential hassles vs. the benefits carefully. Traditional ownership is a popular choice for sophisticated investors looking to achieve that Costa Rican lifestyle, but it isn’t the only way to get your dream vacation home here.

Vacation Home Ownership vs. Flexibility: Which Matters More?

When considering buying a second home in Costa Rica, assess your true intentions. Are the burdens of ownership worth the benefits, or do you want to enjoy the vacation home lifestyle? Full ownership has its perks; you can befriend your neighbors, personalize the space, come and go as you please, and potentially build equity over time. However, it also ties you to one destination, comes with ongoing maintenance costs and hassles, and often ends up underused, even by the most enthusiastic buyers.

Modern solutions like Equity Estates offer a unique way to a dream vacation home.

Instead of managing one high-end property full-time, you can gain access to a collection of luxury homes around the world. With Equity Estates, you may also gain access to higher-end, more upscale villas and estates beyond what you could afford to buy on your own.

Equity Estates: Stress-free Vacation Home Ownership

Costa Rica is an appealing destination to own a vacation home, but traditional ownership can be complex, costly and fraught with hassles. With Equity Estates, you can enjoy the beauty and exclusivity of luxury living without the burdens of full-time ownership—no stress over local regulations, taxes, utilities, maintenance, security or property management.

Equity Estates Fund offers a fully managed luxury real estate fund alternative at a fraction of the cost of traditional second-home ownership. Instead of being tied to one property (and one investment), fund members enjoy an investment in a diversified portfolio and experience global travel (with personal concierge services and daily housekeeping) without the burden of property upkeep. And when the homes are sold ten years later, investors receive their investment back plus appreciation, assuming the market continues to increase in value.

From skiing in Lake Tahoe to exploring museums in Paris, wine-tasting in Tuscany, golfing in Palm Springs, snorkeling in Belize and sportfishing in Los Cabos, you can enjoy second-home ownership benefits without the headaches.

Equity Estate Fund investors enjoy:

Access to 65+ stunning residences in the world’s most sought-after destinations, including Tamarindo and Las Catalinas.
No property management responsibilities, including no landscaping, pool/spa upkeep, housekeeping, snow clearing, repairs or other maintenance concerns. The Fund manages it all seamlessly
Designated residence managers who provide resort-style concierge services
Flexible travel options, including bringing family or friends along
Investment returns when homes are sold

Choosing Equity Estates Fund over second home ownership is ideal if you want to experience luxurious vacation homes like an owner without being tied down to a single location or dealing with the associated hassles.

Discover the more innovative way to travel the world with Equity Estates today!