The first question most of my American clients ask is not about price. It is: "Can I actually do this, and what does it do to my taxes?" The good news is that buying in Costa Rica is straightforward for a US citizen. The part that deserves your attention is the paperwork on the US side, because a few choices you make at the start, like how you pay and whether you use a company, affect what you file every year afterward.
Can a US Citizen Own Property in Costa Rica?
Yes. Foreigners can hold titled property outright in Costa Rica with the same ownership rights as citizens. You do not need residency or any government approval to buy. The one exception worth knowing is land near the ocean: the first 50 meters from the high-tide line is public and cannot be owned, and the next 150 meters is normally held under a municipal concession with extra rules for foreigners. I explain that in the maritime zone guide. Costa Rican title records also work differently from a US title search, so always have the registry, access and water checked before you commit; my post on the water availability letter is a good example of what to verify.
How American Buyers Pay: Financing Options
In my experience, mainstream US mortgage lenders generally do not lend on property outside the United States, which is why it helps to know the real options:
- Cash. The simplest route, and common among foreign buyers.
- Equity from your US home. A home-equity line or cash-out refinance on a property you already own lets you fund the purchase without a Costa Rican loan.
- A US-dollar mortgage on the Costa Rican property. I work alongside Second Street, a US-based lender offering 30-year fixed-rate mortgages in US dollars for US and Canadian buyers, based on your existing US credit and income. See the financing section for details.
- Costa Rican banks. Several local banks lend to foreigners, but expect a larger down payment, extensive documentation and a longer approval process. Rates vary by lender and change, so I do not quote one here.
- Owner or developer financing. Available on some properties, and always negotiated case by case.
Whichever route you take, plan how the money will move. My guide to sending money for a house purchase covers the mechanics.
Your US Taxes: What Actually Gets Reported
As a US citizen you are taxed on your worldwide income, wherever you live. Here is how that plays out for a Costa Rican property.
- The home itself. A property you own directly is not reported on the FBAR (FinCEN Form 114) or on Form 8938. Real estate is not a financial account.
- Your Costa Rican bank account. This one can trigger a filing. If the combined value of your foreign financial accounts exceeds $10,000 at any point in the year, you must file an FBAR. An account opened to pay for or run the property can count. See whether you need a Costa Rican bank account.
- Rental income. You report it on your US return. Costa Rica also taxes local rental income, and a foreign tax credit can offset US tax for income taxes paid to Costa Rica. Property tax does not qualify for that credit. Foreign residential rental property is generally depreciated over 30 years, but confirm the details with your CPA. For the Costa Rican side, read renting out your Costa Rica property.
- Buying through a company. A Costa Rican "Sociedad Anónima" is treated as a foreign corporation for US tax purposes. A US owner may then have to file Form 5471 each year, with a $10,000 penalty per corporation for failing to file, and an interest in a foreign entity is reportable on Form 8938 when thresholds are met. A company is optional, not required. My post on a corporation versus your own name covers the Costa Rican side of that choice.
When You Sell or Pass It On
- Home-sale exclusion. The US exclusion of up to $250,000 of gain ($500,000 for joint filers) applies only to your main home, with 2 of the last 5 years of ownership and use. A vacation home or rental does not qualify.
- 1031 exchanges. US real property and foreign real property are not like-kind, so you cannot use a 1031 exchange between a US property and a Costa Rican one.
- Costa Rican capital gains tax. A sale is taxed in Costa Rica too. I break that down in selling your Costa Rica property.
- Estate tax. US citizens are subject to US estate tax on worldwide assets, including Costa Rican real estate, so include it in your estate plan.
What You'll Pay in Costa Rica
- Annual property tax: 0.25% of the registered value, paid to the municipality. The registered value is usually lower than what you paid. See what owners actually pay each year.
- Luxury-home ("solidarity") tax: an additional annual tax on the construction value of expensive homes. For 2026 it applies above ₡143 million of construction value (land excluded), starts at 0.25% and rises in tiers. The threshold is adjusted each year and the return is filed in January.
- Closing costs: a 1.5% transfer tax, registry and other stamps of roughly 0.5% and a bit more, and a notary fee on a graduated scale plus VAT. In total, roughly 3% to 5% of the price, and who pays what is negotiable. My closing cost breakdown has the detail.
Residency: Buying Doesn't Give You Residency
Owning a home does not make you a resident. The exception is the Inversionista program, which requires a qualifying investment, and its minimum has been unsettled in 2026; I explain it in my Inversionista residency post. Many retirees look instead at the pension-based route in the Pensionado requirements guide. Check current requirements with an immigration attorney before you plan around either one.
Moving the Money Safely
Costa Rican notaries collect the source of the funds and identification as part of anti-money-laundering rules, so expect to provide ID, bank statements and proof of where the money came from. Wire the funds from your own bank account, not cash, and keep every transfer record. Your notary's role is explained in what a notario público actually does.
Myths That Trip Up American Buyers
- "You have to form a company." You do not, and a company adds US reporting.
- "A Costa Rican home goes on my FBAR." Not when you own it directly. Bank accounts and foreign entities are what trigger filings.
- "There's no property tax." There is: 0.25% a year, plus the luxury-home tax on expensive homes.
- "A 1031 exchange will work." Not between US and foreign property.
- "My vacation home gets the home-sale exclusion." Only a main home does.
- "Foreigners can't own near the beach." Titled land outside the maritime zone is fine.
Before You Make an Offer
- Speak to a cross-border CPA about your filings and about buying in your own name versus a company
- Decide how you will pay, and line up a lender early if you need one
- Have the title, access and water verified by your attorney
- Budget for closing costs and the annual property tax
- Plan for tax on any rental income and on a future sale
Frequently Asked Questions
Do I need residency to buy property in Costa Rica as a US citizen?
No. US citizens can buy and hold titled property in Costa Rica without residency and without government approval. Buying property does not by itself give you residency, except through the Inversionista program, which has its own investment minimum and rules.
Do I have to report my Costa Rican home to the IRS?
A home you own directly is not reported on the FBAR or on Form 8938. But any rental income, a future sale, and estate tax rules still apply to US citizens, and a Costa Rican bank account or a Costa Rican company can trigger separate filings. A cross-border CPA can tell you exactly what applies to your situation.
Can I get a US-style mortgage for a Costa Rican property?
Some specialist lenders offer US-dollar mortgages on Costa Rican property. I work alongside Second Street, a US-based lender offering 30-year fixed-rate mortgages in US dollars for US and Canadian buyers, based on your existing US credit and income. Costa Rican banks also lend to foreigners, usually with a larger down payment and a longer process.
Can I use a 1031 exchange with a Costa Rican property?
No. Under the tax code, US real property and foreign real property are not treated as like-kind, so a 1031 exchange cannot move value between a US property and a Costa Rican one.
Does the home-sale tax exclusion apply to my Costa Rica vacation home?
Only if it is your main home. The exclusion of up to $250,000 of gain ($500,000 for joint filers) requires that you owned and lived in the home for at least 2 of the last 5 years. A second home or rental does not qualify.
Do I have to buy through a Costa Rican corporation?
No. Many foreign buyers hold title in their own name. A company can make sense in some cases, but for a US owner it adds US reporting obligations, so it should be a deliberate choice made with your CPA and attorney, not a default.
