How to buy a Holiday Home in Costa Rica (or anywhere else!) without the Headaches
So maybe you have fallen in love with Costa Rica’s magnificent Lake Arenal, its beautiful beaches and incredible opportunities to see wildlife such as turtles in their natural habitat (as Rough Guides state, "turtle-watching is now one of the more popular activities in ecotourism-friendly Costa Rica"). Throw in the amazing weather, and maybe you've decided that you would like to buy your dream holiday home here. Of course, buying a holiday home or even a new home abroad can be a daunting task. Finding an ideal property within a particular budget can sometimes be tricky and even if you do find what you are looking for there are many expenses and regulations to navigate. Here are some tips on how to buy your ideal property overseas without the headaches. Although some of the information is specific to Costa Rica much of this advice is still indispensable no matter where in the world you are looking for property.
Think about what you really want
A lot of people searching for a property abroad waste a lot of time because they are unsure about what exactly it is they want. The best advice is therefore to think long and hard about exactly what it is that you are after. It might sound a bit contrived but it is worth being a bit academic about this and writing down a list of basic questions on a piece of paper and then writing down an answer for each. Such questions should include:
- Is it important for me to be close to a beach or a lake or mountains or am I willing to compromise?
- Do I want to be in the city, a small town or in the middle of the countryside?
- How close do I want to be to amenities such as shops and restaurants?
- Is it going to be practically important to be reasonably near to an airport? Will I want to visit my property abroad for long weekends, which would make proximity to a convenient airport a must?
- How much space do I want in my property abroad? Will I be inviting family and friends over and will I therefore need a property with extra bedrooms and reasonable space for entertaining?
Is buying off-plan an option for you?
There are also options other than buying a conventional property. For example, you could consider buying a property that has not yet been finished, otherwise known as buying off-plan. This can be potentially lucrative if you choose to eventually sell the completed property on at a higher value. There are risks involved, however. For example, there have been cases of uncompleted properties never being finished in some countries because the developer runs into problems or cannot fund their completion. It can also sometimes be difficult to accurately estimate the value of a property before it is actually finished. So although the developer might tell you one thing about the property’s value you should not necessary take it as fact.
Be realistic about your budget
The next piece of advice is to set a realistic budget and do as much Internet-based research as possible before diving in and booking a plane to visit properties. There is nothing worse than visiting properties and falling in love with them and then feeling frustrated and disappointed when your modest offers are rejected. It is advisable to get real about what your money can get you as early on as possible to avoid disappointment and wasting your own time. Also, bear in mind that there will be other expenses on top of the cost of an actual property, such as legal fees and taxes. Some of these can be unexpected. For example, in the UK Taxes can sometimes be chargeable for rented overseas properties. Did you know that if you advertise your property in the UK to rent it out when you’re not using it, then you could be liable to pay certain taxes to the UK government? According to the UK tax department, "If UK tax is due on rental income from an overseas property, you can deduct certain expenses and allowances in the same way as you can from income from UK property." Therefore either be committed to in depth research to calculate what the overall expense of owning an overseas property could be or hire a solicitor or attorney to give you advice on how to figure this out. Remember that there are also costs associated with transferring large sums of money abroad when it comes to paying for your property or paying the fees associated with buying the property and it is worth looking into the best options in terms of money transfer services. Not all providers will be appropriate as, as money.co.uk explain, “some providers don’t cover certain South American countries, while others don’t offer same day transfers – if a provider cannot accommodate your needs you can exclude them before looking at the price”.
Bring in the professionals
Don’t cut corners when it comes to investing in the best professional help that a country has to offer. If English is not the first language in the country where you wish to purchase a property (of course, in Costa Rica our working language is Spanish) then invest in reputable bilingual estate agents and lawyers. Make sure that you make proper enquiries into the history and fees beforehand. Make sure you also quiz your lawyer about all the things that need to be taken care of when making a purchase. For example, is it necessary to make a will in the country where you are buying a property as well as your own country?
Some things to bear in mind regarding Costa Rica
Of course, every country has its specific quirks when it comes to buying property and Costa Rica is no different. For example, you should do a search of any property that you are potentially interested in through a computer system known as Folio Real. A title search through the Folio Real program will tell you a lot about a property’s background- for example the history of who has owned the property in the past, its boundaries and any mortgages associated with the property. One of the first questions that you should also ask about a property is whether it is derechos de ocupación- meaning a property to which you have occupation rights- or derecho de propiedad, which gives you full ownership rights. Be warned that if you buy a property with just derechos de ocupación then the land has not been registered and you will have to undergo a lengthy process to register it. It is also worth researching whether the property is subject to a concession. A concession is similar to what one might refer to as a lease in the US or Canada or the UK, and refers to the period of time the government will allow a property to be used for a particular purpose.
Emma Crosby
