Real Estate Investment for Residency in Costa Rica (2019)

Overview of Real Estate Investment Residency in Costa Rica

There is the option of obtaining residency in Costa Rica through the purchase of real estate. This category is generally known as real estate investment residency Costa Rica, as it requires making an “investment” of at least USD $200,000 in property.

Many countries allow foreign nationals to obtain residency—or in some cases citizenship—through investment programs that include real estate acquisition. Costa Rica follows this model, though its legal framework focuses strictly on the amount invested rather than the speculative or commercial return on the property.

The use of the term “investment” warrants clarification. Investment usually implies the expectation of financial return. However, considering market conditions in Costa Rica, the potential return from simply buying and selling property may vary significantly. This article does not evaluate real estate as a financial vehicle, but rather explains the legal requirements for real estate investment residency Costa Rica as regulated under immigration law.

Section 79 of the Immigration Law, together with Sections 87 and 88 of the Immigration Regulations, establishes the requirements for obtaining residency through real estate acquisition. The minimum qualifying investment is USD $200,000. The following sections explain how this requirement is interpreted and applied.

The USD $200,000 Investment Requirement for Real Estate Investment Residency Costa Rica

The regulations require an actual investment of at least USD $200,000. This means that the applicant must have paid that amount for the property.

This distinction is critical. In practice, many applicants mistakenly believe that the market value of their property is sufficient to qualify, even if they paid less than the required amount. Under Costa Rican immigration rules, valuation alone is not determinative.

The government’s intent is to verify that the applicant injected the required capital into the country. Therefore, eligibility is based on the purchase price reflected in the transaction, not on appraisals or subsequent appreciation.

When evaluating eligibility for real estate investment residency Costa Rica, the relevant question is not how much the property is worth today, but how much was actually paid at the time of acquisition. If the documented purchase price equals or exceeds USD $200,000, the applicant may qualify under this category.

Methods of Acquiring Property for Residency Purposes

The Corporate Ownership Option

As a general guideline, individuals acquiring property for personal use—whether as a primary residence or a second home—are often advised to purchase the property in their personal name.

If, however, the property is intended as an income-generating asset or part of a business operation, acquisition through a corporation may be appropriate. Corporations in Costa Rica are commercial entities by nature and are designed to conduct business activities.

Distribution of Corporate Shares

When a corporation is used, the distribution of shares becomes relevant for residency qualification purposes.

• If a single individual forms the corporation, that person typically owns 100% of the shares.

• If there are partners or a spouse involved, ownership must still reflect a proportional value of at least USD $200,000 for the applicant.

For example:

• A USD $200,000 property requires 100% ownership by the applicant.

• A USD $400,000 property allows the applicant to own at least 50% of the shares.

• A USD $1,000,000 property allows ownership of at least 20%, and so forth.

The ownership percentage must always correspond to a minimum capital value of USD $200,000 to meet the immigration requirement.

Capitalization and Declared Value of the Corporation

When forming a corporation for property acquisition, the declared capital should match the purchase price of the asset.

Although many Costa Rican corporations are created with minimal declared capital (often USD $10,000 or less), this structure is not appropriate when the corporation will acquire high-value real estate for residency purposes.

If the corporation is not initially capitalized at the purchase amount, its capital should be increased prior to acquiring the property. This step is necessary to justify, from an accounting and legal perspective, the origin of the funds used to acquire an asset of significant value.

Acquiring Property in a Personal Capacity

If a single individual acquires a property in their own name for USD $200,000, the title should reflect sole ownership and the full purchase amount.

When married individuals wish to protect marital interests, additional planning is required. For instance:

• If the property is purchased for USD $200,000, the applicant should hold title individually to meet the residency requirement. Spousal interests may be protected through a private agreement addressing distribution upon divorce or death.

• If the property is purchased for USD $400,000, joint ownership may be registered, with each spouse holding 50%, thereby meeting the minimum investment threshold individually.

Such arrangements should always be carefully considered and documented.

Final Legal and Tax Considerations

Depending on the purchase price, properties may be subject to registration with the tax authority for purposes of the Solidarity Tax on Luxury Properties, which applies to constructions exceeding a statutory value threshold in colones.

Additionally, property values must be updated with the local municipality to ensure consistency between the declared purchase price and municipal records.

While obtaining residency through real estate investment is generally straightforward, issues often arise when transactions are structured without considering immigration regulations. Proper alignment between real estate documentation and residency requirements is essential to avoid delays or complications when filing with Dirección General de Migración y Extranjería.

Coordination with tax obligations administered by Ministerio de Hacienda is also necessary to ensure compliance across all regulatory fronts.

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