By Allan Garro

Attorney at Law & Notary Public

Here is a common scenario. A foreigner arrives in Costa Rica and decides to purchase real estate property. The question then arises as to whether it is better to hold the property in one’s personal name or through a corporate structure, such as a limited liability company.

The answer depends on the buyer’s objectives, as well as the amount of time intended to spend in the country during the year. Some foreigners plan to live here permanently, while others intend to spend only a few weeks a year in the country.

If the buyer or buyers’ primary objective is to apply for residency as an investor, the property must be held in their name. To do this, a minimum investment exceeding US$150,000 is required.

If the buyers are a married couple and the investment amounts to US$200,000, the property should be placed in the name of one spouse, who can then apply for residency on behalf of the other. Holding the title in the names of both spouses in equal proportion would imply that each invested US$100,000, which is insufficient.

To apply for residency as an investor, the minimum investment used to be US$200,000, but law number 9996 changed that since 2021, lowering it to US$150,000. It was ratified by presidential decree 43926 in 2023.

Law 9996 was intended to be in effect for 5 years, a period that expired in July 2026. Nevertheless, immigration authorities continue applying the US$150,000 minimum threshold as long as the aforementioned decree remains in effect—though this could change at some point in the future.

Other benefits created by law 9996 that also expired last July 2026 are the following ones:

1. One-time duty free and all import taxes to import household items.

2. Importing up to two vehicles for personal or family use free of import and sales taxes.

3. The amounts reported as income to obtain tax exemption benefits will be exempt from any income tax.

4. Exoneration of twenty percent on transfer taxes on Real Estate Property that the beneficiaries acquire in their name.

5. Exemption from import taxes for instruments or materials intended for professional or scientific practice.

When the buyer’s or buyers’ objective is not to obtain residency as an investor—for instance, because they do not intend to spend long periods of time in the country, or because they wish to rent out the property most of the time—it is advisable to form a limited liability company (LLC) to hold the title to the property.

This offers a number of advantages, such as the fact that, in the event of any civil liability on the part of the buyer, such liability does not extend to the LLC that holds the title.

Other advantages of having an LLC include the following:

a. If the owner is out of the country and a problem needs to be resolved or a government authorization must be requested, an assembly of partners can be held and documents signed remotely; these can then be notarized here, allowing the situation to be addressed. This includes the possibility of granting a POA to sell the property or buy another one.

b. If you establish a business, it is easier to register with the tax authority.

It is always possible to register the title in the buyer’s name, even if he or she does not wish to apply for residency as an investor. Ideally, the buyer should be someone who spends long periods of time in the country, or who grants a general power of attorney to a trusted individual here.

About the Author. Allan Garro was incorporated as a lawyer and public notary in 1996, specializing in Litigation, Real Estate and Corporate Law. In 2025 he received the Distinguished Lawyer of the Year award by the Bar Association. He can be reached at allan@garrolaw.com and website www.garrolaw.com

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Disclaimer: The views expressed are solely those of the author and do not necessarily reflect those of A.M. Costa Rica. The newspaper assumes no responsibility for the content.

 

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