A practical guide for foreign owners (both domiciled and non-domiciled) to identify key issues before negotiating price, signing, and closing.
Selling a home, condo, lot, or commercial property in Costa Rica can trigger capital gains tax and, in certain scenarios, withholding at closing. The goal isn’t to memorize tax rules, it’s to understand what must be evaluated early, because the final treatment depends on your facts, documents, and how the transaction is structured under Costa Rican law.
Before negotiating the price, it is wise to assess the potential impact of capital gains tax, because it can affect your true net proceeds and the financial structure of the closing.
The core concept: what Costa Rica considers “capital gains” on real estate.
In simple terms, if a property is sold for more than its acquisition cost (subject to rules and evidence), a capital gain may arise and become taxable. Costa Rica’s capital gains framework commonly references:
• 15% on the gain.
• A special option in specific cases tied to 2.25% of the gross sale price (typically relevant to property acquired before a key date and on the first qualifying sale).
which treatment applies is not assumed—it must be validated based on documentation, acquisition history, and the specific structure of the deal. (
Potential exemptions: when the sale may receive favorable treatment.
Costa Rican law recognizes exemptions that can apply to capital gains in certain situations, but these are not automatic and must be properly supported.
Common examples for expats include:
• Principal residence (“vivienda habitual”): capital gains from transferring a principal residence may be exempt, subject to requirements and evidence. The exemption may also apply even if the property is held through a Costa Rican legal entity, when it can be shown “indubitably” that it was used as the owners’ principal residence.
• Inheritance, legacies, and donations: these transfers are generally treated under specific exemption rules, and later resale can still require a separate capital gains review.
If you believe an exemption might apply, plan to document it from the start—especially before negotiating price and closing terms.
Domiciled vs. non-domiciled sellers: why this affects withholding at closing.
Costa Rica distinguishes between domiciled and non-domiciled persons for tax purposes (this is not the same as citizenship). In real estate transfers, this distinction can affect whether the buyer has a withholding obligation at closing.
Non-domiciled sellers (foreign owners living abroad, or treated as non-domiciled for tax):
Costa Rica’s Income Tax Law provides that when a non-domiciled person transfers Costa Rican real estate, the buyer must withhold 2.5% of the total agreed consideration and remit it as a withholding related to the capital gain tax framework.
There are also situations where withholding may not proceed, depending on the legal scenario and exemptions, this is why it must be reviewed transaction-by-transaction.
Domiciled sellers (including many expats who have become tax-domiciled):
The withholding mechanics for domiciled transfers have been subject to administrative changes, and operational practice can vary. As a result, the safest approach is to confirm the current closing treatment and documentation requirements before signing and before closing, together with your legal team and your CPA.
Bottom line: withholding is not something to “guess” at the closing table. It should be identified early, allocated correctly in the contract, and coordinated with your CPA.
Timing: the general compliance window.
As a general rule, when a capital gains return/payment is required, Costa Rica’s framework sets a short timeline: within the first 15 calendar days of the month following the taxable event (i.e., when the gain arises).
The filing and payment are made through the Ministry of Finance’s digital platform(s) currently enabled for taxpayers (commonly referenced today under TRIBU-CR / Oficina Virtual), but the exact filing configuration and forms should be confirmed by your CPA for your specific case.
What foreign sellers should evaluate before negotiating price and terms
To reduce risk and avoid last-minute renegotiations, we recommend evaluating these points early:
1. Acquisition profile: how and when you acquired the property (purchase, inheritance, donation, corporate acquisition, etc.). (
2. Eligibility for principal residence treatment: whether “vivienda habitual” may apply—and what evidence can support it (especially if held via a corporation).
3. Tax status of the seller: whether you are treated as domiciled or non-domiciled for Costa Rican tax purposes (this affects withholding exposure).
4. Contract clarity: the sale agreement should clearly define:
o who bears tax responsibility,
o whether withholding is expected (and how it affects net proceeds), and
o how funds flow at closing (including escrow if used).
How KMR Legal supports expats in these sales
• We organize the legal file (title review, documentation, risk flags).
• We draft and negotiate the SPA and closing clauses so tax-related risk is allocated clearly and the transaction is properly documented.
• We coordinate with your CPA/accountant to align the legal structure with the tax treatment—without providing accounting services.
CTA: If you are planning to sell (or already have an offer), the best time to review capital gains exposure is before price and terms are finalized. Early planning protects your net proceeds and your closing.
Scope disclaimer: This article is general information and does not constitute accounting or tax filing advice. Calculations, filings, and amounts must be determined by a qualified Costa Rican CPA/accountant based on your specific circumstances. – Selling Property in Costa Rica as an Expat
Do all foreign sellers pay capital gains tax in Costa Rica?
Not necessarily. It depends on whether a taxable gain exists and whether an exemption (such as principal residence) may apply.
What’s the difference between “domiciled” and “non-domiciled” sellers?
It’s a Costa Rican tax classification that can affect withholding at closing—especially for non-domiciled sellers.
Is there withholding for non-domiciled sellers?
In real estate transfers involving a non-domiciled seller, the buyer is generally required to withhold 2.5% of the agreed price, subject to exceptions that must be reviewed case by case.
When is the tax generally due if it applies?
Typically within the first 15 calendar days of the following month after the taxable event.
