Owning Property in Costa Rica as a U.S. Expat

Buying property in Costa Rica can be exciting. Once the purchase is complete, however, many foreign owners discover that keeping the financial side organized is not always as straightforward.

U.S. expat or foreign property owner

The accounting and tax considerations can depend on several factors: whether you own the property personally or through a Costa Rican corporation, whether it is used only as a vacation home, whether it generates rental income, and whether you maintain bank accounts or other financial activity in Costa Rica.

For U.S. taxpayers, there is another layer as well. Some of the same transactions and ownership structures that matter in Costa Rica may also be relevant to your U.S. tax professional.

The goal does not need to be creating unnecessary accounting work. It is making sure the right records are available when they are actually needed.

Start with how the property is owned and used

Two similar-looking properties can have very different accounting requirements.

A home owned personally and used exclusively by the owner is different from a property rented to guests throughout the year. A home registered in the name of a Costa Rican S.A. or S.R.L. also introduces a legal entity that may have its own obligations.

Before deciding what records to maintain, establish two basic facts:

Who legally owns the property?

And what activity takes place at the property?

Those answers provide the starting point for determining which Costa Rican accounting and tax matters should be reviewed.

Keep the original purchase and ownership records

Property records should not disappear into a folder once the closing is finished.

Keep copies of documentation such as the purchase or transfer documents, closing information, legal and professional fees, property registration information, and significant improvements made after the acquisition.

If a company owns the property, maintain the corresponding corporate records separately as well.

These documents can become important years later when ownership changes, the property is sold, financial information is requested, or accountants need to establish the history of the investment.

Keep municipal property information current

Costa Rica's real estate property tax is administered through the municipalities.

Under the Real Estate Property Tax Law, the general property-tax rate is 0.25% of the value registered with the municipal tax administration. Property owners are also required to declare the value of their property to the municipality at least once every five years.

For practical recordkeeping, property owners should retain property-value declarations, municipal statements, and proof of property-tax payments.

Payment procedures and account information should be confirmed with the municipality where the property is located.

Rental activity creates another accounting layer

A property used only as a residence or vacation home does not have the same financial activity as an income-producing property.

Once rent is collected, the owner needs a reliable record of the income received and how it moved from the tenant, booking platform, or property manager to the owner.

Costa Rica's Ministry of Finance includes the rental and subletting of real estate within the rules for real-estate capital income. Its published guidance describes a regime in which a 15% allowance against gross rental income is used in calculating taxable income, with a 15% tax rate applying to real-estate capital income. The treatment applicable to a particular owner should be confirmed based on the facts and tax regime involved.

This is one reason owners should avoid treating the amount arriving in a bank account as the only record they need.

Property-manager statements, booking-platform reports, invoices, bank deposits and tax records should be organized so the complete transaction can be understood.

A corporation that “only owns the house” should not simply be ignored

Foreign property owners frequently use Costa Rican corporations such as an S.A. or S.R.L. to hold real estate.

Sometimes owners assume that because the company does not operate a traditional business, nothing needs to be done.

That assumption can create problems.

Costa Rica's Ministry of Finance confirms that the annual tax on legal entities applies to both active and inactive companies, although the applicable amount differs according to their status and activity.

Other accounting, tax or corporate compliance considerations can also depend on how the entity is being used.

If your property is company-owned, it is therefore useful to review the company separately from the property itself rather than assuming that a low-activity corporation has no responsibilities.

U.S. owners also need to think about the U.S. side

For U.S. citizens and resident aliens living abroad, the IRS generally requires reporting of worldwide income, including income earned outside the United States.

That does not mean every Costa Rican asset is reported in exactly the same way.

For example, the IRS states that foreign real estate held directly is not by itself a specified foreign financial asset for Form 8938. However, an ownership interest in a foreign corporation or other foreign entity can be subject to different reporting considerations.

Costa Rican bank accounts can introduce another issue. U.S. taxpayers may have an FBAR filing requirement when the aggregate value of applicable foreign financial accounts exceeds the relevant threshold.

These are U.S. tax matters and should be reviewed with an appropriately qualified U.S. professional. From the Costa Rican side, good records make that process much easier.

A practical property recordkeeping file

A useful annual property file may include:

• Purchase, ownership and closing documents

• Municipal property-tax statements, valuations and payment receipts

• Bank statements related to the property

• Rental or booking-platform reports, when applicable

• Property-manager reports

• Invoices and documentation for property expenses

• Records of major improvements

• Costa Rican corporation documents, when applicable

• Copies of Costa Rican tax filings and payment confirmations

  
  

The exact list depends on how the property is owned and used.

Good records connect the two sides

For a U.S. expat or foreign property owner, Costa Rican property ownership is not necessarily complicated—but it can involve more than simply paying the annual property tax.

The key is to understand whether the property is personal-use or income-producing, how it is legally owned, which Costa Rican obligations apply, and which information your U.S. tax advisor may eventually need.

Organizing those records during the year is much easier than trying to reconstruct several years of activity later.

If you need help understanding the Costa Rican accounting side of your property, Accounting Services Costa Rica can help review your situation, organize the applicable records, and coordinate relevant Costa Rican information with your U.S. tax professional when appropriate.

Disclaimer: This article is for general educational and informational purposes only. Costa Rican and U.S. tax, accounting and reporting requirements depend on each owner's facts and circumstances. It should not be considered individualized Costa Rican or U.S. tax, legal, investment or immigration advice.

Sources

Costa Rica Procuraduría / SINALEVI — property-tax rules and municipal property valuation obligations. Costa Rica property-tax legal information

Costa Rica Ministry of Finance — guidance on real-estate capital income. Rentas de Capital Inmobiliario

Costa Rica Ministry of Finance — 2026 tax on legal entities. 2026 Impuesto a Personas Jurídicas notice

IRS — U.S. citizens and resident aliens abroad. IRS guidance for U.S. taxpayers abroad

IRS — Form 8938 and foreign real estate. IRS Form 8938 questions and answers