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home ownership costs
 - Costa Rica

Home Ownership Costs

Home Ownership Costs

Homeowners in Costa Rica enjoy perks like low property taxes, affordable household help, and inexpensive custom furniture.

Homeowners Insurance

Insurance companies offer several classes of home insurance, including protection against fire and lightening, flooding, landslides, winds, and natural disasters such as earthquakes. Annual comprehensive coverage runs around 0.30% of the home's value, or about $600 for a $200,000 home.

Utilities

Depending on your lifestyle, plan on spending $150 + per month for all utilities, including phone and Internet service. Electricity will cost 13.5¢-30¢ per kWh depending on consumption. Cell phone service starts at $6; high-speed Internet averages $30 a month; water from $10-$15; and cable TV runs $35-$55.

Maintenance

Build into your budget both monthly and yearly expenses, such as roof repairs and fumigation. Create an emergency fund to handle one-time items like a broken hot-water heater or fallen tree cleanup. In general, many maintenance costs are on par or less expensive than what you would pay in the United States, though some less common services, such as hardwood floor sanding, may be more costly.

Repairs

Household repairs often come at a bargain price, but keep in mind that replacement parts may be expensive due to import duties and sales tax. Always ask about warranties, as they are often as short as a month. 

Household Help

Household help is very affordable in Costa Rica. Housecleaners, gardeners and handymen usually charge $2-$3 per hour. Always ask friends for recommendations and check references, since you want trustworthy and honest help around your home. 

Furnishing your Home

Electronics and appliances are expensive due to import duties and local sales tax. However, homeowners catch a break on furniture, which retails for 1/3-1/2 what you would pay in the United States. For example, a three-piece microfiber couch set runs about $1,300, and custom hardwood kitchen cabinets will cost less than $5,000.

HOA or Gated Community Fees

If you live in a gated community, don't forget to budget for your homeowners' association (HOA) fees. Running $40-$700+ monthly, these fees may cover basic utilities and amenities like a pool, security guard or a playground.

Security

If you don't live in a gated community, you may want to hire a security guard part-time. Some homeowners pay a small amount for a neighborhood patrolman to pass by their house every few hours in the evening. Another option is to hire an on-site caretaker to provide extra security.

Getting Quotes

Most local businesses charge for giving cost quotes. For example, if you want multiple quotes for septic tank cleaning costs, prepare to pay a moderate fee ($30-$75) for each company's time and transportation to your site. More complicated jobs that require highly trained experts will be pricier. There are exceptions, so keep an eye out for services advertised as "sin compromiso" or "cotizacion gratis."

Estimated Yearly Expenses (based on a $250,000 home)

Monthly

Yearly

Cable Television (Basic Cable)             $35             $420

Cleaning Supplies

$10-$30

$120-$360

Electricity (central A/C will raise bill)

$25-$400

$300-$4,800

Maintenance & Repairs (1% of home's value)

$208

$2,500

Fumigation - Organic (twice yearly)

$13

$160

Gardener (8 hours per day, once weekly)

$87

$1,040

HOA Fees, if applicable

$40-$700+

$480-$8,400+

Home Phone

$8

$96

Homeowners Insurance (0.3% of home's value)

$62.50

$750

Housecleaner (8 hours per day, twice weekly)

$175

$2,080

High-speed Internet (2Mb) 

$43

$516

Property Taxes (0.25% + luxury tax)

$104

$1,250

Water 

$10-$15

$120-$180

Total

$519-$2419

$6,232-$29,032

Low Property Taxes

Property taxes in Costa Rica are calculated at 0.25% of a home's appraised value, which is declared by the homeowner but ultimately determined by the local municipality. In 2009, a luxury tax was enacted to govern additional property taxes charged on homes – not land, just structures – valued at over $200,000. The luxury tax adds an additional 0.25%-0.55% to the base property tax rate. 

Capital Gains

Costa Rica does not charge capital gains tax. U.S. citizens are eligible for a capital gains exclusion of $250,000-$500,000, even on real estate sold abroad. 

U.S. Tax Deductions

U.S. taxpayers are eligible to deduct mortgage interest from their annual taxes, even if the mortgage is for a home located abroad. To take this deduction, your mortgage must be in U.S. dollars, must be your first or second home, and must not exceed $1,000,000 in home acquisition mortgage debt. If you use a home equity loan to finance a home purchase in Costa Rica, your deductions are subject to the $100,000 debt limit and AMT disallowance rules. Always consult with a U.S. tax lawyer and/or accountant regarding tax issues or deductions.

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