Members of Facebook groups related to Costa Rica real estate will often make the claim that "anyone" can be a Costa Rica real estate agent...
And that's partially true in so far as licensing is concerned, since in Costa Rica there is no legal licensing regime.
However, there are specific and important ways to tell whether or not you're dealing with a "legitimate" agent. That's because there are certain legal requirements one must meet in order to legally sell real estate and earn commissions doing so in Costa Rica.
Residency status
It's not legal for someone to enter Costa Rica on a tourist visa and just start selling real estate. Working as a real estate agent is in fact "work" and tourists, or those allowed into the country as such (on a tourist visa) are not allowed to work in Costa Rica.
What if they've achieved temporary residency status? Nope! You still cannot work in Costa Rica, even with temporary residency. Only permanent residents and citizens (born or naturalized) can legally work in Costa Rica.
What if the agent sets up a Costa Rica Corporation and does all his or her real estate work in that name? No way! You cannot skirt these rules simply by setting up and hiding behind a corporation.
So, one way to find out if the agent you're about to hire is legitimate is to ask what their legal status in the country actually is. In fact, ask for proof of it. Anyone who's an actual permanent resident or citizen should be able to quickly whip out their DIMEX card (residency) or cedula for actual citizenship.
The IVA Issue
Several years ago Costa Rica greatly expanded its nationwide sale tax by including within its purview, both goods and services. And, yes, that also includes services as a real estate agent.
That means if I sell your property and collect a commission, I am also legally bound to charge for and collect the 13% sale tax (now called the IVA) on that commission.
Sounds harsh I know, but it's just the way it is. Income and property taxes are relatively low in Costa Rica. Their main revenue source is the IVA that consumers pay on, well, everything.
And no, its not a tax the agent should pay. The agent already pays income tax on his or her commissions. This, on the other hand, is a sales or use tax and those are always paid by the consumer of the good or service, not the provider.
So, another way to tell if the agent you're about to hire is legitimate is to ask whether he's registered with the Hacienda (the Costa Rica version of the IRS) and whether he in fact is charging for, collecting and paying an IVA on all his commissions.
The SUGEF Issue
Costa Rica is pretty serious about policing against money laundering. If you've ever bought a property in Costa Rica you were probably bewildered in having to prove to the escrow company that the money you were bringing into the country was not in fact "dirty."
I believe a lot of this hysteria about money laundering stems from requirements on international banking imposed by Uncle Sam.
The government agency that polices the banking system is known as SUGEF. A few years ago SUGEF decided it needed to recruit all real estate agents in Costa Rica as money laundering investigators.
As a real estate agent you are required to be registered with SUGEF. This entails annual fees and quite a bit of annual red tape. In short, it's a royal pain in the ass, but legitimate agents must be registered with SUGEF. And only permanent residents or citizens can be so registered.
So, a third way to tell if the agent you're about to hire is legitimate is to ask if he or she is registered with SUGEF.
As you can read, it's not proper, nor even possible, to start doing real estate in Costa Rica fresh off the plane, boat, or whatever way you entered the territory.
There are hoops one has to jump through. These hoops are costly and time consuming for legitimate agents to comply with. And only "serious" agents make the effort.
So please, before you hire an agent, ask for proof of their legitimacy...
You might just be glad you did!
And that's partially true in so far as licensing is concerned, since in Costa Rica there is no legal licensing regime.
However, there are specific and important ways to tell whether or not you're dealing with a "legitimate" agent. That's because there are certain legal requirements one must meet in order to legally sell real estate and earn commissions doing so in Costa Rica.
Residency status
It's not legal for someone to enter Costa Rica on a tourist visa and just start selling real estate. Working as a real estate agent is in fact "work" and tourists, or those allowed into the country as such (on a tourist visa) are not allowed to work in Costa Rica.
What if they've achieved temporary residency status? Nope! You still cannot work in Costa Rica, even with temporary residency. Only permanent residents and citizens (born or naturalized) can legally work in Costa Rica.
What if the agent sets up a Costa Rica Corporation and does all his or her real estate work in that name? No way! You cannot skirt these rules simply by setting up and hiding behind a corporation.
So, one way to find out if the agent you're about to hire is legitimate is to ask what their legal status in the country actually is. In fact, ask for proof of it. Anyone who's an actual permanent resident or citizen should be able to quickly whip out their DIMEX card (residency) or cedula for actual citizenship.
The IVA Issue
Several years ago Costa Rica greatly expanded its nationwide sale tax by including within its purview, both goods and services. And, yes, that also includes services as a real estate agent.
That means if I sell your property and collect a commission, I am also legally bound to charge for and collect the 13% sale tax (now called the IVA) on that commission.
Sounds harsh I know, but it's just the way it is. Income and property taxes are relatively low in Costa Rica. Their main revenue source is the IVA that consumers pay on, well, everything.
And no, its not a tax the agent should pay. The agent already pays income tax on his or her commissions. This, on the other hand, is a sales or use tax and those are always paid by the consumer of the good or service, not the provider.
So, another way to tell if the agent you're about to hire is legitimate is to ask whether he's registered with the Hacienda (the Costa Rica version of the IRS) and whether he in fact is charging for, collecting and paying an IVA on all his commissions.
The SUGEF Issue
Costa Rica is pretty serious about policing against money laundering. If you've ever bought a property in Costa Rica you were probably bewildered in having to prove to the escrow company that the money you were bringing into the country was not in fact "dirty."
I believe a lot of this hysteria about money laundering stems from requirements on international banking imposed by Uncle Sam.
The government agency that polices the banking system is known as SUGEF. A few years ago SUGEF decided it needed to recruit all real estate agents in Costa Rica as money laundering investigators.
As a real estate agent you are required to be registered with SUGEF. This entails annual fees and quite a bit of annual red tape. In short, it's a royal pain in the ass, but legitimate agents must be registered with SUGEF. And only permanent residents or citizens can be so registered.
So, a third way to tell if the agent you're about to hire is legitimate is to ask if he or she is registered with SUGEF.
As you can read, it's not proper, nor even possible, to start doing real estate in Costa Rica fresh off the plane, boat, or whatever way you entered the territory.
There are hoops one has to jump through. These hoops are costly and time consuming for legitimate agents to comply with. And only "serious" agents make the effort.
So please, before you hire an agent, ask for proof of their legitimacy...
You might just be glad you did!
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