US citizens living in Costa Rica, or those with property in CR, have IRS reporting obligations that may require professional appraisal of their real estate. This guide covers reporting scenarios and how a CFIA appraisal in Costa Rica meets IRS, FATCA, and FBAR requirements.
When does a US expat need an appraisal in CR?
1. Foreign asset declaration (Form 8938, FATCA)
If total foreign account and asset wealth exceeds FATCA thresholds (vary by filing status: $50K single / $100K married US resident; $200K / $400K foreign resident), you must report on Form 8938 with year-end value.
For real estate: not reported directly on Form 8938 (financial assets only), but may be relevant for calculating net worth for other forms.
2. FBAR (FinCEN 114)
Declaration of foreign bank accounts >$10,000 during the year. Doesn’t apply directly to real estate, but if property is in a Costa Rican LLC or trust, may generate obligation.
3. Sale of property with capital gain reporting
When selling Costa Rican real estate, a US citizen reports the capital gain to the IRS even if living abroad. The gain is the net sale price (minus selling expenses) minus your adjusted basis: what you paid, plus documented improvements, minus any depreciation taken. If you keep the purchase deed, improvement receipts and sale contract, you normally do not need an appraisal. An appraisal is useful when:
- You inherited the property: the basis is fair market value at the date of death (the step-up), and a retrospective appraisal to that date documents it.
- You received it as a gift: the basis follows the donor’s, and fair market value at the gift date matters for calculating losses.
- You converted it from personal use to rental: the depreciable basis is the lesser of fair market value or adjusted basis at the date of conversion, and land must be separated from the building.
- Purchase or improvement records are missing: a retrospective appraisal can help reconstruct value; your CPA decides whether it is enough.
Keep in mind that the IRS computes the gain in US dollars, using the exchange rates at purchase and at sale.
4. Inheritance or donation of CR property to US beneficiary
US beneficiary must report to IRS:
- Form 3520 (gifts or inheritances >$100K from foreigner)
- Fair market value at event date (death or donation)
A CFIA appraisal at specific date is standard evidence.
5. Contribution of CR assets to US fiscal structure
For tax optimization (LLCs, trusts, Sub-S), may need professional valuation of contributed asset.
6. Estate planning
US federal tax minimization strategies (estate tax) require periodic valuation of foreign assets.
What makes a CR CFIA appraisal “IRS-ready”
A US CPA or tax advisor will typically ask that a foreign appraisal include:
- Licensed appraiser (the counterpart of a US “Certified Appraiser”): a CFIA appraiser is a licensed professional
- Written report in English or with official translation
- Fair Market Value per USPAP/IVS definition
- Visible appraiser signature, date, and credentials
- Documented methodology: IRS may request to see how value was derived
- Photographs and comparables
- USD currency (with CRC conversion if also needed)
Additionally, for sophisticated tax planning, coordinate with US CPA or tax attorney so format is compatible with their processes.
Real cases
Case 1: Expat selling home in Tamarindo
Purchase 2015: $350,000 (with purchase invoice) Documented improvements (pool, kitchen renovation): $45,000 Sale 2026: $650,000
Capital gain = $650,000 - $350,000 - $45,000 = $255,000
If single: $250,000 exclusion if it was primary residence 2 of last 5 years. Taxable gain: $5,000 × 15% = $750.
If investment (not residence): full gain $255,000 × 15-20% = $38K-$51K.
With purchase and sale records, the calculation does not require an appraisal; one only helps if records are missing or part of the home was rented.
Case 2: Farm inheritance in southern zone to US son
Costa Rican father passes, leaves 5-ha farm in Pérez Zeledón to US-resident son. Farm market value: $180,000
Son must report on Form 3520 (foreign inheritance >$100K). Reported value: $180,000 per CFIA appraisal as of date of death.
Advantage: son’s cost basis (step-up basis) is $180,000, reducing future capital gain if selling.
Case 3: US resident with vacation home in Guanacaste
US owner with Nosara home leasing via Airbnb. 2026 Airbnb income: $45,000 USD Must report on Schedule E of Form 1040.
Additionally:
- Home depreciation (NOT land): requires documented cost basis with a professional appraisal separating land from construction
- CR taxes paid: foreign tax credit (Form 1116)
CFIA appraisal splits land vs construction value to support US depreciation.
Coordination with US CPA and tax attorney
CR appraisal doesn’t replace US legal-tax advice. Must coordinate with:
- CPA (Certified Public Accountant) USA experienced with foreign asset clients
- Tax attorney for complex planning (trusts, LLCs)
- CR CFIA appraiser (us) for technical asset value
FAQ
Does IRS accept CFIA appraisals from Costa Rica? We cannot guarantee it: the IRS decides, and your tax advisor will tell you what you need. What we deliver is a report with the elements a CPA typically asks for (fair market value, documented methodology, licensed appraiser). Recommended: report in English or with translation.
In what currency should it be reported? USD. Appraisal must express value in USD with official conversion if applicable.
How much does an “IRS-ready” CR appraisal cost? The same as a standard appraisal: from approx. ₡150,000 (USD 300); the final amount is set in the quote, which includes the English translation if required. See what affects the price.
Do I need appraisal to report CR bank account on FBAR? No. FBAR is bank accounts only. For real estate, other reports apply (Form 8938 if applicable, Schedule E if there’s income).
Can I use an old appraisal to report sale? A technically sound retrospective appraisal (to a past date) can be prepared; your CPA will confirm whether it works for your filing. A CFIA appraiser can reconstruct value at specific date with comparables from that period.
Professional scope
Díaz Peritajes is a firm with several professionals, founded by Ing. José Alberto Díaz Vidaurre, a CFIA-licensed appraiser (license ICO-3075). We issue technical appraisals of real estate and machinery in Costa Rica with the elements a US tax advisor typically asks for (documented market value, recognized methodology, report in English if required). We do not provide US tax advisory, preparation of Forms 1040/8938/8621, or FATCA/FBAR compliance. For those aspects you must consult with CPAs or tax attorneys accredited in the US. This post is informational; US tax preparation corresponds to your US tax advisor.
Conclusion
US expats in Costa Rica have complex fiscal obligations often requiring CR professional appraisals. A CFIA appraiser who understands IRS requirements and coordinates with your US advisors simplifies the process. Díaz Peritajes offers US-reporting-compatible appraisals in English or Spanish. WhatsApp +506 7272-7270.
Disclaimer: this blog is informational, not tax advice. Always consult with a certified US CPA or tax attorney.