As a foreigner, you can indeed buy property in Colombia. The Colombian government recognises the importance of foreign investment and has made the process easy for foreign individuals to buy property in Colombia. The process is the same for foreigners as it is for locals, the only requirements are that they be in possession of a valid passport and the sufficient funds for the purchase. In fact, buying a property in Colombia can even lead to a residency permit; depending on the size of your investment you can apply for a one-year or five-year visa.
1. Acquire a Certificate of Tradition and Liberty
After you’ve found the right property for your investment and you wish to go forward with the purchase, one of the first steps you must take is to acquire a Certificate of Tradition and Liberty or ‘Certificado de Tradición y Libertad’. This is important because the certificate contains all of the information about the property and its history including ownership records, mortgage history, legal claims to the property and any works carried out. At this stage it is highly recommended to hire a local lawyer to assist you in verifying the certificate and carrying out a due diligence check on the property. You can request the Certificate of Tradition and Liberty at the local Registry Office and it will only cost you $15,700 pesos.
2. Pay Taxes and Fees Involved in Purchasing Property in Colombia
Purchasing a property in Colombia involves paying certain taxes and fees. Before you make the purchase however, you must ensure that the previous owner has paid all of the outstanding taxes on the property. To do this you must obtain two separate certificates directly from the owner:
- Tax free property certificate (Paz y Salvo Predial) – guarantees that all the municipal taxes on the property have been paid.
- Tax free on value gained property certificate (Paz y Salvo de Valorización) – guarantees that all taxes have been paid on the increase in value of the property.
At the time of purchase, the buyer must pay different taxes and fees which amount to a total of 1.65% of the value of the property. These can be broken down as follows:
- 1% tax on the property’s value for the registration of the property.
- 0.5 % fee of the property’s value for the registration of the property.
- 0.15% fee of the property’s value for the notary.
The seller of the property must pay between 3.63% and 4.79% of the total value of the property in taxes and fees:
- 0.15% fee of the property’s value for the notary.
- 3-4 % (including 19%VAT) fee of the property’s value for the real estate agents.
3. Sign the Public Deed or ‘Escritura pública’
The final step to buying property in Colombia is the signing of the Public Deed or ‘Escritura pública’ and this will confirm you as the new legal owner of the property. The Public Deed is a written legal instrument and you must hire a notary to produce it. The following taxes and fees apply:
- 0.25% fee of the property’s value for the notary.
- 1% of the value of the transaction as an advance payment to be applied to the Income Tax.
Once the Public Deed is paid for and signed, it gets registered at the Registry Office and then consequently at the Cadastre or ‘Subdirección de Catastro’ where you will be officially registered as the new owner of the property.
Where Can You Find More Information About Buying Property in Colombia?
If you’re interested in buying property in Colombia or you would like more information about the process, feel free to contact us at Biz Latin Hub. We have a team of professional lawyers with the experience and specialism in Colombian real estate law ready to answer any questions or queries you may have. Feel free to contact us now for further details on how we can help.
Do you want to learn more about why you should invest in Colombia? Check out the video below for more information!
