Foreigners are permitted to buy property in Colombia, as the government values foreign investment and has facilitated the process for foreign individuals.
The procedures for foreigners to buy property in Colombia are identical to those for local residents, with the only prerequisites being a valid passport and adequate funds for the purchase. Interestingly, buying property in Colombia can potentially lead to a residency permit.
Depending on the magnitude of the investment, individuals can apply for a one-year or five-year visa, granting them the opportunity to reside in the country.
The Colombian government’s recognition of the significance of foreign property ownership, along with the potential for obtaining residency permits, makes Colombia an appealing destination for real estate investment.
Not only does buying property in Colombia provide a tangible asset, but it also offers the possibility of an extended stay or relocation. It is advisable to engage the services of a knowledgeable local real estate agent or lawyer to ensure compliance with legal requirements and receive guidance throughout the transaction.
In summary, if you choose to buy property in Colombia you will be exposed to a welcoming environment, with a straightforward process, potential residency benefits, and a variety of investment opportunities to explore.
Why buy property in Colombia?
There are numerous advantages if you buy property in Colombia. With its rich cultural heritage, stunning landscapes, and growing economy, Colombia presents a favorable environment for property ownership and investment. Some examples:
- Colombia offers a relatively low cost of living compared to other Latin American countries, making it an affordable destination for property ownership. The availability of a wide range of property types, including apartments, houses, and rural estates, caters to diverse preferences and budgets.
- The Colombian government has implemented legal frameworks to protect property rights, ensuring a secure environment for property owners. This includes a transparent legal system and streamlined processes for property transactions.
Overall, diverse landscapes, growing economy, affordable cost of living, secure property rights, and an attractive lifestyle make it ideal to buy property in Colombia.
Below we will consider the various necessary steps when considering to buy a property in Colombia.
1. Acquire a Certificate of Tradition and Liberty
Upon deciding to buy property in Colombia, obtaining a Certificate of Tradition and Liberty, or ‘Certificado de Tradición y Libertad,’ is one of the initial steps to undertake. This certificate is crucial as it provides comprehensive information about the property, including its history, ownership records, mortgage details, legal claims, and any renovations conducted. To ensure a thorough evaluation of the property, it is highly advisable to engage the services of a local lawyer who can assist in verifying the certificate and conducting a due diligence check. The Certificate of Tradition and Liberty can be obtained from the local Registry Office at a cost of $15,700 pesos, and it serves as an important document for the legal and financial aspects of the property transaction. By acquiring this certificate and conducting due diligence, potential issues or complications associated with the property can be identified and addressed, ensuring a smoother and more secure purchase process. This is the first vital step needed to buy property in Colombia.
2. Pay Taxes and Fees Involved in Purchasing Property in Colombia
When you buy property in Colombia, it is important to be aware of the taxes and fees involved in the process. Before proceeding with the purchase, it is essential to ensure that the previous owner has paid all outstanding taxes on the property. To verify this, you will need to obtain two separate certificates directly from the owner.
The first certificate is the Tax Free Property Certificate (Paz y Salvo Predial), which guarantees that all municipal taxes associated with the property have been paid. The second certificate is the Tax Free on Value Gained Property Certificate (Paz y Salvo de Valorización), which ensures that all taxes related to the increase in property value have been paid.
At the time of purchase, the buyer is responsible for paying various taxes and fees, which amount to a total of 1.65% of the property’s value. This can be broken down as follows: a 1% tax on the property’s value for registration, a 0.5% registration fee, and a 0.15% notary fee. This is payed directly when you buy property in Colombia.
On the other hand, the seller of the property is obligated to pay between 3.63% and 4.79% of the total property value in taxes and fees. This includes a 0.15% notary fee and a 3-4% fee (including 19% VAT) for real estate agents.
Being aware of these taxes and fees associated with property transactions in Colombia is crucial for both buyers and sellers to ensure compliance with legal requirements and a smooth transaction process. These processes must be abided by when you buy property in Colombia.
3. Sign the Public Deed or ‘Escritura pública’
The final step in the process to buy property in Colombia is the signing of the Public Deed, also known as the ‘Escritura pública,’ which legally confirms you as the new owner of the property. To produce the Public Deed, it is necessary to engage the services of a notary.
During the signing of the Public Deed, certain taxes and fees are applicable. These include a 0.25% fee of the property’s value for the notary services. Additionally, there is a requirement to make an advance payment of 1% of the transaction value, which will be applied to the Income Tax.
Once the Public Deed is signed and the necessary payments are made, it is then registered at the Registry Office and subsequently at the Cadastre or ‘Subdirección de Catastro.’ These registrations officially record you as the new legal owner of the property, providing you with the necessary documentation and legal rights associated with property ownership in Colombia.
It is important to ensure that all necessary taxes and fees are paid and that the Public Deed is properly registered to complete the property purchase process and establish your ownership rights in a transparent and legally recognized manner.
Where Can You Find More Information About Buying Property in Colombia?
If you’re interested to buy 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!
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
