Buying Real Estate in Colombia

Foreigners Buying Real Estate In Colombia

As seen in part 1 of this report, a non-resident foreigner can also buy real estate in Colombia taking advantage of the benefits established in the Colombian foreign investment regulations.

Buying real estate registering the purchase as foreigner

As mentioned in part 1, a foreigner buying real estate in Colombia will have to first follow the same steps any Colombian national follows when buying real estate in Colombia and receive the same security and other benefits as a local. To read about these steps please click here.

Then, if the foreigner is non-resident in Colombia, he/she can register the purchase as foreign investment before the Central Bank to advantage of the Colombian foreign investment regulations including tax exceptions and the possibility to sell the property at any time and take the proceedings back to his/her country at a lower cost.

What are the benefits?

• If you sell your real estate property you can send back to your country all the proceedings and you will be charged only 7%. (Please note that in case you are resident or you didn’t register the purchase as foreign investment, part or all of the remittance might be taxed as non-recurrent income, meaning you might end up paying up to 35% of the remittance in taxes).
• As long as you are not profiting from your property (ie. you are not renting it) you won’t have to pay the 35% income tax (impuesto de renta) or the 1.2% estate tax (impuesto al patrimonio), although you will have to pay the real estate tax (impuesto predial) every 6 or 12 months, depending on of each city.

What do you have to do?

The steps are pretty simple and straightforward, however, we always recommend you consult with a qualified real estate attorney in Colombia before doing anything on your own. Feel free to contact us for some great recommendations on quality lawyers.

First, you have to register the foreign investment and all the wire transfers and payments for that real estate property by delivering Central Bank Form # 4: Foreign Investment Exchange Declaration.

Please note, there are some requirements:

• The investor can’t be resident in Colombia. All those foreigners that have been within the borders of Colombia for a total of 6 months or more in a period of 12 months are considered resident.
• The installments or payments have to be made under the established regulations, and these have to in fact be destined to the investment. This means you have to show you used all the money to buy real estate (showing bank statements and the purchase agreement).
• The enforcing agencies might contact the investor and/or his bank to confirm all the information. This means that the Colombian Business Superintendence and DIAN (the Colombian IRS) can revise your investment and if you infringed any tax laws you will have to pay the due tax plus a fine of up to 200% the value of the infraction.

Second, within the next three (3) months (from the date Form #4 was delivered) the investor has to request registration before the Central Bank Foreign Exchange Department by delivering Form # 11 Foreign Investments Registration and attaching the following documents:

In case of a Pre-Existing Colombia Real Estate:

• A no-liens certificate proving the value paid and ownership under the foreigner’s name.
• If the no-liens certificate is not available yet, he/she should deliver the notarized Real Estate Sale Contract signed by the seller and buyer.

In case of an Pre-Construction Colombia Real Estate:

• A copy of the trust fund agreement, and real estate sale contract.
• Whenever the construction is finished, you will have to show a no-liens certificate.

1. 

   Boyce Babat says:

   May 20, 2010 at 5:47 pm

   Fantastic blog post.Really thank you! Will read on…

   reply