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Everything you need to know is included in our Colombia Property Pack
Colombia, with its breathtaking scenery, vibrant cultural traditions, and welcoming people, attracts many foreigners looking for real estate investment possibilities.
Nevertheless, understanding the complexities of buying property in a foreign country can be daunting, especially when it comes to the legal framework and regulations involved.
That's why this guide is here to help! We'll explain how the property market works in Colombia in a straightforward and easy-to-understand way, covering all you need to know.
Also, for a more in-depth analysis, you can check our property pack for Colombia.Can you purchase and own a property in Colombia as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Colombia for US citizens.
Foreigners looking to buy real estate in Colombia will find a relatively welcoming and straightforward process, with opportunities that are quite similar to those available to local buyers.
First and foremost, yes, foreigners can own property in Colombia, including land. This is a significant point, as not all countries allow foreign nationals to own land. In Colombia, there are no restrictions on the type of property a foreigner can own, which means you can buy anything from a small apartment to a large piece of land.
Now, let's talk about the differences in rights between foreigners and locals.
Generally, the rights are the same. Once you purchase property in Colombia, you have the same legal rights to use, enjoy, and even sell that property just like a Colombian citizen would.
However, it's crucial to ensure that all legal processes are correctly followed during the purchase to secure these rights.
There aren't special rules based on your nationality. Whether you're from the United States, Europe, Asia, or any other region, the process and your rights as a property owner remain consistent. This universal approach makes Colombia an attractive destination for international real estate investors.
Als, know that residency isn't a requirement for buying property in Colombia.You can purchase real estate even if you don't live in the country. This is particularly appealing for investors or those looking to buy vacation homes. However, owning property in Colombia doesn't automatically grant you residency rights.
Regarding visas and permits, there's no specific visa or permit required to buy property. But if you're planning to stay in Colombia for an extended period, or if you want to apply for residency, owning property can be beneficial.
Colombia offers a property owner's visa for those who make a significant investment in real estate, but this is separate from the actual purchase process (more below).
Typically, there's no special approval needed from a government institution to buy property. The main focus should be on ensuring a clear title and compliance with standard legal procedures during the purchase. It's highly recommended to work with a reputable real estate agent and a lawyer who's experienced in Colombian property law.
There's no general minimum investment requirement for buying property. However, if you're looking at obtaining a property owner's visa, there is a minimum investment threshold that you need to meet. This amount can vary and should be confirmed with up-to-date sources or legal counsel.
Can you become a resident in Colombia by owning a property?
Yes, you can become a resident in Colombia by owning a property.
Foreigners who invest in real estate in Colombia can apply for a Migrant (M) or Resident (R) visa, depending on the amount of their investment.
Migrant (M) visa
For a Migrant (M) visa, the minimum investment should be equivalent to 350 times the Colombian minimum wage (which is around USD 285 per month, which gives us an investment of more than 100,000 USD approximately).
To get this visa, you need to show three things:
- A certificate that proves you own the property you want to buy.
- A document from the International Exchange Department of Banco de la República. It should say that you invested money from another country to buy the property
- That the amount of money you invested is at least 350 times the minimum wage in Colombia.
The Migrant (M) visa allows the holder to accumulate time towards a Resident visa after a minimum stay of 5 years as a visa holder.
Resident (R) visa
For a Resident (R) visa, the minimum investment should be equivalent to 650 times the Colombian minimum wage (or 185,000 USD).
To get this visa, you need to show a certificate from the International Exchange Department of Banco de la República. It should say that you invested money from another country in your name, and this amount should be, as mentioned before, more than 650 times the minimum wage in Colombia.
The Resident (R) visa has an indefinite validity, but the holder cannot remain outside of Colombia for more than two consecutive years, or they will lose their resident visa status.
Buying a property in Colombia can be risky
An increasing number of foreign investors are showing interest in Colombia. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What is the process to buy real estate as a foreigner in Colombia?
We have made a detailed article so you can understand what are the stages to buy a property in Colombia.
Here is a summary table.
| Step | Details | Documents and Fees | Potential Pitfalls |
|---|---|---|---|
| Estudio de Títulos | - Conduct a physical property inspection - Perform a title search and due diligence |
- Paz y Salvo de Valorización - Certificate of Property Free of Taxes - Due diligence checks through the local Registry Office: 15,700 COP |
- Unresolved issues may affect the purchase agreement - Ensure the title is clear of liens, debts, and legal claims |
| Negotiation Phase | - Negotiate the property price - Seek a 10-15% discount - Utilize a local agent for negotiation |
N/A | - Be aware that sellers may raise prices for foreign buyers - Avoid revealing your identity too early in the process |
| Promesa de Compraventa | - Draft a solid purchase agreement - Include payment terms, legal disclaimers, and all necessary details |
N/A | - Avoid vague language and missing fixtures - Contracts are typically in Spanish; ensure understanding before signing - Be mindful of penalties for non-compliance |
| Property Payment | - Establish a payment schedule and method in the Promesa de Compraventa - Pay a significant down payment after signing the purchase agreement |
- Open a brokerage account - Convert funds to Colombian Pesos - Register funds with the Colombian National Bank - Brokerage account fees: ~1% + 0.4% government tax |
- Ensure funds are properly legalized in Colombia - Be cautious of the final payment date and potential penalties for missing it |
| Escritura Pública | - Prepare the escritura pública for property ownership transfer - Sign the document in the presence of a notary |
- Gastos de Escrituración: 0.54% of property's sale price - Notary fees - Government taxes - Real estate agent's commission: 3% to 5% of sales price |
N/A |
How is the real estate market in Colombia?
Market data
You can find fresh and updated data in our pack of documents related to the real estate market in Colombia.
The real estate market in Colombia has been gaining attention for various unique and compelling reasons.
To start with, Colombia boasts some strengths that set it apart from other countries. One of the most distinctive features is its diverse geography, offering properties ranging from beachfront villas on the Caribbean coast to mountain retreats in the Andes.
This kind of geographical diversity is hard to find elsewhere, and it provides a wide array of choices for potential buyers depending on their preferences.
People are drawn to buy in Colombia for several reasons. The country's rich culture, vibrant cities like Medellín and Bogotá, and the tranquil beauty of smaller towns like Cartagena and Santa Marta are major attractions.
Additionally, the cost of living and property prices in Colombia are relatively low compared to North American and European standards, making it an attractive destination for retirees, investors, and expats seeking a high quality of life at a lower cost.
Foreign interest in Colombian real estate is particularly high.
Many foreigners view Colombia as a land of opportunity due to its growing economy, improving security situation, and welcoming attitude towards foreign investment.
The government has also implemented policies that make it easier for foreigners to buy property, such as simplified visa requirements and tax incentives.
The dynamism of the Colombian real estate market can be backed by specific data points like the steady increase in foreign direct investment in the sector. For example, the rise in property sales to international buyers over recent years is a testament to the market's growth and appeal.
A unique aspect of properties in Colombia, especially in cities like Medellín, is the emphasis on blending modern amenities with natural surroundings.
Many properties, particularly in the luxury segment, are designed to offer panoramic views of the city's lush greenery and mountains, a feature that's highly prized and not commonly found in many urban real estate markets around the world.
Looking towards the future, properties in Colombia are expected to gain value due to several factors. The country's economy is steadily growing, and there is a continuous influx of foreign investment and tourism.
Infrastructure development, like the expansion of transportation networks and urban renewal projects, are making cities more accessible and attractive.
Additionally, Colombia's increasing global recognition as a tourist destination is likely to spur further interest in real estate, particularly in cities known for their beauty and cultural heritage.
To know more, you can also read our dedicated article: is it a good time to buy a property in Colombia?
The life as an expat
Living as an expat in Colombia can be a very rewarding experience.
Colombia is a vibrant and diverse country full of culture, nature, and friendly people. Colombians are very welcoming and open-minded to foreigners, making it a great place to live and work. The cost of living is also relatively low, allowing expats to enjoy a comfortable lifestyle without breaking the bank.
Colombia has a lot to offer in terms of entertainment, with a variety of sports, music, food, and nightlife. The country is also home to a wide range of natural wonders, from the Caribbean coast to the Andes Mountains. Expats can explore the country’s many national parks, take advantage of its world-class healthcare system, and enjoy its diverse cultural offerings.
In short, life as an expat in Colombia can be an incredibly rewarding experience. With its welcoming people, diverse culture, low cost of living, and natural beauty, Colombia is a great place to live and work.
What are the best places to buy real estate in Colombia?
This table summarizes some of the best places to buy a property in Colombia.
| City / Region | Population | Average Price per sqm (COP) | Strengths |
|---|---|---|---|
| Bogotá | ≈ 7.4 million | 3,000,000 - 9,000,000 | Capital city, economic hub, cultural attractions, gastronomy, diverse neighborhoods |
| Medellín | ≈ 2.5 million | 2,500,000 - 7,500,000 | City of Eternal Spring, innovative urban planning, mild climate, art scene |
| Cali | ≈ 2.4 million | 2,000,000 - 6,000,000 | Salsa capital, lively nightlife, warm climate, proximity to natural landscapes |
| Cartagena | ≈ 1 million | 4,000,000 - 10,000,000 | Historic port city, UNESCO World Heritage Site, Caribbean beaches, colonial charm |
| Santa Marta | ≈ 500,000 | 2,500,000 - 7,000,000 | Beachside city, gateway to Tayrona National Park, Sierra Nevada mountains |
| Manizales | ≈ 450,000 | 2,000,000 - 5,000,000 | City in the Coffee Triangle, mild climate, coffee plantations, panoramic views |
| Popayán | ≈ 300,000 | 1,500,000 - 4,500,000 | Colonial city, UNESCO World Heritage Site, rich cultural heritage, Semana Santa |
Do you need a lawyer to buy a property in Colombia?
When purchasing a property in Colombia, engaging a local lawyer can be essential to navigate the legal requirements and ensure a successful transaction.
One crucial document they can assist with is the Purchase Agreement (Contrato de Promesa de Compraventa), which is a legally binding contract between the buyer and seller, outlining the terms and conditions of the sale.
The Colombian lawyer can also help with conducting a Title Search (Estudio de Títulos) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Moreover, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local land registry office or relevant authorities.
They will ensure that all relevant taxes and fees, such as the Property Transfer Tax (Impuesto de Registro) and Notary Fees (Honorarios Notariales), are paid correctly and in compliance with Colombian laws and regulations.
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What are the risks when buying real estate in Colombia?
We've got an article dedicated to the risks associated with purchasing property in Colombia.
1. Land Ownership and Property Rights
Colombia has regulations governing land ownership and property rights. It's essential to understand the legal framework and ensure that the property you intend to buy has clear ownership and is free from any legal disputes or claims. Conduct thorough due diligence and consider working with a reputable lawyer to verify the property's title and ensure a secure transaction.
2. Security and Safety Considerations
Colombia has made significant progress in improving its security situation in recent years. However, it's important to be aware of the specific security conditions in the area where you plan to buy property. Research the local crime rates, engage with local residents or expatriate communities, and take necessary precautions to ensure personal safety and the security of your property.
3. Regional Climate and Natural Disasters
Colombia's climate varies across regions, and some areas are prone to natural disasters such as floods, landslides, or earthquakes. Research the specific climate and potential natural disaster risks in the region where the property is located. Consider appropriate insurance coverage and evaluate any necessary precautions or structural requirements to mitigate potential risks.
4. Infrastructure and Accessibility
Consider the availability and quality of infrastructure in the area where you plan to buy property. Assess the proximity to roads, airports, public transportation, healthcare facilities, schools, and other essential amenities. Accessibility to basic services and transportation networks can significantly impact your quality of life and the property's value.
5. Local Laws and Regulations
Familiarize yourself with the local laws and regulations that govern property ownership and transactions in Colombia. These may include taxes, permits, zoning regulations, and any specific restrictions or requirements. Engage with legal professionals who specialize in Colombian real estate to ensure compliance with the local legal framework.
6. Cultural and Language Differences
Moving to Colombia involves adapting to a new culture and potentially a different language if you are not already fluent in Spanish. Familiarize yourself with the local customs, traditions, and social norms to facilitate a smoother integration into the community. Understanding the local language will help with day-to-day interactions and legal processes related to property ownership.
7. Investment Potential and Market Dynamics
Research the local property market dynamics and investment potential in Colombia. Analyze factors such as market trends, property appreciation rates, rental demand, and potential returns on investment. Consider consulting with real estate professionals and market experts who can provide insights into the specific region or city where you intend to buy property.
Everything you need to know is included in our Colombia Property Pack
What is the list of documents needed for a real estate transaction in Colombia?
When buying a property in Colombia, the buyer will need to provide the following documents:
1. A valid passport or other official form of identification;
2. A certificate of good standing from the National Registry of Colombia;
3. A deed of sale, which must be certified by a notary public;
4. An affidavit of the seller, stating the property is free of liens or encumbrances;
5. The cadastral certificate, which is a document issued by the municipality where the property is located;
6. A certificate of occupancy, which is issued by the municipality;
7. A certificate of title, which is issued by the local land registry office.
We review each of these documents and tell you how to use them in our property pack for Colombia.
What strategies should you employ for successful negotiations with Colombians?
Understanding the local culture and customs is key to successful house-buying negotiations in Colombia.
Ensure that you are familiar with the local market and the average house prices in the area you are buying in. This will give you an idea of what to expect in terms of cost.
Be prepared to negotiate and have a clear idea of what you are willing to pay and what you are not.
Be respectful of the seller's culture and customs. Showing respect and courtesy will go a long way in successful negotiations.
Be patient and take your time. Negotiations in Colombia can take some time and it is important to be patient and not rush things.
Be prepared to compromise and make concessions. This will help both parties come to an agreement.
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Can foreigners obtain a bank loan in Colombia?
Some banks may grant a loan to foreigners if they meet certain conditions such as being married to a Colombian national, having lived in Colombia for more than six months, planning to buy for living and not as a second home, and already having a local bank account.
However, it's important to note that foreigners who are not residents of Colombia may not be able to obtain loans with local banks.
Traditional financing, such as mortgages or loans, is generally not available to foreigners.
Before they can even be considered for a mortgage, foreigners must obtain residency in Colombia and typically reside in the country for several years.
They are also required to have a Colombian bank account and established credit, and they may be asked to present proof of paying Colombian taxes.
It is also very difficult for foreigners to take out a mortgage in Colombia. If successful, the bank will require a 30% to 40% down-payment and charge around 12% interest. Most banks only offer five to 15-year home loans.
What are the taxes related to a property transaction in Colombia?
Here is a breakdown of taxes related to a property transaction in Colombia.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Rental Income Tax | Tax on rental income generated from the property | 35% of the associated total rental income | Owner |
| Local Taxes | Local taxes imposed by the municipality | 1.05% of the property purchase price (split between the seller and buyer) | Seller and Buyer |
| Transfer Tax | A tax imposed on the transfer of property ownership | 0.15% of the property purchase price (split between the seller and buyer) | Seller and Buyer |
| Capital Gains Tax | Tax on the profit made from the sale of a property | 10% on the net capital gain if held for more than two years | Seller |
| Value Added Tax (VAT) | Tax on the sale of new properties | 19% of the property value | Seller |
| Property Tax | Annual tax on the property's value | From 0.5% to 1.6% of the property value, depending on the municipality | Owner |
What fees are involved in a property transaction in Colombia?
Below is a simple breakdown of fees for a property transaction in Colombia.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Registration Fee | Fee for registering the property transfer with the Real Estate Registry | From 0.5% to 1% of the property sale price | Buyer |
| Notary Fee | Fee for the notary's services in handling the property transfer | Generally around 0.3% of the property value (split between the buyer and the seller) | Seller and Buyer |
| Real Estate Agent Commission | Fee paid to a real estate agent for facilitating the property transaction | Typically around 3% to 4% of the property value | Seller |
-Buying property as a foreigner in Brazil: the guide
Buying real estate in Colombia can be risky
An increasing number of foreign investors are showing interest in Colombia. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.