Buying real estate in Colombia as a US citizen?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

How to buy and own real estate in Colombia as a US citizen

Last updated on 

real estate Colombia

Everything you need to know is included in our Colombia Property Pack

¡Bienvenidos a Colombia! A country of breathtaking landscapes, vibrant cities, and warm, welcoming people.

If you're an American citizen with a sense of adventure and a desire to invest in one of South America's most dynamic nations, then buying property in Colombia might just be your next big move.

However, making a property investment in Colombia as a US citizen involves navigating new laws and regulations, which can be quite challenging.

No worries, we will give some indications in this blog post made by our country expert.

Our goal is to simplify this information for you, ensuring it's easy to understand. Should you have any further questions, please don't hesitate to get in touch with us.

Also, for a more detailed analysis, you can download our property pack for Colombia, made by our country expert and reviewed by locals.

Can American people buy property in Colombia?

Do you need to be a local or a permanent resident to buy a property in Colombia?

You don't need to be a citizen of Colombia to buy property there, which is good news if you're an American interested in owning property in Colombia.

However, there are some specific requirements and steps you should be aware of.

Firstly, being a permanent resident isn't necessary for purchasing property, but you will need a cédula de extranjería, which is a Colombian ID for foreigners. This ID is obtainable once you have a visa.

Speaking of visas, you don't need a specific property-buying visa. Any valid visa, including a tourist visa, can be sufficient at the beginning of the process.

Regarding the purchase process, technically, it is possible to do much of it online from the United States. You can search for properties, negotiate, and even sign preliminary agreements digitally. However, for the final steps, such as signing the official deed (escritura pública), it's highly advisable, if not mandatory, to be present in Colombia or to appoint a power of attorney who can represent you in Colombia.

A tax ID, known as a Número de Identificación Tributaria (NIT), is required. This ID is necessary for the property registration process and for future tax payments. Setting up a local bank account in Colombia can greatly facilitate the transaction, especially for transferring funds and managing future expenses related to the property.

Finally, other documents you'll need include a passport, proof of funds, and potentially a bank certification or credit history report, especially if you're planning to take out a mortgage from a Colombian bank.

What are the rights and requirements to buy real estate in Colombia as a US citizen?

In Colombia, American citizens have the same property rights as Colombian citizens and other foreigners. There are no special privileges or additional restrictions based solely on your nationality.

However, there are specific regulations that apply to all foreigners, including Americans, when it comes to owning property in Colombia.

One key regulation is related to properties located in border or coastal areas. In these zones, known as "zonas de frontera" and "zonas marítimas," respectively, there are restrictions on foreign ownership. These areas are considered strategic for national security, and as a result, the Colombian government restricts the property rights of foreigners here.

For example, within the first kilometer of the national border or the first kilometer of the coastline, foreign individuals and foreign-controlled companies are typically prohibited from owning property. There are some exceptions, but they require special government approvals and are not commonly granted.

Apart from these specific zones, foreigners can freely buy and own property elsewhere in Colombia. There is no minimum investment requirement for property purchases by foreigners.

You can buy residential or commercial properties, and there are no limits on the number or type of properties you can own.

Thinking of buying real estate in Colombia?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner Colombia

What about buying land in Colombia as an American?

Let’s focus a bit more on the land ownership system in Colombia.

As a U.S. citizen, you can indeed purchase land in Colombia.

The process is fairly open to foreigners, and there aren't many restrictions compared to other countries. This includes buying various types of land such as residential, commercial, rural, and even in coastal areas and near borders. However, it's important to be aware of specific regulations and challenges.

In coastal and border areas, there are certain limitations.

For instance, coastal properties often fall under the category of 'Concession' from the Colombian government, meaning you don't own the land outright, but you're granted rights to use it. This can be a complex area and often requires legal advice.

Near borders, there are more stringent rules due to national security concerns, and foreigners may face restrictions on owning land in these zones.

Foreigners commonly buy land in regions like Medellín, Bogotá, and Cartagena. These areas are popular for their economic opportunities, cultural attractions, and in the case of Cartagena, for its coastal charm.

Each region in Colombia has its own zoning and land use planning regulations. These determine what you can and cannot do with your land, affecting everything from building heights to the type of business you can operate. You have to understand these local regulations as they can significantly impact your use of the land.

One of the most common issues with land ownership in Colombia is the clarity of the land title. Ensuring that the seller has a clear and undisputed title to the property is vital.

This is because there are cases of land being sold by those who don't rightfully own it, leading to legal disputes. Another issue is understanding the local laws and customs. Each region might have specific regulations or customary practices that can affect your ownership or use of the land.

It's also worth noting that while the process is open to foreigners, it can be bureaucratic and time-consuming. Having a local lawyer who understands Colombian property law and the specific dynamics of the region where you're buying is invaluable.

Buying property and becoming resident in Colombia

Yes, Colombia offers a residency program for foreign investors, including Americans, who invest in real estate. This is known as a Resident Investor Visa, which can lead to permanent residency and eventually citizenship.

To qualify, you need to invest a certain minimum amount in Colombian real estate. This minimum is tied to a specific number of Colombian Minimum Monthly Legal Wages (CMLW).

The exact amount can vary as it's updated annually. It is around 650 CMLW. To get the current value in US dollars, you'll need to convert the total CMLW amount at the current exchange rate.

Once you've made the investment, you apply for the Resident Investor Visa. The process involves providing proof of investment, such as property deeds and bank statements, and fulfilling other standard visa requirements like a clean criminal record and a valid passport. You may also need to show evidence of financial means to support yourself.

The Resident Investor Visa is initially temporary, typically valid for a few years.

However, after five years of continuous living in Colombia, you can apply for permanent residency. This step requires you to demonstrate your ongoing investment, along with other standard residency requirements.

Permanent residency in Colombia does open the path to citizenship. After holding permanent residency for an additional five years (10 years in total including the temporary residency period), you can apply for Colombian citizenship. This process involves demonstrating your integration into Colombian society, which might include language proficiency and knowledge of Colombian history and culture.

Make a profitable investment in Colombia

Better information leads to better decisions. Save time and money. Download our guide.

buying property foreigner Colombia

What is the process to buy property in Colombia as an American?

How to get started? What are the different steps?

If you need a detailed and updated analysis of the process (and the mistakes to avoid), you can check our full guide about property buying in Colombia.

Buying property in Colombia involves a few key steps and considerations, especially for an American buyer.

To start, you'll usually begin by identifying the property you want to purchase. This can be done through real estate agents, online listings, or by visiting the country.

Once you've found a property, the next step is usually to conduct a title search. This is crucial in Colombia, as you need to ensure the property has a clear title, free of liens or encumbrances. Title searches in Colombia are typically handled by a notary, who will check the property's history and current legal status in the public registry.

After confirming the property's title is clear, the next step is the transfer of property. This is done through a public deed, which is a legal document formalizing the sale. The deed is prepared by a notary and must be signed by both the buyer and seller. The notary plays a vital role in this process, ensuring all legal requirements are met.

Transferring funds internationally for the property purchase can be complex due to regulations on both the Colombian and U.S. sides. It's important to understand the laws about foreign investment and currency exchange. You'll likely need to use a bank or financial institution that operates in both countries to handle the transfer.

Be prepared for additional scrutiny and reporting requirements to comply with anti-money laundering laws.

Closing costs and fees in Colombia can vary, but they typically include notary fees, registration fees, and taxes. As an American buyer, you might also incur legal fees if you hire an attorney to assist with the process. It's prudent to budget for these additional costs, which can range from a few percent to around 5-7% of the property's value.

Getting a mortgage as a foreigner in Colombia is possible but can be more challenging compared to local buyers. Colombian banks do offer mortgages to foreigners, but the requirements are usually stringent.

You'll need to provide proof of income, employment history, and possibly a higher down payment. Interest rates for foreigners can also be higher. Some American buyers choose to secure financing from the U.S. or through international lenders specializing in overseas property purchases.

Risks and potential pitfalls related to property investment in Colombia

When buying residential real estate in Colombia, you should be aware of several risks, some of which differ from those in the United States.

One significant risk is the lack of a comprehensive, centralized system for checking property titles. This can lead to issues with unclear ownership, unlike in the U.S. where title insurance and extensive public records reduce this risk.

Another area to consider is zoning regulations. In Colombia, zoning laws can be less predictable and more subject to change than in the U.S. It's crucial to verify the zoning status of a property to ensure it aligns with your intended use. Changes in zoning can occur more frequently and with less public notice, potentially affecting your property's value or usability.

Cultural and local customs are also important. In Colombia, relationships and personal connections often play a more significant role in business transactions, including real estate. Understanding and respecting these customs can be key to a successful purchase.

For example, negotiations might take longer, and there might be more back-and-forth discussions compared to the more straightforward processes you might be used to in the U.S.

U.S. citizens often face pitfalls related to the language barrier and legal differences. Contracts and legal documents are in Spanish, and legal concepts can differ from those in U.S. law.

Please, work with a bilingual attorney who understands both Colombian and U.S. legal systems.

Regarding dispute resolution, Colombia has its own legal system for property-related issues. This includes conflicts with neighbors or authorities.

While the Colombian legal system is accessible, it can be slower and more bureaucratic than what you might expect in the U.S. International arbitration is not commonly used for local real estate disputes. Instead, local courts are the primary avenue for resolution.

Tax implications for US citizens buying property in in Colombia

As an American citizen owning property in Colombia, you'll face a unique set of tax implications, shaped both by U.S. and Colombian tax laws, as well as by the tax treaty between the two countries.

Firstly, let's talk about property taxes in Colombia.

If you own real estate in Colombia, you are subject to local property taxes. The rate of this tax varies depending on the municipality where the property is located and its assessed value. It's important to stay informed about these local rates and ensure timely payment to avoid penalties.

Capital gains taxes are another key consideration.

In Colombia, if you sell your property at a profit, you are liable for capital gains tax. The rate is typically around 10% of the gain. However, this can change, so it's advisable to check the current rates at the time of sale.

Now, regarding the tax treaty between the U.S. and Colombia: this agreement aims to prevent double taxation on income, including income from real estate.

However, it's important to note that you must report your Colombian property and any income derived from it on your U.S. tax returns, regardless of the tax treaty. The Foreign Tax Credit might provide some relief, as it allows you to credit taxes paid in Colombia against your U.S. tax liability on the same income.

When it comes to inheritance and estate planning, owning property in Colombia adds complexity. In Colombia, there are specific laws governing inheritance, and these may differ significantly from U.S. laws. For instance, a portion of your Colombian property might be legally reserved for certain heirs under Colombian law, which can impact your estate planning intentions.

Finally, for American citizens, it's crucial to include your Colombian property in your U.S. estate planning. The U.S. taxes its citizens on their worldwide assets, and this includes property in Colombia. Failure to consider this in your estate plan could lead to unexpected tax liabilities for your heirs.

Don't lose money on your property in Colombia

100% of people who have lost money in Colombia have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

buying property foreigner Colombia

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.