Total transaction costs are low in Colombia
March 21, 2017
How high are realtors’ and lawyers’ fees in Colombia? What about other property purchase costs?
|Real estate Agents’ Fees||3% - 4% (+ 16% VAT)||seller|
|Costs paid by buyer||1.65%|
|Costs paid by seller||3.63% - 4.79%|
|ROUNDTRIP TRANSACTION COSTS||5.28% - 6.44%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in Colombia?
Foreigners can freely buy property in Colombia.
All transfers of title on real estate as well as all encumbrances must be done by public document. All taxes must be paid in order for a transfer to be legally effective. Any document of transfer or judicial decision pertaining to property must be recorded with the Real Property Registry.
The following registration procedures are followed:
- Obtain a certificate or Certificado de Tradición about the history of the property for COP7,000 (US$2) from the Registry Office.
- Your lawyer will study the property titles, which takes around 5 days to complete and costs around COP1,113,000 (US$385). A certificate from the municipality should be obtained certifying that all municipal taxes on the property have been paid (Paz y Salvo Predial and Paz y Salvo de Valorizacion.)
- Obtain the following tax certificates: certificado de paz y salvo predial that states municipal property taxes have been paid from Secretaría de Hacienda del Distrito, and the certificado de paz y salvo de valorización which contains taxes related to increases in the value of the property due to constructions, roads, etc.
- The Notary prepares the public deed. The participation of the notary in the preparation of this public deed is mandatory and his fees are 0.30% of property value. Moreover, the notary will also keep 1% of the value of the transaction from the seller as an advance payment to be applied to the Income Tax (Retencion en la fuente).
- The Public Deed must be registered at the Registry Office. The Registry Tax (Impuesto de Registro) is paid. After registration, the new public deed is automatically sent to the Office of the Cadastre to register the change of ownership.
These procedures can be completed in around 14 days.
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.