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How To Buy Real Estate

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How to invest in real estate sector

To buy real property in Colombia you usually need to start with the execution of a purchase promise which is then completed with a purchase agreement. By this way, the seller agrees to transfer the property rights. This agreement must be executed by means of a public deed at a Notary Public´s office. In order to do so, the following documents are required:

  • Authentic copy of the real estate tax paid on the year of the purchase of the real property.
  • Original appraisal good standing certificate issued by the Urban Development Institute (Instituto de Desarrollo Urbano - IDU).
  • Original home owner association fees - "HOA fee" – good standing certificate if the real property is subject to a condominium regime.
  • Proof of payment of the national consumption tax when applicable.

Property rights over real estate must be transferred by means of the registration of the acquisition title in the Public Instruments Registry Office (Oficina de Registro de Instrumentos Públicos). The purchase of the real property ends with the formal delivery of the good.

The costs related to the process depend on the price of the good acquired. The list of the costs for the purchase of a real property is as follows:

  • Notary rights: paid by the seller and buyer evenly.
  • Withholding at source: (1% of the price of the real property).
  • Registry tax: paid by the seller and buyer evenly (1,67% of the price of the real property).
  • Transfer and appraisal certificates: paid by the seller.
  • Registry rights: paid by the buyer (0.5% of the value of the business).
  • National tax on the consumption of real estate: it is generated by the sale of real estate (different from rural properties destined to agricultural activities and properties destined to the execution of housing projects of social or priority interest), whose value exceeds 26,800 UVT, (approx. USD 306,145; 1USD = COP3000)
  • The seller is responsible for the tax. It will be collected through the withholding at the source mechanism. It must be canceled prior to the transference of the real estate.
  • The applicable rate will be two percent (2%) over the entire sale price.

 

Real_Estate.pdf 253.86 KB
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