Secrets For A Successful Foreign Investment In Colombia Real Estate

Here are some secrets of successful foreign investment in Colombian real estate.

Get to know the tricky Colombia Title law, and common traps laid by sellers and real estate agents.

Verify Colombian Wire Transfers Forms

Incorrect wire transfer forms can result in fines up to 4 times the value of the wire in some cases.

Incorrect ID/passport number, vales or concept code numbers can disqualify you for visas.

No Cash Transactions

– Colombia has a new Financial Law which went into effect January 1st, 2019 to Control Sales of Property using cash transactions to Avoid Taxes.

– Cash Transactions are illegal under the new financial law.

Deposit / 1st Payment Value

This is negotiable, and normally it equals amount of penalty clause. Some foreigners offer a small initial deposit as payment to hold the property while the buyer organizes an internatinoal wire for full required payment.

Property Closing Tips for Title at Signing at Notary

Common practice in Colombia is to record a lower value on a title, However there is a very strict financial law which went into effect January 1st, 2019 which lets the government fine you up to 4 times the value of your property if you under declare the real sale value.
Never Let Sellers or Realtors Talk you into recording lower value on Title. This will cause you to have higher capital gains in the future.
Notary Fees and Taxes are based on the value recorded on the title. Pay attention to this or sellers may try to make you pay more than your share.
You may save on closing and yearly property tax values but you risk loosing your property for tax evasion and money laundering.
It is illegal to pay cash on the side for furniture or other items related to the sale of the property in order to lower the declared value of the property.

Filed Bank Transfer form

– Common form numbers are formulario 4 and formulario 5.
– Always ask your bank or financial institution for copy of the ‘FILED’ (radicado) wire transfer form.
– Banks often make clerical errors that must be corrected.
– Bank wire transfer forms can be easily corrected.

Carefully Verify puchase Contract to see who is paying for notary fees and taxes

• Your compraventa or promesa de compraventa should split notary fees and taxes between buyer and seller

• The witholding taxes (retencion) is paid by the seller always

• The registration fee for new title is always paid by the buyer

• Sales taxes called renta is always split between seller and buyer

• Notary fees are split between seller and buyer

• Special Luxury taxes

Property and Title inspections should be done before signing a purchase agreement

• Property Inspection should include criminal background checks of last several owners against international terrorist list and national police records

• Property Title should include legal investigation of title history for liens

• Certificate of good standing from apartment/property administration

• If tenants verify tenants have a VALID rental contract

• Verify financials from home owners association if one exists

Penalty Clause: Do not sign document without having a clause to protect you from a bank not opening or clearing your wire transfer Normal Penalty clause is for 10-20%.

NO LETTER OF INTERNET – Letters of internet are not customarily used in Colombia as they are in the United States: The only binding document is a purchase or pre-purchase sales agreement.

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Open a Bank or Investor Account in Advance

• Do not wire directly to a seller without having a purchase agreement signed at notary.

• Wire directly to your personal account in Colombia.

• Plan Fund Transfers in Advance to avoid missing dates in purchase agreement.

Open-a-Bank-or-Investor-Account-in-Advance

Foreigners in Large Cities Buy in "estrato" 4 or Higher

Social economic income coding for neighborhoods usually ranges from 1-6, the higher numbers are economically better off than the lower numbers and usually have higher security levels, but are also more expensive when it comes to public utilities, and taxes. Outside of major cities this is not as much of an issue.

There you have it. A complete guide on how to make foreign investments in Colombian real estate successfully.

Frequently Asked Questions (FAQ)

How to setup a Colombian business remotely?

You can start the business from abroad using a power of attorney. Our firm will handle the paperwork, registrations, and filings on your behalf.

Do I need a visa to start a business in Colombia?

Not initially. You can create a company on a tourist visa, but opening a bank account and running operations may require a Migrant Visa or Investor Visa.

Can a foreigner own 100% of a Colombian company?

Yes. There's no legal requirement for a Colombian partner or representative. Foreigners can have full ownership rights.

How long does it take to open a business in Colombia?

Usually between 5 business days to 3 weeks depending on documentation and whether the owner is present in Colombia.

What is the easiest legal structure to use?

A Colombian SAS Corporation is the most flexible structure. It allows for single-person ownership, low startup costs, and limited liability.

Final Thoughts: Should You Open a SAS in Colombia?

Learning how to setup a Colombian business is the first step toward achieving your entrepreneurial goals in Latin America. With the right legal team, the process can be fast, secure, and fully compliant with local laws.

📞 Contact Colombia Legal & Associates and Visas by James today to start your business in Colombia the right way.
🌐 Visit www.colombiavisas.com or call us at +57-313-390-7109 to schedule your consultation.