A Guide to Buying Real Estate in Colombia for Foreigners: Tips and Considerations
Colombia is a popular destination for foreigners interested in purchasing real estate. To do so, all that is required is a passport, cash, and a little bit of patience. One of the advantages of buying real estate in Colombia is that it can qualify you for a Colombian residency visa. However, there are some important points to keep in mind when buying real estate in Colombia as a foreigner. For instance, deals are done in cash, and there is no significant discount for paying in cash. In fact, most real estate transactions only offer between a 3% to 8% discount in the negotiation.
It is also important to note that the Colombian marketplace is not over-leveraged, and if a property has been on the market for two years, the seller is unlikely to lower the price. Another point to consider is that negotiations may be unsuccessful if you plan on rehabbing the property, as the seller may believe that the property is already in good condition.
The process for buying real estate in Colombia involves making a verbal offer, agreeing on the price, the deposit amount, and how the road improvement tax will be paid. Once these details have been agreed upon, a title search and a series of other background checks must be conducted. It is recommended that you hire an experienced lawyer who understands real estate law to complete this process. Once the title search is done, the document called the Promesa de Compraventa will be prepared, outlining all the details agreed upon.
Foreigners without a Colombian ID are unable to obtain bank accounts, so opening a brokerage account is the recommended option. This process may be tedious, as the Colombian government is very strict and asks many questions. However, this is the safest and most secure way to bring money in and out of the country. Every time money is moved in or out of the country, it must be registered, which is sent to the Bank of the Republic.
If you plan on using a Colombian residency visa based on real estate investments, you must purchase a property of 650 times the “salario minimo” – or approximately 455,000,000 COP. This visa is renewable up to five years and has recently become an “indefinite” visa, which must be restamped every five years.
It is important to note that the property must be registered in your name and cannot be purchased through an L.L.C., S.A.S., Panama S.A., or a foreign trust if you want to apply for a visa based on a property purchase. However, you can still purchase real estate in Colombia through any of these vehicles, and it is completely legal.