8 Tips For Getting an Investor Visa Through Real Estate in Colombia

Tomás Giraldo Bolívar
Medellin

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Are you captivated by the allure of Colombian real estate, envisioning the property of your dreams nestled in the country’s scenic landscapes? Embarking on a journey to secure your piece of paradise is an exciting venture, but it comes with its fair share of questions and considerations. In this brief guide, we’ll address some of the most common inquiries that arise when navigating foreign direct investment (FDI) in Colombian real estate.

• How to qualify for residency in Colombia through a real estate investment
• How to (correctly) pay for your Colombian real estate investment
• How to reside in Colombia long-term
• Tax implications of moving to Colombia
• How to ensure you actually buy the property you think you’re buying
• Make sure you understand the complete cost of acquisition
• Understand property tax and “predial”
• Think twice before manipulating the deed registration

1. How to qualify for residency in Colombia through a real estate investment

Colombia offers residence permits (with a path to both PR and eventual citizenship) to those who acquire property valued above certain thresholds through the Colombia Investor Visas. If the property’s value exceeds 350 Colombian minimum salaries (about US$109,000 in 2023), you’re eligible to apply for an investor visa; a gateway to an extended stay in the country.

The investor visa is initially valid for three years and is renewable as long as the investment is maintained.

If you decide to make Colombia your long-term residence, you can change your investor visa to a permanent resident visa after a period of five years. And if you decide to request Colombian nationality, you can do so after

• 1 year of holding the R visa if you are a citizen of a country in Latin America or the Caribbean
• 2 years of holding the R visa if you are Spanish or have Colombian family (spouse or children); and
• 5 years of holding the R visa if none of the other conditions apply.

It’s also possible to qualify for an investor visa in Colombia by investing in a new or existing Colombian business. Learn more about Colombian Investor Visas here.

2. How to (correctly) pay for your Colombian real estate investment

Are you imagining you’ll be making a direct payment to the seller’s American or other foreign bank account? Not so fast!

Foreign direct investment in Colombia requires a mandatory registration with the country’s central bank. This ensures transparency and adherence to regulations. To be compliant, you must transfer the funds directly to Colombia through an authorized intermediary of the exchange market (financial institutions). If a seller offers to let you pay with a wire transfer to a foreign account, know that you could face fines of up to 100% of the value of incorrectly transfered funds. 

3. How to reside in Colombia long-term

Planning to soak up the Colombian charm for more than six months? With an investor visa, you’re granted the freedom to reside in the country for an extended period, making your connection with Colombia even deeper. The investor visa requires that you show proof of financial self sufficiency by showing bank statements, the registration of your foreign direct investment with the Central Bank, proof of insurance with sufficient coverage, and a copy of the property deed.

If you decide to make Colombia your long-term residence, you can change your investor visa to a permanent resident visa after a period of five years. And in only two extra years you would be eligible to apply for Colombian citizenship

4. Tax implications of moving to Colombia

The realm of taxation can be complex. Tax liabilities in Colombia hinge on various factors, including your income source. As in most countries, you do become a tax resident after living in Colombia for 183 days in a given year. There are, however, several ways to shield your assets from tax obligations, but make sure you don´t fall into the trap of tax avoidance.

Seeking professional advice is key to understanding your tax obligations accurately.

5. How to ensure you actually buy the property you think you’re buying

A vital step in property acquisition is conducting a thorough title search. It is important to conduct a title search before you buy any property in Colombia. This will help you to ensure that the property is free of any liens or encumbrances. Rely on experienced legal guidance to delve into property records, uncover ownership history, and ensure a seamless transfer of ownership.

6. Make sure you understand the complete cost of acquisition

The path to property ownership involves costs beyond the purchase price. Registration taxes, notary fees, and registration rights are among the financial considerations you need to account for. Roundtrip transaction costs can, in many cases, amount to up to 6% in Colombia.

7. Understand property tax and “predial”

Colombia levies a property tax known as Predial. This tax varies based on the property’s location and size, contributing to the maintenance of local infrastructure and services. This tax can normally range around five pesos for every thousand pesos of the Cadastral value. However, this rate depends on the municipality.

8. Think twice before manipulating the deed registration

Resist the urge to understate the property value during deed registration. This tactic may appear appealing, but it ultimately works against you as any tax that is not paid by the seller will ultimately be passed on to you when trying to sell the property (capital gains). Not to mention that this practice is illegal in the first place.

Make sure you have expert guidance

If these questions have been circling your mind and answers seem elusive, worry not! Colombia is well known for its service economy with service providers standing ready to be your guiding light through the maze of foreign direct investment in Colombian real estate.

In Colombia, you can find a myriad of financial, legal, and tax advisors poised to address your queries, ensuring a smooth and informed journey towards realizing your Colombian property aspirations. 

See also: Why a Bulletproof Mobility Portfolio Should Contain a Western Hemisphere Allocation

IMI Pros who can help with Colombian residency