Properties for Sale in Colombia

Tax and Offshore Investment in Colombia

Tax regimes vary greatly throughout Latin America. While some countries are investor friendly, others are not so open. There are several benefits (i.e. retirement programmes, tax discounts) but also some tax obligations. In this section we provide an analysis of the different tax structure in each country where January First Real Estate lists properties. This information may be very important for you to choose you retirement destination or where to invest. Keep in mind that there are related visa and residence issues which are discussed in Visa/Residence Requirements. In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.

Real estate assets are, without doubts, one of the most secure and profitable ways of investment. There are two main reasons for this:

1. Properties always tend to increase their value in the long term.
2. They generate an income for their exploitation (rental/yields).

Taxes and Costs in Colombia

Taxes and Costs
Income tax (Impuesto de Renta)
Nonresidents are subject to income tax on all his Colombian-sourced income. The tax rate is 35%, withheld by the tenant.
The nonresident can opt to file an income tax return. All expenses incurred in generating the income can be deducted. The amount previously withheld will be credited against the taxpayer’s final tax liability. In case the nonresident files an income tax return, a 10% surcharge is applied.

Surtax
Remittance abroad of Colombian-sourced income is subject to 7% surtax. This tax is levied on the rental income less the 35% withholding income tax, which is 65% of gross rental income. The effective tax rate would be 4.55% (7% tax on 65% of the rental income) .

Real Estate Tax (Impuesto Predial)
Property taxes are levied on the cadastral value of the properties as assessed by the municipalities. The rates of the unified property tax, on the aggregate value of the land and buildings, range between 0.1% and 1.6%. In Santa Fe de Bogotá, Colombia’s capital, the property tax range from 0.002% to 0.015%.

Wealth Tax (Impuesto al Patrimonio)
Wealth tax is an annual tax imposed on individuals who exceed a certain amount of wealth. The tax rate is 0.3% levied on the taxpayer’s wealth in excess of the threshold amounts. Assets and properties less than COP 3,000,000,000 (US$ 1,126,765) are not taxable.

Capital Gains Tax
Capital gains earned by nonresidents are taxed at a flat income tax rate of 35%. The taxable gain is computed by deducting the following from the transfer or selling price: acquisition costs (as revalued by the consumer price index), costs of transferring ownership, and improvement costs.

Living There
Residents are taxed on their worldwide income. Income earned by individual residents in Colombia is taxed at progressive rates.
The tax rates vary depending on the taxable income. Income up to COP20,400,000 (US$ 7,662) are not taxable. The maximum tax rate is 35% on income exceeding COP 96,000,000 (US$ 36,056).
Residents are subject to a 10% surcharge on their income tax liability. Accordingly, the maximum tax rate would be 38.5% (35% + (10% surtax on 35%)).
Foreign residents are taxed only on their Colombian-sourced income for the first four years of their stay in Colombia. On their fifth year of residence, foreign residents are taxed on their worldwide income. The income tax is determined in accordance with a progressive table, of which the highest marginal rate is 38.5%.

Capital Gains
Capital gains earned by residents are subject to tax in Colombia. The taxable gain is computed by deducting the following from the selling price: acquisition costs (As revalued by the consumer price index), costs of transferring ownership, and improvement costs.
Capital gains earned through a resident’s fixed assets are subject to special taxation. Fixed assets are houses, apartment, vehicles, chattels, and implements. If the property was sold within two years of acquisition, the capital gains earned are subject to tax at the standard progressive income tax rates. Profits generated through sale of the property held for more than two years is subject to the capital gains tax rate of 1%, withheld at source.
In transfer of the taxpayer’s homes, a reduction in the 1% withholding tax rate is applied if the property was acquired from 1978 to 1986. The reduction rates are as follows:

Year of Acquisition / Reduction
1986 / 10%
1985 / 20%
1984 / 30%
1983 / 40%
1982 / 50%
1981 / 60%
1980 / 70%
1979 / 80%
1978 / 90%

Colombia, make your dream investment come true.