4 Tips for Buying Property in Colombia
Expat Exchange members, some of whom have purchased multiple properties in Colombia, offer tremendous insight into the property buying process in Colombia and the involvement of Colombian lawyers, real estate agencies and Banco Republica. Expats in Colombia and others considering investing in real estate in Colombia should read these tips for buying property in Colombia.
1. The Property Buying Process in Colombia
One expat in Colombia offered a very helpful checklist for buying a property in Colombia. He advised the following:
First, find the property you want to buy and make a sales contract.
Second, wire the money to your BanColombia account, when it gets here, show the bank your sales contract and they will convert it into pesos and deposit into your account.
The bank will assist you in filling out a formula 4, keep a copy and send it to Banco Republica.
One business day before the closing, go get a new certificate of title, certificado de tradition, just to make sure nothing new has come up.
On closing day, show up with a bank check for just a little less than the estimated closing amount and some cash to make up the difference.
Go right away, the same day or the next day and pay the tax and register your property.
Trust no one and especially not the sellers or any family members that have advice.
2. Bank Transfers for Buying Property with the Formulario No 4 or the Formulario No 5?
Formulario No 4 and Formulario No 5 are two different Banco Republica forms that are filed when you bring money into the country. Formulario 4 is for foreign investment and Formulario 5 is for everything else. If you use the forms incorrectly, you may face significant fines.
"I am NOT a specialist on such matters and expert advice may be necessary. When I tried (wrongly) to use a Formulario No 4 for an inwards transfer whilst I was already deemed a resident fiscally (more than 183 days in Colombia), I was threatened with a fine for infringement of Colombia's exchange control rules of up to 200% of the amount being transferred. Fortunately, I was able to argue my way out of it and then used the Formulario No 5 which is used by Colombian resident expats," recalled one expat.
Another member explained, "Which formulario should you use... I learnt the hard way. I initially used Form 4 and then had to change to Form 5. The idea is, you are either identified as a 'tax resident' in Colombia, or you are not. The Form 5 is used by 'tax residents' in Colombia when they want to bring money into the country from overseas. But if you are not a 'tax resident,' then the money you bring in is registered by the Banco de la Republica as a 'foreign Investment,' and Form 4 is used for this purpose."
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Your sales contract will confirm the actual price if ever needed," recommended one expat.
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