Last updated on April 30th, 2024 at 10:57 pm
In recent years, Colombia has become a popular destination for tourists and North American expats looking to move internationally, and more people are becoming interested in Colombia’s real estate as a result.
Whether you’re looking for houses for sale in Colombia to relocate your family, retire to, or rent out as an investment property, there is much to consider. You’ll need to decide if buying property in Colombia is worth it based on the benefits and drawbacks of owning a home in the country and where you choose to purchase a property. To help you weigh your options, our team here at Remitly put together this guide to finding and buying property for sale in Colombia.
Can foreigners buy property in Colombia?
Unlike many other Caribbean and Latin American countries, Colombia affords foreigners the same rights of property ownership enjoyed by citizens and permanent residents. As a result, you’re free to look for houses for sale in Colombia in any location you choose. You also won’t have to worry about having a citizen as a co-owner or leasing the property from the government the way you might when buying international real estate elsewhere.
Why buy property in Colombia?
There are a few major benefits to buying property like houses in Colombia. Read on to explore some of the reasons why you may want to consider purchasing real estate in the country.
Streamlined pathway to residency
For those hoping to move to the country, buying Colombian houses can provide a gateway to a residency visa.
Colombia’s Resident Investor’s Visa program allows individuals who own property worth at least US$200,000 to gain a permanent residence visa. Their spouses or permanent partners usually qualify for the visa as well. Generally, property owners can receive visas for their parents and children if they are financially dependent on them.
Favorable exchange rates
With the value of the U.S. dollar and the euro rising, Colombian peso exchange rates favor foreigners looking to buy homes and land for sale in Colombia. Foreign currencies now buy more pesos than in years past, allowing buyers to save as much as 30% compared to what they would have paid before the appreciation of major world currencies.
Low cost of living
Overall, the cost of living in Colombia is much lower than in the U.S., Canada, and Europe. Average monthly costs are 75% less expensive than in the U.S. While the United States is the fifth most expensive country in the world to live in, Colombia ranks 164th.
Even in Colombia’s major cities, the cost of living is lower than in the biggest cities in the U.S. For example, those looking for property in Bogota, Colombia, can enjoy monthly costs that are 70.8% less than the average in New York City, while people considering property for sale in Medellin, Colombia, will find costs are around 69.5% lower than those in the Big Apple.
People purchasing Colombian houses for the purpose of moving abroad will find that the prices for things like utilities, clothing, food, and entertainment are much lower. As a result, foreigners relocating to Colombia will see their retirement savings or income go further.
Investors considering real estate in Colombia also benefit from the low cost of living. You can expect to pay less for upkeep and repairs on a home than in the U.S., and hourly rates for the housekeeping staff needed to prepare the property for vacationers will also be significantly more affordable.
Growing tourism
Prior to the COVID-19 pandemic, tourism was booming in Colombia. In 2019, a record-breaking 4.1 million foreign visitors came to the country and collectively spent more than US$6.754 million.
Although travel restrictions and shutdowns stymied tourism during 2020 and 2021, the industry has rebounded faster in Colombia than in many other Latin American countries. The Colombian government has undertaken several initiatives to attract tourists and support the tourism industry as well.
Due to Colombia’s status as a major tourist destination, potential investors will likely see strong demand for rental properties, particularly in areas most popular with international visitors, such as Medellin. Plus, growing tourism may cause the values of properties in popular destinations to increase over time, opening the doors for big profits if investors choose to sell in the future.
What’s the Colombian real estate market like?
Since January 2021, the housing market in Colombia has been gradually heating up. According to the Housing Index, prices of new houses increased from 116.13 points in the last quarter of 2022 to 119.59 points during the first quarter of 2023.
Rising prices can have an unexpected benefit for foreigners looking to purchase real estate in Colombia. Concerns about inflation and increasing rates may lead Colombian citizens and permanent residents to refrain from buying property, providing opportunities for those looking to purchase real estate.
Still, foreigners looking to buy property in Colombia may wish to act quickly as prices will likely continue rising for the foreseeable future.
How much does it cost to buy property in Colombia?
When buying property in Colombia, you’ll pay more than the home’s selling price. Having a clear understanding of the additional costs associated with purchasing homes in Colombia can help you establish a realistic budget. Here are some things that factor into the total cost of real estate in Colombia.
Housing prices
The price for Colombian houses varies based on location, size, age, and condition.
Most standard family homes cost between US$50,000 and US$100,000. Luxury homes can cost upward of US$1 million. As of June 2023, prices for homes in Colombia listed on Realtor.com ranged from US$19,191 for a 44-square-foot home in Bucaramanga to US$12 million for an eight-bedroom, 41,872-square-foot home in Cartagena.
Taxes
Foreigners purchasing real estate in Colombia are responsible for paying the same taxes assessed to citizens. Most municipalities charge a local tax of around 1.05%. However, the buyer and seller usually split the cost of these taxes equally.
The seller is also responsible for paying 1% sales tax on the purchase price of the property and 1% income tax on the purchase price. As a buyer, you won’t be assessed these taxes, but it’s good to be aware of them if you ever decide to sell.
Fees
In addition to taxes, you can expect to pay fees at the time of closing. These include:
- Attorney fees, which are usually around US$800 and cover the costs of conducting due diligence, filling out paperwork, and overseeing the closing
- Registration fee, generally equal to 0.5 to 1% of the sale price
Traditionally, buyers and sellers split the following fees equally during real estate closings in Colombia:
- Notary fees, typically equal to 0.30 to 0.35% of the sale price
- Transfer charges of around 0.15% of the sale price
The seller will also be responsible for paying real estate agent fees equal to around 3% of the purchase price plus 19% VAT. In some cases, sellers may set their asking prices higher to help cover these costs.
Insurance
Homeowners insurance protects you from financial loss in the event that your home becomes damaged. Most policies available for Colombian homes include coverage for fire, lightning strikes, smoke, hail, flooding, landslides, severe storms, and auto accidents that damage the structure. To get coverage for damage caused by political unrest, robberies, and liability, you may need to purchase riders for an additional cost.
The price of homeowners insurance in Colombia depends primarily on the property’s location and value—the cost is generally less than what you’d expect to pay for similar coverage in the U.S.
When comparing properties, it’s a good idea to obtain homeowners insurance quotes from a few insurance companies so that you can compare rates and estimate costs.
Where is the best place to buy property in Colombia?
The best places to buy property in Colombia depend on your personal goals and preferences.
Retirees may look for homes near great hospitals and recreational opportunities. Families may be most concerned about the quality of schools in the area and the availability of services and amenities. At the same time, investors may be most interested in homes located in top tourist destinations.
The following are some popular areas for purchasing property in Colombia:
- Bucaramanga: Called the City of Parks, this city on a plateau in the Colombian Andes has plenty of recreational opportunities.
- Medellin: Home to a large expat population, this city located along the Porce River in the Andes is home to top hospitals and international schools and is a major tourist destination.
- Santa Marta: Those looking for a beachfront property can consider Santa Marta, located on the Caribbean Coast.
- Cartagena: This Caribbean coastal city offers luxury living standards and access to beautiful beaches and is one of the top destinations for tourists.
- Salento: Located in the coffee-producing region of Colombia, this resort town draws visitors from all over the world who come for coffee tastings and tours.
- Leticia: This city’s location in the heart of the Amazon Basin has become a key center for eco-tourism in Colombia.
The pitfalls of buying property in Colombia
Although there are many benefits to buying Colombia real estate, there are some potential drawbacks that you should consider before you begin your search. They include all of the following considerations.
No licensing for real estate agents
In Colombia, there is no licensing program for real estate agents. As a result, anyone can advertise their services and offer to assist potential buyers. You’ll need to do more research when choosing a professional to work with than you might need to when buying international real estate in other countries.
Language barrier
Spanish is the official language of Colombia. If you’re not fluent in the language, you may find it difficult to communicate with sellers on your own.
To facilitate negotiations, it will be important that you have a bilingual attorney and a real estate agent. You may also need to hire a translator to provide English versions of official documents for your review.
Risk for fraud
Although most sellers in Colombia are reputable, foreigners are at an increased risk for real estate scams. Unscrupulous individuals may sell a single property to more than one buyer or list a property that may soon be seized by the Colombian government either due to failure to pay taxes or because illicit funds were used to purchase it.
Another form of fraud that buyers could get drawn into is the underreporting scam. With this scheme, the seller asks the buyer to pay for a portion of the home in cash and then lists the sale price on official paperwork as a smaller amount.
Sellers may offer you a significant discount if you agree to underreport the home’s value, but it’s important that you not take the bait. This type of scam can lead to legal problems and hefty tax bills in the future.
Cultural differences
In some regions of Colombia, locals may be more accustomed to an informal selling process based largely on verbal agreements. Foreigners looking to purchase property in Colombia may have to insist on using an attorney and putting everything down in writing.
No escrow
There is no escrow system in place in Colombia.
In many cases, this does not pose a problem, but you may be asked to pay money upfront to settle liens, taxes, and other obligations before you can close on a property. If this occurs, it can open you up to financial risk, making it important to have a knowledgeable real estate attorney representing you in Colombia.
Potential for political unrest
Areas of Colombia along the border of Venezuela and in the departments of Arauca, Cauca, and Norte de Santander are hot spots for political violence and domestic terrorism.
Other areas of the country are generally considered to be safer. However, there is some potential for widespread political unrest in Colombia that could lead to disruptions in city services and a decreased interest in tourism. When considering where to buy property in Colombia, carefully research the political climate and crime rates to mitigate the risk.
Tips and resources for buying land and homes for sale in Colombia
To close out this article on buying property in Colombia, we put together some final tips to help ensure a safe and fair real estate transaction, plus a list of resources that may be helpful to you throughout the process.
Choose your real estate agent carefully
A real estate agent can greatly simplify the buying process and help you find a home that matches your budget and needs well. However, you need to use caution when selecting an agent since there is no licensing for the profession in Colombia.
To ensure that you select a knowledgeable professional, follow these tips:
- Ask for recommendations in expat community forums and social media groups.
- Request a list of references and contact them, asking them to describe their experience.
- Choose agents affiliated with well-known international real estate agencies.
(You’ll find links to two in the resources section at the end of this article.) - Conduct an Internet search for the real estate agent’s name and look for any news articles about them.
- Read online reviews for the real estate agent and the agency that they work for.
- Interview multiple agents, asking about their years of experience, areas of expertise, and fees.
Obtain financing in your home country
Colombia is home to a very conservative banking system, and most financial institutions are unwilling to provide financing for people who have yet to build credit in the country. As a result, you may find it difficult to get approved for a mortgage through a Colombian bank. Even if you do manage to get approval, interest rates may be unfavorable, and the bank may require you to make a sizable down payment of 30 to 40%.
Due to the challenges posed by strict lending guidelines, many foreigners purchasing property in Colombia seek financing through banks in their home countries.
Work with an experienced Colombian attorney
As previously mentioned, an experienced Colombian real estate attorney is a valuable asset for anyone looking to buy international real estate in the country. An attorney can help you spot scams, ensure that you file all the necessary paperwork, and oversee the closing for you.
Don’t buy homes in Colombia sight unseen
Virtual property tours theoretically make it possible to view homes without visiting Colombia. However, they’re still no substitute for inspecting a house yourself and walking through the neighborhood on your own.
Use virtual tours to compile a shortlist of properties to view, and then plan to travel to Colombia to see the homes in person to ensure you know exactly what you’re buying.
Consult a tax professional
If you’re purchasing a home in Colombia to use as an investment property, there may be tax implications at home. Consult a tax attorney to determine whether you’ll need to pay income tax or other taxes on the income you make through renting out a property in Colombia.
Use a remittance service
If you need to send money to Colombia to pay fees and other expenses, consider using a remittance service like Remitly. Compared to banks, online and mobile international money transfer services often charge lower fees and offer more competitive interest rates. Download the Remitly app to learn more.