american buying property in colombia

harocha says on Aug 25, 2005, 22:59:

I would like to get some advice too!!! Thank you Captbill for the post, I have the same question, and would appreciate any help with a website or list of requirements and steps that a foreign in Colombia must follow to do this in the right and legal way.

Thanks for your input.

Albatross says on Aug 26, 2005, 03:58:

Calipro You might want to ask Calipro, I believe he has been researching this for some time.
Also Viewpoint might have some suggestions...

“Democracy - a pathetic belief in the collective wisdom of individual ignorance." - H.L. Mencken

Dan says on Aug 26, 2005, 04:18:

Try looking at these. plenty of good information

http://poorbuthappy.com/colombia/node/3175
http://poorbuthappy.com/colombia/node/9522

God Bless America!

viewpoint says on Aug 26, 2005, 04:33:

captbill Well I will try to state the facts as I know them regarding the challenges that face you and your wife in purchasing real estate in Colombia.

First, any foreign person in possession of a passport can purchase real estate in Colombia. The maximum time that you (a foreign person) can legally reside in Colombia is 180 days without some form of Colombian resident visa. If you obtain a resident visa and reside for more than 180 days you are subject to patimony (and other) taxation on net assets (less encombrances) exceeding CP$80.000.000.

If you wife takes title in whole or part to the real estate purchased she may be taxed on the value of her portion for unreported income which is 35-40%. If that's not discouraging enough you will immediately run into the situation where you personally can't open a bank account in Colombia without a Colombia cedula and you can't obtain the cedula until you have a Colombia resident visa. Your wife with her Colombian cedula can open a bank account as principal and put your name on the account also. She will have control of the bank account so continue to be nice to her.

Sure, there are shortcuts (damn few) to some of these drills through your marriage to a Colombian woman but it's still a nightmare of hurdles (regulations) to navigate. If you work your way through these minefields and are prepared to fund your real estate purchase the receiving bank (of the incoming wire transfer) must fill out and file a FORM 4 declaring and registering the funds as a "foreign investment in real estate" with the central bank and you are responsible for filling out a FORM 11 and filing that within 90 days after the receipt of the incoming wire transfer. The form 4 registers the foreign investment (basically the declaration and stated purpose of the use of funds) from the incoming wire transfer and the form 11 evidences the transaction (copy of recorded transaction or compra venta attached) that the funds were used for. If you fail to file the form 4 & 11 as required you may be subject to a 200% fine (i.e. your incoming wire transfer is US$50,000 then the fine could be as much as US$100,000) further since you failed to register your foreign investment as required you would be subject to a 40% undeclared income tax on your real estate sales proceeds if you try to convert them back to US dollars and wire them back to the US or other foreign country.

AZTEC (a regular poster) has invested a lot of time and $$$ seeking professional legal advice as he has a Colombian wife and he can better explain in detail the challenges facing your wife taking title in whole or part. Hunter (another poster from Medellin) knows the drill regarding purchasing property as a foreign resident of Colombia and the taxation issues facing a foreign Colombian resident.

My suggestion always is to explore Panama before committing to Colombia as it's a much more friendly place to foreign people for both immigration and real estate purchases. In Panama they use the US dollar as their currency and there is 5% - 30 year residential mortgage financing available for borrowers that qualify. Remember there are almost 100 banks in Panama City looking for business and no shortage of capital. Most importantly they don't close from 12:00 to 2:00PM and go take a nap.

If Colombia is your final choice, then there are creative ways to mitigate these issues in the way that you take ownership of the real estate. Seek good legal advice from a knowledgable Colombian attorney. If the attorney tells you he or she has to study the issue then you are talking to the wrong one.

The problem that AZTEC and I found was that while there are many attorneys and accountants in Colombia, damn few of these professionals can answer your questions about foreign real estate purchases and taxation correctly (if at all).

Here is an example of a lawfirm that doesn't have to study these issues. They are expensive but cheaper than paying to educate an uneducated attorney subject to making mistakes with your money. This Bogota lawfirm is one of the best in Colombia and issues like this are below their normal day-to-day "corporate" practice but they will have an associate to help you. http://www.phrlegal.com/

tomtom33 says on Aug 26, 2005, 08:38:

Bank financing? Two chances-little and none. If you do manage to get a loan from a Colombian bank, be prepared to pay outrageously high interest rates.

harocha says on Aug 26, 2005, 13:00:

Attorney Vewpoint, do you know if this lawfirm works out of Bogota? We want to buy in Rodadero and need legal advice.

Does anyone knows if the agencies who will follow up on the forms 4 and 11 have any website where we can download the forms, and read more about steps or requirements?

Thank you.

viewpoint says on Aug 26, 2005, 14:38:

harocha Yes the lawfirm "POSSE, HERRERA & RUIZ" is based in Bogota. I will PM you a managing partners name to ask for. Go to the following link and look for AZTEC post regarding a link for FORMS 4 & 11 in PDF format. Also you will find on his same post a link for the new regulations regarding registering a foreign investment. Further, this link has answers to most of the other questions you might have regarding properly structuring a foreign real estate purchase.

http://www.poorbuthappy.com/colombia/node/12019

Pay attention to all of the options available to you in taking title to the real estate as there are several vehicles that are available to you for different purposes and situations.

Dan says on Aug 26, 2005, 15:43:

harocha Try going to the Banco de la República website. They have the forms listed on there...

Took a while to find but here's where the forms can be found:
http://www.banrep.gov.co/cambios/compendio/formularioscompendio.htm

God Bless America!

mikecolombia says on Aug 26, 2005, 17:21:

My only advice is that you don't need a bank account in Colombia. It's alot safer here, and less likely somebody can track you finances. You really don't anybody to know how much you make especially there. If you need money,go to an ATM machine or to a bank to withdraw money. you should be able to withdraw whatever amount you need daily. You can withdraw between 300,000 to 600,000 pesos daily, or go to a bank to withdraw more.

precession says on Aug 26, 2005, 17:43:

Peso 2 Dollar Another consideration that you might wish to make is:

1. The peso is strong now, so by paying in dollars, you may lose in the medium term if the peso nose dives.

2. However, the dollar also seems to be on the wane so any loss may not be so great.

I would suggest that, unless you have already done so, you should perhaps rent in the area until you get things figured out as to how best to proceed talking through things with local advisers. Also, it is more possible to do creative deals here if you are not "sold" on a particular property.

All previous advice seems to be very valid.

precession,
Bogota

tomtom33 says on Aug 26, 2005, 17:55:

Mike I have withdrawn 3.6 million pesos in one day, all from the same ATM. The only limit is the one your home bank imposes. Also, you can generally get only 300K per transaction. You just keep doing transactions until you get what you need.

viewpoint says on Aug 27, 2005, 04:44:

mikecolombia - don't need a bank account ? Your advice is maybe true for the typical tourist traveling periodically to Colombia for short visits but I don't know how you could function in Colombia without a bank account in your name (or someone elses name) if you own real estate to function in making the automatic payments of your utility and other monthly bills during periods of time you might not be physically present in the country.

If you think that it is better to function on a larger scale than mere subsistance without reporting or registering your activites you will wake up to a big surprise called DIAN. The vehicles and real estate you own are a matter of public record. Assets purchased with unregistered funds may be deemed to have been aquired with unreported income subject to taxation. Funds obtained in Colombia through assets sales in any substainal amount are trapped in Colombia pesos and any attempt to convert these funds (through the central bank) to another currency for wire transfer outside Colombia raises the issue of taxation of unreported income.

Tapping the ATM to fund your living expenses (up to a certain amount) is both legal and practical but if your presence in Colombia is more substanial than that you will definately need a bank account and more importantly you need to do things by the book in the country you live or it will bite you in the ass. In fact, if you are a foreign person of more substanial means you don't want to live in Colombia for more than 180 days always remaining a simple tourist.

tomtom33 says on Aug 27, 2005, 06:48:

Bank account I do not have one in Colombia. I own an apartment and followed the proper procedures. I have a Rentista VISA. The guy who handles my rentals when I'm gone pays my monthly bills for me. I currently live in Cartagena about 7 months a year.

I see no reason to have a Colombian bank account.

bufalo says on Aug 27, 2005, 07:18:

I have been living of the ATM for over three years. I´d do anything I couldnot to open an account in colombia. I would get charge to deposit, 3X1000, charged towithdraw, etc. I never paid a fee using my atm in colombia spain brazil nor uruguay. I do not however own property, so that could be a different story.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

miamimike says on Aug 27, 2005, 09:31:

Viewpoint, That Drill appears to be a tiring process, Too bad they don't have any Pensionada Programs as are found in Panama, Nicaragua or Honduras.I know Col. has somewhat of a Retiree visa but you don't recieve all the goodies-legal advantages,medication discounts, ability to import new cars, Motos, Boats every few years ect. Its not even close(col) . I remember one day here we talked about all the advantages they had and how(reletive) easy they were to obtain, provided you met the Income Pre-reqs. Colombia needs to make this process somewhat more Transparent should they attempt attracting larger numbers of Foreign Retirees with their hard Capital.I'm tired after just reading your post closely with all its detail.Siesta time jaja

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? ... That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.,

aztec says on Aug 27, 2005, 11:32:

miamimike Viewpoint may be boring and tiring but if you are moving a significant amount of funds into Colombia you would be wise to remain alert and pay attention to him!

viewpoint says on Aug 27, 2005, 15:05:

MiamiMike Well after you mentioned taking a nap I did the same but I feel more rested now. jajajaja

I have to admit that the little I have learned was triggered mostly as a result of AZTEC's original questions, experiences and concerns over the past 1.5 years. In the beginning I thought I had most of the answers but I found through his intensive investigation how little I knew and more importantly how to conduct future transactions so that I would not get into a trap again.

Here is one of his posts from a previous thread that's very informative.

http://poorbuthappy.com/colombia/node/7992#comment-56978

Even though I do everything correctly now I still get questioned by the regulatory people from the central government questioning me (and my representatives) about the transactions and wire transfers.

In the beginning I made a few mistakes as a result of not knowing all of the filing requirements and their impact on future repatriation of funds.

When you receive a letter from the Colombian central government notifing you of a possible US$250,000 fine as a result of a lost or misplaced form 11 not showing on their system or in their files (after being filed) you will have greater appreciation of the rules and regulations that govern foreign investment transactions. They sure as hell got my attention.

ronaldo says on Aug 31, 2005, 15:15:

American Buying House in Colombia I have a house in Colombia that you can buy using US$ in United States, so no need to convert your money and go through all that hassle. 4 Bedroons, 3 1/2 baths, terazza, livingroom, diningroom
and American style kitchen with lots of cupboards and center island.
e-mail me at ron at doug.net. Thanks.

Ronaldo

Shovelbum says on Sep 2, 2005, 06:30:

I did it I bought an apartment in Cartagena last summer without a Colombian cedula or bank account. So it's possible but it is a MASSIVE pain in the ass unless you don't mind over-paying like a lot of gringos do. Just check out the Paul Juan Real Estate site- highway robbery but it caters mostly to gringos who don't know any better...

tomtom33 says on Sep 2, 2005, 06:35:

Shov Which barrio did you buy in? I'm in Laguito.

kat1 (Moderator) says on Sep 2, 2005, 07:34:

W e're near tomt I own one in Bocagrande

engage brain before opening mouth

tomtom33 says on Sep 2, 2005, 08:30:

Be still my heart. Kat, I am usually around Oct. to Dec. 15 and Jan. 15 through May. Drop me a note if you are in town when I am. I'd like to have coffee with you and your esposo(darn). The coffee is on me.

kat1 (Moderator) says on Sep 2, 2005, 09:48:

Thanks tomt. ;-)

engage brain before opening mouth

utopiacowboy says on Sep 2, 2005, 22:01:

Cuidado, Tom. You're making me and Elmo jealous.

Disclaimer: any comment I make is inane and is not to be taken seriously, and is so patently ridiculous that no one should take it seriously, even as an insult.

utopiacowboy says on Sep 2, 2005, 22:01:

Cuidado, Tom. You're making m So jealous my frigging mouse had to ensure that it was posted twice. I'm going to remove that thing's ball if it's not careful.

Disclaimer: any comment I make is inane and is not to be taken seriously, and is so patently ridiculous that no one should take it seriously, even as an insult.

jmbone says on Sep 3, 2005, 10:28:

"a MASSIVE pain in the ass" Shovelbum, I'm sorry to learn that your personal experience of buying property in Cartagena was: "a MASSIVE pain in the ass." By now your rectum should have healed and you are enjoying your new life in Cartagena. Sure hope so!

Ideally, buying real estate should be an interesting, enjoyable and profitable event-a fun time, that you pass on to friends, and long remember? Perhaps you believed that your prior home-country knowledge in real estate would put you at an advantage over the locals? Or maybe you felt that your "massive pain in the ass" would offset the 3% commission charged by Cartagena real estate professionals?

Based on my experience of living and working for the past ten years in Hispanic countries, and as a currently licensed Real Estate Broker (Florida License BK325238) since 1982, AND as a fellow apartment owner in Cartagena, I must congratulate you on the self purchase and negotiation of your apartment. If you did not overpay, you should consider yourself lucky. I would never do what you have done. IMHO, it's just not worth it-life's too short!

Knowing what I know, I had Paul Juan locate and negotiate the purchase of my apartment-a true waterfront (palm trees on the beach) with a garage space, pool, two balconies, one bedroom, two bathrooms, fully furnished for $19,900. U.S. Paul listened when I told him what I was looking for, and he found it! The purchase was made almost three years ago. Recent comparable sales suggest the value of my apartment is now over 50K. Was I the victim of "highway robbery" by Paul Juan? I don't think so.


Shovelbum, when you opened an account as a poster to PBH you were instructed by Peter, the owner of PBH:

"When you start posting, remember the rules:

No personal attacks."

Your post: "Just check out the Paul Juan Real Estate site- highway robbery but it caters mostly to gringos who don't know any better...". Sounds to me like a personal attack on the integrity and honesty of Paul Juan? Do you know the facts regarding Paul and his popular real estate websites? Do you know which countries his client base comes from? I do, and I'm sorry, but the facts bear little semblance to your opinions. Paul does not set the prices. He locates, qualifies, promotes and negotiates real estate sales. He does this in perfect Spanish, or English. To accuse him of "highway robbery" smacks to me, as a personal attack and against the Rules (which you agreed too) as laid down by Peter?

When a person interested in Cartagena real estate visits either of Paul's Home Pages-www.cartagenarealty.com (English) or the Spanish version, they will find a wealth of up-to-date information on more properties than all other Cartagena real estate websites combined! An HTML programmer/designer works an average of 5 hours a day, 5 1/2 days a week, keeping the buying public informed of the current Cartagena real estate buying opportunities. This information includes: prices, floor plans, maps, pages and pages of Buyer's Tips, PLUS hundreds of quality, high detail, photos.

Paul practices Full Disclosure to all parties. He presents the facts, as he knows them, letting Buyers and Sellers, including "gringos who don't know any better..."(your words), make their own decisions. Paul does not use "pressure" in any form. He encourages Buyer's to ask questions, and COMPARE the various properties available. Paul Juan Realty Home Pages are award winning websites-recipients of the Golden Key Award for website design and user friendly presentation.

And now for Full Disclosure: I am a good friend, minor partner, advisor, and mentor(Paul's words)to Paul Juan-a native son of Cartagena. And, yes, even though we are partners, I insisted on paying Paul his full commission for my apartment. In my opinion, the "highway robber" earned every Peso!

Shovelbum, I'm sure we have much in common, beginning with our love of, and our enjoyment in living in Cartagena. Let's get together for a cold one-on me?

Regards, Jim

aztec says on Sep 3, 2005, 12:46:

Cartagena and Paul Juan My wife and I made several trips to Cartagena with the express intent of purchasing property. Paul Juan was very helpful in finding exactly what we wanted. He was and is professional with no pressure at all. He provides you the facts as he sees them. I would not disparage his integrity and honesty at all.

Paul is a bilingual LSU graduate with beautiful wife and children who all reside there in Cartagena. He will treat you fairly.

Ultimately, we elected not to purchase in Cartagena. Our reasons are specific to our likes and dislikes. Other people may think we should have purchased. If we had know the prices would explode upward we might have purchased anyway!

First off, we found the constant harassment by street vendors too much. As indicated earlier, we have made several trips to the area over the past 16 years. That problem has definitely gotten much worse. The vendors now work as far as three streets from the beach! We see no evidence the authorities will ever address this problem and believe it will ultimately affect the quality of life there.

In Addition, we were convinced the infrastructure was becoming overloaded. One gets the feeling the whole peninsular may be slowly sinking into the Caribbean. Since we were last there several major structures are planned or have already been built.

jmbone says on Sep 4, 2005, 08:36:

Aztec, thank you for your comments regarding Cartagena

and Paul Juan. We appreciate your first hand, positive experience with Paul, owner of: www.cartagenarealty.com

We agree with you, and share your concern about the conditions in Cartagena. Your comments are on the mark!

Paul and I are creating a website which will hope will encourage a running dialogue on practical ways to improve both our infrastructure and lifestyle. The concept will be similar to PBH. Not an easy task, as Peter's PBH is a hard act to follow.

Cartagena-such a historic, beautiful and romantic city must endure and grow to her full potential.

Thanks again for your comments.

Regards,
Jim

tomtom33 says on Sep 4, 2005, 17:22:

Jim Be sure that you do not discourage comments about the La Dolce Vita lifestyle in your new site.

You think we need to improve the infrastructure for those thousands of new apartments on the drawing board?