How to Legalize an Investment in Colombian Real Estate
It’s important to legalize your investment. If it is not registered correctly, the fine can be up to 100% of the investment. This extreme reprimand comes from the laws against money laundering. The Colombian government takes foreign investments very seriously. However, these foreign investments are happening constantly, and there’s absolutely no problem when they’re done correctly. This is why it’s important to choose a law firm with experience so you can avoid the problems.
While many people do choose to invest and legalization that investment in Colombian real estate, it’s not always necessary to invest in property–there are other ways to transfer your life savings to this country and legalize an investment. But real estate remains a popular form of investment, and many people do very well with it. Perhaps you’d like to take advantage of the high ROI on rental properties, or you love the quality of life here in Colombia and want a home to call your own. Whether you’d like a house, apartment, or a finca, there is a lot to choose from. Read on to learn about Colombian real estate investment legalization.
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Important Steps to Legalizing Your Colombian Real Estate Investment
These are critical steps in the process of legalizing your Colombian real estate investment:
Create a financial investment account in Colombia. (We prefer accounts with investment banks because you will get better customer service.)
Send the closing agreement to the Public Instruments Office (Oficina de Instrumentos Publicos).
Certify the promesa de compra venta at the Notary. Make the initial down payment to the names listed on the purchase contract.
Register your foreign investment with the federal government.
Close the sale at the Notary and make your final payments.
After a price has been agreed upon and a contract signed, you’ll be handing over the money so you can get your keys. You’ll likely be completing a wire transfer to get the money to the seller’s account.
Take Care with Wire Transfers
Unlike in many other countries, in Colombia all wired funds must be carefully classified and coded for their intended use. Banks in Colombia want transparency, and transfers are audited by the Colombian regulatory agencies. Criminal intent may be suspected on money that is used for purchases other than what were stated on the transfer documents, and in such cases the government will keep the transferred money.
Origin of the Wire Transfer is Very Important
The money coming into Colombia should be from an account in your name if you are the one making the investment. In other words, the name on the Colombian investment needs to match the name on the financial account of origin.
Your money is not considered your investment if it comes from a third party. In the case of a married couple, proper documentation will show that the wife´s
Avoid Paying Third Parties in Colombia
When purchasing property in Colombia, you must take care to avoid paying any third parties that are not listed in the purchase agreement after the money enters Colombia. Failing to follow this guideline could be considered money laundering–hopefully not what you had in mind, and certainly something that will ruin your chances of living happily ever after here in Colombia.
For example, if the seller asks you to deposit part of the money in her account, another portion in her husband’s account, and still another amount in her mother’s account, all of these recipients should be listed on your purchase agreement. If they are not, it is important that you send the money only to the seller herself if she is the only one named on the document.
investment is also the husband’s investment. However, sometimes it happens that someone wants to buy a house in their name using money from an overseas account in a company name. If you do this, the investment in the real estate in Colombia will not qualify you for a Colombia investor’s visa.
TIP: Never ask friends to send money from their account as a favor. This happens with clients whose banks require them to make large transfers in person. If the client is already in Colombia and can’t do it, they think it’s okay to ask a friend to send the money, but this will cause problems as described above.
It’s important to open your Colombian investment account before you leave your country of origin.
Origin of the Wire Transfer is Very Important
We highly recommend working with a seasoned real estate company, like Paradise Realtor, to navigate the obstacle course that is buying property abroad. From negotiating a price and learning the tax ropes to drafting a purchase contract and closing, you’ll want a professional with you the whole way.
Realtors who have experience working with ex-pats can help explain the foreign investment process to local sellers. Often, the seller wants the money right away and doesn’t understand the time and potential complications involved with a foreign investment. The realtor can help ease the seller’s mind and encourage patience while the investment legalization process is completed.
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We also suggest getting a property inspection, survey, and insurance, and making sure you understand the residential and commercial zoning laws.
There is a lot to think about when legalizing an investment in Colombia real estate, but we’re sure you’ll find, as so many have before you, that it is worthwhile. Colombia Legal & Accounting can assist you throughout the process of investing.