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Property prices in Colombia

Hello everyone,

Finding affordable housing in Colombia is number one priority for newcomers. Tell us more about the estate market in your district/city/region.

What are the most desired places to live? What are the most affordable ones? What is the average cost of a rented flat? And what is the average sale price for an appartment or a house? Could you tell us more about local real estate policies/procedures? What about property tax or residency tax in Colombia?

What about you? Where do you live now? Is it a place you would recommend?

Thank you in advance for your clarifications.

Priscilla

Renting is always the better route during a newcomer’s first year in South America.

There’s a wrinkle in the rental rules in many Colombian cities, relating to a so-called fiador.

This is a local Colombian who would be on the hook for a renter’s obligation if the renter finds him/herself unable to meet the rent payments.

In Medellín, for instance, a rental agency may require an Expat renter to find or provide a fiador for any long-term rental.  Otherwise, the agency would be on the hook for the dough.

A way around this requirement can be to pay three or six months of the rental in advance.

Another method is to avoid dealing with an agency and rent directly from the property owner. 

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Rents in Medellín are literally all over the map -- depending on sector, size, amenities, neighborhood safety and your negotiating skills.  That’s just a partial list of the variables.

It has been widely reported that the Western-style living available in many of Medellín’s Poblado-sector neighborhoods -- with upscale supermarkets, ethnic restaurants, enhanced security and superior health care -- attracts the most Expats and also produces the highest average rents.  Poblado's Golden Mile or Milla de Oro strip is the Beverly Hills of the city .. pricey for Medellín, but a bargain compared to the California original.

Property prices and rents in Medellín’s popular areas are significantly higher than another Expat-friendly area .. the Zona Cafetera or Coffee Zone, whose principal cities are Armenia, Pereira and Manizales.

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Priscilla :

What about property tax or residency tax in Colombia?

Well, there’s a subject we could discuss all day.

To simplify:  property taxes in most of South America are much less expensive than in North American cities.

As for residency tax, let’s make these points...

1.  Cities such as Medellín use a Strata System -- 1 through 6, six being the fanciest areas -- to assess utility costs and property taxes.  Part of your due diligence is to know what stratum you would be buying into and how that would affect you.

2.  Expats who live or stay in Colombia for more than 183 days in any 12-month period are considered tax residents of Colombia.

This means they are required to file a tax return with the government regardless of whether there is tax due .. and regardless of the type of visa you may have.

A few of the features of Colombia’s fancy tax system as it affects ’tax residents'....

  -- You are liable to pay taxes on your worldwide income on a sliding scale of up to 33 percent.

  -- If, let’s say, you paid the IRS in North America $10,000 in taxes in a given year, you can typically deduct that amount from your Colombia obligation.

  -- There are few exclusions from the tax man’s reach.  One is inheritance income, which is non-taxable in Colombia.

  -- There’s now a ‘wealth tax’ according to which tax residents with about $400,000 or more in worldwide assets may pay a small percentage of the value of their assets in taxes each year.

  -- El presidente has been trying to change the tax laws -- and not to make them friendlier to Expats -- although the current and important peace process may have taken his eye off the proverbial tax ‘ball.’

Yesterday (Thanksgiving Day 2016), el presidente and FARC signed the peace deal .. which will go directly to Congreso for approval, without a repeat of the national public referendum that scuttled the deal in October.  Despite the public’s rejection of the accord, el presidente -- Juan Manuel Santos -- was the surprise winner of the 2016 Nobel Peace Prize just weeks after the Colombia vote, for his work toward obtaining a peace treaty with the FARC rebels after decades of conflict.

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