Transcript Document
Chapter 5: In This Chapter • • • • 1 Introduction Foreign ownership Financing Commercial real estate • Residential real estate • Rental property • Licensing and brokerage • • • • Government Legal system Taxes and fees Economy and business • What you need to know • Beyond the basics • Key contacts Map of Colombia 2 Source: CIA World Factbook Introduction to Colombia • Democratic republic divided into 32 departments and capital of Bogotá • Rising economic star • New stability and security • Advancement in drug war 3 Colombia—The Rich Tapestry Source: Wikipedia 4 Colombia—The Rich Tapestry 5 Source: Wikipedia Colombia—The Rich Tapestry 6 Source: Wikipedia Colombia—The Rich Tapestry 7 Source: U.S. Geological Survey; N. Banks Foreign Ownership of Real Estate • Freely allowed • Some restrictions on public-domain beachfront property – Leasehold rights possible • Sales proceeds can return to country of origin 8 Financing • Mortgage market growing due to policies and low bank rates – Securitization market • Difficult to obtain by foreigners 9 Commercial Real Estate • Growth attributed to economy – Retail – Industrial • Tourism – Some hotel development 10 Residential Real Estate • Home prices stabilizing after rising at a heated pace – Increasing demand – Well-regulated mortgage market – Loans to developers, although land is in short supply • Second-home market growing 11 Rental Property • • • • • 12 Neutral to pro-landlord Lease agreements Rents Deposits Evictions Licensing and Brokerage • • • • • • 13 No licensing Listings Transaction process Language of contracts Appraisals Transferring money with Form #4 Realtor.com/international 14 What You Should Know About Government • Republic with executive, legislative, and judicial branches • Pro-market policies to expand foreign investment and trade • Engagement with FARC 15 Legal System • Civil law system • Courts at different levels and with different duties • Lengthy proceedings due to process inefficiencies and number of courts actions • Corruption an issue 16 Real Estate Taxes and Fees Real Estate Taxes and Fees Tax or Fee Paid by Registration Fee 1.5% Buyer Stamp Tax 1.5% Buyer Municipal Taxes 1% Buyer Notary Fees Agent Fees 0.3% 0.15% 0.15% 3-5% Buyer Buyer Seller Seller Property Tax (annual payable to state) 0.1-1.6% of value Owner (Buyer) Real Estate Transfer Charge Source: Global Property Guide 17 Amount Business and Income Taxes • Individual income tax – Residents: 0-33% on worldwide income – Nonresidents: 33% on Colombia-sourced income • Business income tax – Resident and nonresident companies with permanent establishments: 25% – Nonresident corporations with no branch or permanent establishment: 33% • Withholding tax – – – – Dividends: 25% unless certain conditions apply Royalties paid to nonresidents: 33% Interest: 33% if loan term does not exceed 12 months; 14% otherwise Management fees: 10% • Capital gains – Generally 10% • Value-added tax – 0-16% 18 • Other taxes Economy and Business • Strong economic trends – Pro-market policies dating to the 1990s – Challenges include reliance on oil exports and inadequate infrastructure • Major industries and exports • Colombian coffee 19 Economic Drivers • Global investment – – – – – 20 Oil and mining Manufacturing Banking Transport Communication • Medical tourism • Free trade agreements • Free trade zones Sources: Guardian Media, Wikipedia, Proexport Colombia What You Need to Know • • • • • • Substantial economic growth Few restrictions on foreign ownership Office, retail, and industrial sectors Home prices still rising but stabilizing No real estate agent licensing Pro-market government policies, sophisticated legal system • Economic drivers 21 Beyond the Basics • • • • • 22 Appearance Greetings Business cards Meetings Communication • • • • • Negotiations Hierarchy Dining Family Gift giving Key Contacts • US-Colombia International Chamber of Commerce • Proexport Colombia • U.S. Embassy • Embassy of Colombia • FEDELONJAS • Marco Island Area Association of REALTORS® (Ambassador Association) 23