chapter 5: in this chapter introduction foreign ownership financing commercial real estate...
TRANSCRIPT
Chapter 5: In This Chapter
• 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
1
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
4
Source: Wikipedia
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
• Neutral to pro-landlord• Lease agreements• Rents• Deposits• Evictions
12
Licensing and Brokerage
• No licensing• Listings• Transaction process• Language of contracts• Appraisals• Transferring money with Form #4
13
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
17
Real Estate Taxes and FeesTax or Fee Amount Paid by
Registration Fee 1.5% Buyer
Stamp Tax 1.5% Buyer
Municipal Taxes 1% Buyer
Notary Fees 0.3% Buyer
Real Estate Transfer Charge 0.15%0.15%
BuyerSeller
Agent Fees 3-5% Seller
Property Tax (annual payable to state) 0.1-1.6% of value Owner (Buyer)
Source: Global Property Guide
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%
• Other taxes18
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– Oil and mining– Manufacturing– Banking– Transport– Communication
• Medical tourism• Free trade agreements• Free trade zones
20Sources: 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
• Appearance• Greetings• Business cards• Meetings• Communication
• Negotiations• Hierarchy• Dining• Family• Gift giving
22
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