Buying Property in Colombia as a US Citizen

Buying an apartment or house in Colombia as a US citizen follows the same Colombian process as for any other foreigner. What changes is the home-country side: US tax reporting follows you wherever you own property. This guide separates the two and points to the guides that go deeper.

Which Colombian rules stay the same for a US passport holder?

The steps to buy and register do not depend on your passport. The paperwork is an escritura signed before a notary and registered with the Oficina de Registro de Instrumentos Públicos, which is part of the Superintendencia de Notariado y Registro. The sequence of steps is in our step-by-step guide to buying as a foreigner.

The money side is the same too. Banco de la República lists foreign investment in Colombia, and its yields, among the operations that must be channeled through the exchange market, and its own example is a US resident buying an apartment in Cartagena (Banrep, basic concepts). That page does not name a form number, so ask your bank which exchange declaration applies. Then read how to register your foreign investment. A Colombian contador can confirm how Colombia taxes that rent.

What does US tax law require for a Colombian property?

The IRS says US citizens and resident aliens are subject to tax on worldwide income from all sources (IRS). Under that rule, Colombian rent is income to report. The Schedule E (Form 1040) instructions say what to enter when a rental property is in a foreign country (Schedule E instructions). For foreign taxes on income, the IRS says the foreign tax credit is figured on Form 1116 (IRS foreign tax credit).

Two information returns are separate questions:

• FBAR (FinCEN Form 114). It is required when the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year (FinCEN). It concerns accounts. The IRS comparison table marks foreign real estate held directly as "No" for this form (IRS comparison).
• Form 8938. Directly held foreign real estate is not a specified foreign financial asset, but if the real estate is held through a foreign entity, your interest in that entity is (IRS Form 8938 FAQ).

Among others, the IRS lists these Form 8938 thresholds (IRS filing page):

• Unmarried, living in the US: more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year.
• Married filing jointly, living in the US: more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.
• Living abroad, not a joint return: more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year.
• Living abroad, joint return: more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Our US tax reporting guide goes through these forms in detail.

Is there an income-tax treaty between the US and Colombia?

DIAN's page of international tax agreements does not list an income-tax treaty with the United States. It places the United States under tax-information exchange (Ley 1666 de 2013) and an FATCA agreement (DIAN). Relief from double taxation on Colombian rent therefore depends on US rules, such as the foreign tax credit above, and not on a treaty. Confirm with a US tax preparer how it applies to you.

Can you sign from the United States?

Colombia and the United States are both contracting parties to the Apostille Convention. It took effect for Colombia on 30 January 2001 and for the United States on 15 October 1981 (HCCH status table). The U.S. Department of State, Office of Authentications, issues apostille certificates (Office of Authentications). If you plan to use a power of attorney, see buying from abroad with a power of attorney.

How do you send the money from the US?

On the Colombian side, the funds come in through the exchange market, and ask your bank whether the name on the wire should match the name on the exchange declaration and the escritura. Your bank may ask for source-of-funds documents, so ask it what it needs before you send anything.

On the US side, the official pages we reviewed do not set a wire-reporting threshold for an individual. The $10,000 figure FinCEN publishes for the CMIR applies to physically transporting currency or monetary instruments out of the United States, not to wires (FinCEN CMIR guidance). Our guide to sending money from the US covers the wire itself.

What do tax authorities exchange about your accounts?

DIAN's CRS section says every jurisdiction is reportable under CRS except the United States (DIAN). The OECD notes that the United States exchanges information under FATCA and intergovernmental agreements, from 2015 (OECD). The two governments signed a FATCA agreement on 20 May 2015 (IRS arrangement). The date it took effect is not confirmed in the sources we reviewed, so ask your bank how it treats your accounts.

Do you need a visa, and which visa fits an owner?

Cancillería puts the United States on Lista A. Its passport holders may enter without a visa for short stays, including tourism and business, as long as the activity generates no pay in Colombia (Cancillería). The page we reviewed does not state the number of days, so confirm it before you travel.

The M Inversionista visa through real estate requires title solely in the foreigner's name for a minimum of 350 SMLMV (salarios mínimos mensuales legales vigentes) at the application date, plus Banco de la República extracts registering the investment (Cancillería). See visas for property buyers.

Questions to take to your advisers

The Colombia Owner Kit includes a United States sheet (FBAR, Form 8938, Schedule E, entity forms and the foreign tax credit), plus the Colombian calendar, checklists, letters in Spanish, a BanRep records pack and question lists for your advisers. You can also start with the free one-page due-diligence checklist.

• Colombian lawyer or contador: Which exchange declaration applies to my transfer? Should the escritura show the same name as the wire?
• US tax adviser: How do I report Colombian rent and claim the foreign tax credit? Do the FBAR or Form 8938 apply to me, and does it change if I hold through an entity?
• Your bank: What source-of-funds documents do you need, and how do you treat my accounts under FATCA?

This guide is educational, not legal or tax advice.

Frequently asked questions

Is there a tax treaty between the US and Colombia?

DIAN's list of international tax agreements does not show an income-tax treaty with the United States. It lists the United States under tax-information exchange and a FATCA agreement.

Do I need to file an FBAR for a Colombian property?

FinCEN requires an FBAR when the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year. The IRS comparison table marks foreign real estate held directly as not reportable on that form, so the question is about accounts, not the property itself.

Does Form 8938 cover foreign real estate?

The IRS says directly held foreign real estate is not a specified foreign financial asset. An interest in a foreign entity that holds the real estate can be.

Can a US citizen visit Colombia without a visa?

Cancillería lists the United States on Lista A, which exempts passport holders from a visa for short stays that do not generate pay in Colombia. Confirm the number of days with Cancillería before you travel.

Not sure where you stand? Take the quiz. The Colombia Owner Kit (US$79, pre-order) turns this guide into a checklist, a calendar entry and a question list: see what’s included. Or start with the free sample: K19, the one-page due-diligence checklist.