Valorización vs. Plusvalía in Colombia

Two charges surprise foreign buyers more than most: valorización and participación en plusvalía. Both can attach to a property, neither is the same as predial, and neither is the tax on your own gain when you sell. This guide explains what each one is, citing the official texts, and how to look for them before you buy.

What is valorización, and why does it matter when you buy?

Valorización is a contribution charged on real property benefited by a public work, and it is a real lien on the property. The statute is Decreto 1604 de 1966, which renamed the old impuesto de valorización as the contribución de valorización (art. 1) and says the national, departmental or municipal entity that executes the work establishes, distributes and collects it (art. 2). Article 12 makes it a lien on the property and has it communicated to the registrar for inscription (Decreto 1604 de 1966).

Article 13 tells registrars not to register a deed on an affected property until the entity asks for the lien to be cancelled because it is fully paid, or authorizes registration because the installments due are paid. It also requires the lien to appear on the certificate of title. That prohibition is addressed to registrars, and the 1966 text speaks of a special registry book; we did not confirm how each registry office carries the charge today, so read the certificate itself.

For national valorización, unpaid balances bear financing interest and default bears the DIAN late-payment rate; departments, districts and municipalities may use that same default rate (Decreto 1604 de 1966, art. 11). For the national regime, Decreto 1394 de 1970 allows installments of not less than two and not more than five years (arts. 54 and 55). We did not confirm any current city schedule. In Bogotá, the Instituto de Desarrollo Urbano (IDU) offers an online "Certificado de Estado de Cuenta para Trámite Notarial (paz y salvo)" (Bogotá).

What is participación en plusvalía?

Participación en plusvalía is the public share of the land-value increase caused by an urban planning decision, not by a public work or a private sale. Ley 388 de 1997, arts. 73 to 90, says urban actions that regulate land use and raise its development potential entitle public entities to share the resulting plusvalía (art. 73, Función Pública).

Article 74 lists the hechos generadores: incorporating rural land into urban expansion land, or treating part of it as suburban; setting or changing the regime or zoning of land uses; and authorizing greater building use by raising the occupancy index, the construction index, or both. The participation rate may range between 30% and 50% of the increased value per square meter (art. 79).

The rate may sit anywhere within that range. In Bogotá, Decreto Distrital 790 de 2017, art. 9, reproduces Acuerdo 118 de 2003, art. 6: 50% from 1 January 2006 onward (Alcaldía de Bogotá). The Secretaría Distrital de Planeación issues an oficio on whether the charge is in force or payable for a given lot (Bogotá).

When does plusvalía have to be paid?

Article 83 was rewritten by Decreto Ley 019 de 2012, art. 181. Under it, the charge is demandable from the owner or possessor only after a plusvalía effect has been liquidated and inscribed on the folio de matrícula, and then only when one of several events occurs: a request for an urbanization or building license, an effective change of use, an act transferring ownership (for generators 1 and 3 of art. 74), or acquisition of titles representing additional building rights. The Corte Constitucional declared that article partially constitutional in Sentencia C-249 de 2019.

Article 81 adds that once the liquidation is final, inscription on each folio is ordered, and registering a transfer requires a certificate from the administration stating that the plusvalía has been paid. How articles 81 and 83 apply to a specific property is a question for your Colombian lawyer.

How are they different from predial and from tax on your own gain?

Predial is a separate charge; see paying predial as a foreign owner. Valorización follows a public work, and plusvalía follows a planning decision.

Tax on your own gain is a third thing. A gain on selling a fixed asset held for two years or more is ganancia ocasional under the income tax, while a gain on an asset held less than two years is ordinary income (Estatuto Tributario, art. 300). That is not the municipal plusvalía. See selling Colombian property and repatriating the money.

How can you check before you buy?

Start with the certificado de tradición y libertad, where a valorización lien must appear and where an inscribed plusvalía liquidation would be recorded. Then ask for the paz y salvo de valorización from the entity that issued the charge, such as the IDU certificate in Bogotá. For plusvalía, ask the municipality whether the charge is in force or payable for that lot; in Bogotá that is the Planeación oficio described above.

The free one-page due-diligence checklist is a starting point for the documents. The Colombia Owner Kit has a buy checklist that lists the paz y salvo de predial and valorización, a red-flags guide that annotates a fictitious certificado line on valorización, and a sell-and-exit roadmap that includes settling any valorización before a sale.

Who pays, and what can the promesa say?

The sources we reviewed do not say how these charges are divided between buyer and seller in a private sale, so that is a matter for the contract. Because registration can depend on a valorización lien being paid or authorized, it is worth settling the point before closing. The promesa de compraventa is where parties allocate such items, as the closing costs guide shows for other charges. Ask your lawyer to write down who settles any valorización or plusvalía and how a balance is handled at closing.

Questions to take to your advisers

• Your Colombian lawyer: Does the certificado show any valorización lien or plusvalía inscription, and is there a paz y salvo from the issuing entity?
• Your Colombian lawyer: How should the promesa allocate any unpaid valorización or plusvalía, and what happens at closing if a balance remains?
• The municipality or the issuing entity: Is any valorización or plusvalía in force or payable for this property?
• Your Colombian contador: How would ganancia ocasional apply when I sell, and does the two-year rule affect me?
• Your home-country tax adviser: Could these charges matter for my reporting on a future sale?

This guide is educational, not legal or tax advice. Rules and city procedures change; confirm them for your property with your lawyer and the local entity.

Frequently asked questions

What is valorización in Colombia?

It is a contribution charged on real property benefited by a public work, set and collected by the national, departmental or municipal entity that executes the work. It is a real lien on the property under Decreto 1604 de 1966.

Is plusvalía the same as the tax on my gain when I sell?

No. Participación en plusvalía is a municipal share of land-value increases caused by planning decisions. The gain on selling a fixed asset held two years or more is ganancia ocasional under the income tax.

How do I check for these charges before buying?

Read the certificado de tradición y libertad, ask for a paz y salvo de valorización from the issuing entity, and ask the municipality whether any plusvalía charge is in force or payable for the lot. Your Colombian lawyer can confirm how this applies to your property.

Who pays valorización or plusvalía in a purchase?

The sources we reviewed do not say how the charges are divided between buyer and seller in a private sale. Ask your lawyer to state in the promesa who settles any balance.

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.