Colombia Forum

fecherklyn
Joined 2015
Posts: 1377

4 years ago

That is good news

4 years ago

Let me first of all correct the title of this OP by personalizing it:

“This is good news FOR ME, not necessarily for YOU”

For full details buy today’s El Colombiano where the subject makes front page – “Actualizacion catastral” = Revision to taxable values.

In essence, the tax values applicable for “Impuesto predial” and “Capital gains on property sales” is going up, WAY UP (Provision: The new Mayor of Medellin is against this legislation and says he intends to reject it).

How much will the valor catastral increase? By up to 11.6% based upon application of no greater than IPV plus 8 % (thus 3.6% + 8%). This increase will apply to estratos 3,4,5 &6.

Thus, if it is applied as projected from January 2020, expect your predial payments to rocket up.

Why is this good news for me?

Because I am selling my house in January and, with luck, this new valor catastral will apply to the tax I must pay on the capital gain I make from my house sale.

In my case, which will be like for most property owners in Colombia, the market price I paid when buying my house (in 2012) was well above its valor catastral at that moment. In fact the valor catastral was only 65% of the price I paid. Accordingly, one of the major factors influencing the property market in Colombia gas been the “ exaggerated” capital gain made on property sales which assess the capital gain as the difference between the REAL market value at sale and the valor catastral at the same moment. In reality, the government has been imposing a tax on a capital gain that does not exist.

Conclusion, if this new legislation does come into effect in January, my capital gain for tax purposes will have reduced by 11.6%

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