LUXURY REAL ESTATE SALES IN COLOMBIA UNDER THE 2025 STAMP TAX
The reintroduction of the Stamp Tax in Colombia will be a key factor in the luxury real estate market in 2025. This article analyzes its main implications and explores strategies to minimize its impact on high-end property negotiations in the country.
Although this tax was introduced by Law 2277 of 2022, its enforcement begins in February 2025, driven by the government's goal of addressing the Catatumbo emergency under the framework of a state of emergency decree.
This decree established the tax as temporary, at least for now—unless a legal challenge is filed to declare it unconstitutional.
Regarding real estate transactions and deed registration, the Stamp Tax applies to properties valued above 20,000 UVT, which is approximately COP $995,980,000 in 2025. In other words, it directly affects the luxury real estate segment, where market prices typically start around one billion pesos in Colombia.
It's important to clarify that the Unidad de Valor Tributario (UVT) is a key reference in Colombia’s tax system, as the DIAN updates its value annually based on inflation and other economic indicators. (For 2025, the UVT is set at COP $49,799, reflecting an increase from the previous year.)
1. Stamp Tax Rates for Luxury Property Sales
Below are the Stamp Tax rates for 2025, which vary based on the property's value in UVT (Taxable Value Unit).
UVT Range | Value in COP | Marginal Rate | Tax Calculation |
0 - 20,000 | Up to COP $995,980,000 | 0% | Not applicable |
20,000 - 50,000 | COP $995,980,000 - COP $2,489,950,000 | 1.5% | (Property value in UVT - 20,000) × 1.5% |
More than 50,000 | Over COP $2,489,950,000 | 3% | (Property value in UVT - 50,000) × 3% + 450 UVT |
2. ¿Who Is Responsible for Paying the Stamp Tax on Luxury Properties?
The Stamp Tax on luxury real estate sales must be paid by either the buyer, the seller, or both parties, as the law does not specify a mandatory distribution of the cost.
However, according to regulations, the notary acts as the withholding agent, collecting the tax at the time of the public deed registration.
Since this tax can be negotiated between buyer and seller, here are some key strategies to consider when discussing the property price:
Negotiation Options:
a. Shared Payment: Both parties agree to split the tax evenly, reducing the financial burden on each side.
b. Seller Covers the Tax in Exchange for a Smaller Discount: In resale transactions, it is common for sellers to offer discounts of around 3% off the listed price. Instead of this discount, the seller could cover the 1.5% tax for properties priced between 20,000 and 50,000 UVT (COP $995,980,000 – $2,489,950,000) or the full 3% tax for properties exceeding 50,000 UVT (COP $2,489,950,000).
Example 1: A property valued at 20,000 UVT (COP $995,980,000) would incur a 1.5% tax (COP $14,939,700). If the seller originally planned to offer a 3% discount (COP $29,879,400), they could instead reduce it to 1.5% (COP $14,939,700) and cover the tax.
Example 2: For properties exceeding 50,000 UVT, the seller could eliminate the discount entirely or reduce it to a maximum of 3%, since they would be absorbing the tax.
c. Buyer Covers the Tax in Exchange for a Larger Discount: The buyer pays the full Stamp Tax, but in return, the seller offers a higher discount, potentially ranging from 4.5% to 6%, depending on the applicable tax rate.
Example: For a 20,000 UVT property (COP $995,980,000) with a 1.5% tax, the cost would be COP $14,939,700. If the buyer assumes this tax, the seller could offer a discount of 4.5% to 6% off the sale price.
3. Impact of the Stamp Tax on Luxury Real Estate Sales
The introduction of this tax could significantly affect the luxury real estate market in Colombia, impacting both buyers and sellers in several ways:
Increased transaction costs, especially for new properties, where buyers must also cover notary and registration fees. This may lead to a greater need for tax advisors to help minimize financial losses.
Potential decline in demand for high-value properties due to additional costs. Some sellers may choose to postpone sales until the state of emergency decree expires or until legal actions challenge the constitutionality of the tax.
Greater emphasis on negotiation: Buyers and sellers in the luxury market will need strategies such as tax-sharing agreements, price adjustments, or modified discounts to facilitate sales and optimize transactions.
Conclusion
The 2025 Stamp Tax introduces a new financial burden on luxury property sales in Colombia. To mitigate its impact, both buyers and sellers must explore effective strategies to fairly distribute this tax and close successful deals.
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