Key takeaways
- Buyer closing costs run about 2 percent of the price (notary 0.27 percent, registry 0.67 percent, beneficencia 1 percent), plus your lawyer's fee.
- This is the real decision, not the tax.
- Closing normally takes 30 to 45 days once the deal is agreed.
- Four situations, in order of how often they come up.
Buy the deed, unless the company itself holds something you cannot get any other way. A share purchase transfers the entity with every liability it has ever acquired, known and unknown. A deed purchase transfers the land and the building, and leaves the seller’s history with the seller. Most private buyers of an estate should take the deed.
The exception matters, though. Some estates sit inside a company because the parcel was assembled over years, because a licence, water concession, hotel registration or operating permit is issued to the entity rather than to the land, or because the shareholders want a single clean transaction instead of a deed plus a long list of assignments. When the value of the asset is partly in what the company holds, you buy the company and you pay for the diligence that comes with it.
What actually changes in the taxes
With a deed purchase, the transfer cost structure is the ordinary one. Buyer closing costs run about 2 percent of the price (notary 0.27 percent, registry 0.67 percent, beneficencia 1 percent), plus your lawyer’s fee. The seller faces capital gains, taxed at 15 percent when the property was held for two years or more.
With a share purchase, there is no deed and no notarial transfer of real estate, so the notary, registry and beneficencia line does not arise in the same way. That saving is the headline argument sellers and brokers reach for first. It is also the smallest number in the transaction.
What replaces it is harder to price. You inherit the company’s tax position: its filings, its carried-forward balances, its payroll history, its withholding obligations, any assessment in progress. The annual property tax, which runs from 0.3 to 1.2 percent of cadastral value depending on the municipality, continues against the property whoever owns the shares, and any arrears travel with the entity. You also inherit the company’s cost basis in the asset rather than resetting it to what you paid for the shares, which affects what the entity owes when it eventually sells. Rates and the current treatment of share transfers are set by the national tax authority and published in the tax statute; have a Colombian tax lawyer confirm the figures in writing against the current text before you choose a structure.
What changes in the liabilities
Everything. This is the real decision, not the tax.
A deed transfers an asset. A share purchase transfers a legal person: its contracts, its employees, its guarantees, its litigation, its environmental exposure, its debts to suppliers and to the state. If a caretaker was employed for fifteen years without proper social security contributions, that is now yours. If the company guaranteed a loan for an affiliate, that is yours. If a previous administration signed a long lease over part of the land, that is yours.
The protection is contractual, not structural. Representations and warranties, an indemnity from the sellers with a survival period long enough to cover tax and labour claim windows, and a holdback or escrow so there is money to claim against. A share purchase agreement without a funded holdback is a promise from someone who has already been paid.
What the due diligence looks like on each side
On a deed purchase, the file is about the property. The certificate of tradition and freedom, requested with the property’s registry number, shows the registered owner and every mortgage, lien and encumbrance. It is read before any money moves, and read again as you approach signature. Land use is set by each municipality’s territorial plan, which decides whether a parcel allows country housing, subdivision or agricultural use only. A clean title does not by itself mean a house can be built. Boundaries, access, water, cadastral status, property tax receipts.
On a share purchase, you do all of that, and then you do a second diligence on the entity: incorporation documents and the certificate of existence and legal representation, the share register and the chain of share transfers, shareholder resolutions authorising the sale, corporate books, three or more years of financial statements, tax returns and proof of payment, employment records and settlements, contracts, powers of attorney, pending or threatened claims, and confirmation that the property is registered in the company’s name without liens. Expect a tax lawyer and a corporate lawyer, not one lawyer doing both.
Closing normally takes 30 to 45 days once the deal is agreed. A share purchase sits at the long end of that or beyond it, because the corporate diligence runs in parallel with the property file and the warranties take negotiation.
When buyers choose the share route anyway
Four situations, in order of how often they come up. The company holds a permit, concession or registration that does not transfer with land. The estate is several parcels plus vehicles, equipment, a brand of operation or staff, and one share transfer is cleaner than ten deeds. The seller will only sell that way and the asset is genuinely unrepeatable. Or the entity has a long operating history you want, for instance a rental operation already licensed and filing.
Note what is not on that list: saving the transfer costs. Two percent of the price is not a reason to take on an unknown labour and tax history. If the only argument for shares is the closing cost, buy the deed.
Foreigners can own property in Colombia outright with a passport, with no residency required, so the share structure is not a workaround for any ownership restriction. And whichever route you take, pesos are the source of truth for every price; a dollar figure is an approximation at the day’s market rate and should say so in the contract. See Colombia luxury real estate and current luxury listings.
Frequently asked questions
Is a share purchase cheaper than a deed purchase?
On transfer costs, yes. Buyer closing costs on a deed run about 2 percent of the price (notary 0.27 percent, registry 0.67 percent, beneficencia 1 percent). A share purchase avoids that line, but adds corporate and tax diligence fees and transfers the company's entire liability history.
Do I still pull the certificate of tradition and freedom if I'm buying shares?
Yes. It is requested with the property's registry number and shows the registered owner, mortgages, liens and encumbrances. You need it to confirm the property is actually in the company's name and unencumbered, then you do a separate diligence on the entity itself.
Does buying shares change my annual property tax?
No. Annual property tax runs from 0.3 to 1.2 percent of cadastral value depending on the municipality and attaches to the property regardless of who owns the shares. Any unpaid arrears remain owed and effectively become yours.
How long does a share purchase take to close?
A deed purchase normally closes 30 to 45 days after the deal is agreed. A share purchase typically runs at the long end of that or beyond, because corporate, tax and labour diligence runs alongside the property file and the warranties need negotiating.
Do foreigners need a company to buy property in Colombia?
No. Foreigners can own property in Colombia outright with a passport, and no residency is required to buy. A company structure is a choice about liability, succession and operations, never a requirement for foreign ownership.
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