The national government, through the Minister of Finance, Ricardo Bonilla, and in collaboration with the Ministry of Agriculture, presented in the Congress of the Republic an initiative to reform the regulations that govern the property tax in Colombia. This project seeks to impose limitations on the increase in the Unified Property Tax (IPU) and encourage periodic cadastral updates.
The proposal includes a series of incentives for the timely payment of property tax, highlighting a significant reduction in the allowed increase in the IPU for both urban and rural properties.
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With the new cadastral calculation methodology Properties with a maximum value of up to 135 current legal monthly minimum wages (smmlv), equivalent to $175,500,000, will be affected. In addition, it is established that the increases will be limited to specific percentages depending on the appraisal range, varying from a maximum of 50% to a maximum of 200% for the highest value properties.
Therefore, the measure designed to organize and regulate the growth in property appraisals in the national territory applies different scales of increase according to the cadastral value of each real estate.
Thus, the increases will have these adjustments:
- Residences valued at 135 smmlv or less may see a maximum increase in their cadastral value of 50%.
- Properties with an appraisal between 135 and 250 smmlv will have an increase limit of 75%.
- Properties whose valuation is between 250 and 350 smmlv may be increased by up to 100%.
- For properties with a cadastral value between 350 and 500 smmlv, a growth cap of 150% was set.
- Properties listed with a valuation greater than 500 smmlv will face a maximum allowable increase of 200%.
The responsibility for cadastral management will fall, to a greater extent, on the municipalities. This has as its main objective increase efficiency and transparency in the property valuation process. The proposal highlights the importance of the cadastre, which is why it specifically mentions its role in the formalization of properties of an informal legal nature.
Among the proposed incentives is the power of municipal and district councils to set differentiated rates for properties with updated cadastral valuation. Reduced rates are planned for urban properties of social strata 1, 2 and 3rural properties worth less than 135 minimum wages, and areas designated for environmental protection, high-risk areas or areas dedicated to food production.
The bill also contemplates specific limits on the increase in the tax for properties subject to the methodology of reducing the lag in the cadastral valuation, so establishes a limit of 50% increase compared to the previous year for these cases.
This potential reform to the property tax system adds to the Government’s efforts to improve tax inspection and administration in the country. The measures seek to balance the tax burden, promote equity and ensure that the updating of cadastral values is carried out in a fair and transparent manner.
It should be noted that, in November 2023, when the project was presented, several discussions and criticisms were generated.
For example, the former Minister of Agriculture and former president of the National Federation of Poultry Farmers of Colombia (Fenavi) Andrés Valencia referred to the discussion and assured that “in this way the Government puts the accelerator to the agrarian reform, increasing taxes on rural owners (small and large), who would have no choice but to sell their properties to the National Land Agency.”
Valencia, in x (before Twitter) assured that The bill eliminates the limits that small rural landowners have established in Law 44 of 1990 (rules on cadastre and real property taxes), which raises a minimum rate established by the municipal councils. According to him, with the Government’s bill the increase could be up to 50% of the IPU of the previous year.
