The profit from selling a property held for two years or more is taxed as an occasional gain at a rate of 15% for resident individuals. What changes the tax is the tax cost basis (the purchase cost, adjusted, with improvements or with the appraisal the law allows), the exemptions (such as the first 5,000 UVT of profit on the sale of a home with an AFC account) and whether the price on the deed holds up before DIAN. Ligal calculates each scenario before you sign the deed. No outcome is guaranteed.
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Occasional gains are those arising from the sale of assets that formed part of the taxpayer's fixed assets for two years or more, and their amount is the difference between the sale price and the tax cost basis of the asset (Tax Code, art. 300). If the property was held for less than two years, the profit is net ordinary income and not an occasional gain. For resident individuals and estates of resident decedents, the single rate on occasional gains is 15% (art. 314, as amended by Law 2277 of 2022). The tax cost basis of a property can be established in several ways: the acquisition cost adjusted by the percentage increase in real-estate value published by the Government, plus improvements and valorization contributions paid (art. 73), or the cadastral appraisal or self-assessed value of the property tax for the year before the sale (art. 72); in both cases the depreciation that was deducted is subtracted.
Two rules protect or threaten the outcome. The first is the exemption of article 311-1: the first 5,000 UVT of the profit on the sale of an individual's home (house or apartment) are exempt, provided that all the money received is deposited in an AFC account and used to buy another house or apartment or to pay in whole or in part mortgage loans tied to the home sold; if the money is withdrawn for another purpose, the benefit is lost. The second is the price: for real estate the law does not accept a price below cost, the cadastral appraisal or the self-assessed value, and requires the parties to declare under oath in the deed that the price is real (art. 90). This page explains how the tax is calculated, how the cost is proven and what to do so that the sale does not become a problem with DIAN.
Keys to selling real estate
Ligal calculates the occasional gain in each scenario, gathers the support for the cost, decides with you how to structure the sale and represents you before DIAN if the price or the cost is challenged, without promising outcomes.
01
We review when and how you acquired the property (purchase, inheritance, gift), how much you paid, how you paid, what improvements you made, whether it was your home and what cadastral appraisal or self-assessed value appears on the property tax. That determines whether there is ordinary income or an occasional gain and what the tax cost basis is.
02
Jeysson Pulido and LIGAL Auditores calculate the occasional gain with each form of cost (adjusted purchase with improvements, or cadastral appraisal or self-assessed value), with and without the exemption of the first 5,000 UVT and with the 1% withholding at the notary, to compare the effect of each decision.
03
We gather the purchase deed, bank vouchers, improvement invoices, valorization receipts and the property-tax certificate. The law does not accept as cost of real estate the sums not disbursed through financial institutions (art. 90); documenting in time avoids losing cost.
04
If the property is your home, we assess the exemption of article 311-1: the AFC account, the use of the funds (another home or a mortgage loan) and what it means to withdraw the money. We also review the wording of the deed so that the price and the sworn declarations are consistent.
05
If DIAN challenges the price, the cost or the exemption, or compares your net worth against the income declared, we prepare the reply with the evidence of cost and price, and represent the taxpayer in the request, the statement of charges and the appeals.
The sale of a property is decided between the exact calculation of the tax and the legal reading of the deed and the supporting documents. At Ligal the same team handles it.
Director · Tax lawyer, ex-DIAN
Leads the legal strategy and representation before DIAN: decides how to structure the sale, which exemption applies and how to respond if DIAN challenges the price or the cost.
Accountant · Quantification and traceability
Calculates the occasional gain in each scenario, rebuilds the tax cost basis with the supporting documents and models the effect of the exemption and the withholding.
Certified public accountants
Prepare the accounting support and technical analyses behind the income tax return and the replies to DIAN.
For real estate the law does not accept a price below cost, the cadastral appraisal or the self-assessed value, the value of the property includes all sums paid even if agreed outside the deed, and the parties declare under oath that the price is real. Without those declarations, income tax, occasional gain tax and registration and notary fees are assessed on four times the value stated in the deed, without prejudice to DIAN's powers to determine the real value (Tax Code, art. 90).
The cost is proven with the purchase deed, banked payments, improvement invoices and valorization receipts. The law does not accept as cost of real estate sums that were not disbursed through financial institutions (art. 90). Rebuilding that support after the sale is usually costlier and less certain.
The exemption of the first 5,000 UVT requires depositing everything received in the AFC account and using it for another home or to pay mortgage loans tied to the home sold. Withdrawing the funds for any other purpose loses the benefit and triggers the withholding initially not applied (art. 311-1).
The exemption of article 311-1 is for an individual's home (house or apartment). The exemptions of article 307 (13,000, 6,500 and 3,250 UVT) relate to occasional gains from inheritances, bequests and allocations, not to the later sale of the property. We identify which one applies to each transaction.
Before signing the promise to sell or the deed, the first step is to date when you acquired the property and under what title (purchase, inheritance, gift). Then gather the purchase deed, the payments, the improvements, the valorization contributions and the property-tax certificate, and calculate the occasional gain with each form of cost. If the property is your home, decide whether you will use the exemption of article 311-1 and open the AFC account or arrange payment of the mortgage loan. The deed price is set with the cost, the appraisal and the market value in view. Ligal accompanies the taxpayer from start to finish. Juan Santiago Rodríguez Prieto, a tax lawyer and ex-DIAN, leads the strategy together with accountant Jeysson Pulido and LIGAL Auditores (certified public accountants). The team, with lawyers, accountants and direct experience inside DIAN, handles real estate planning, audit and tax litigation cases.
Keep in mind: each case depends on the title, the holding period and the supporting documents available. Ligal assesses the situation and defines the strategy without promising results.
Director
Juan Santiago Rodríguez Prieto
Tax lawyer · Ex-DIAN
The tax is decided before the deed is signed. We assess your case within one business day. Use the form or open Diagnosis.
01
TodayWe review the purchase deed or the succession, payments and improvements, the property-tax certificate, the projected sale price and whether the property is your home.
02
One business dayWe determine whether there is an occasional gain or ordinary income, the tax cost basis that can be supported, the applicable exemption and the effect of each scenario on the tax and the withholding.
03
ImmediateWe decide how to structure the sale, which documents to prepare, how to word the price and declarations in the deed, and who prepares each piece.
Frequently asked questions
The occasional gain is the difference between the sale price and the tax cost basis of the property (Tax Code, art. 300), and for resident individuals it is taxed at a single rate of 15% (art. 314, Law 2277 of 2022). If it is your home, the first 5,000 UVT of the profit are exempt if you deposit everything received in an AFC account and use it for another home or to pay mortgage loans tied to the one sold (art. 311-1). Illustrative arithmetic example, not a prediction: if the taxable occasional gain were $100,000,000, the tax at 15% would be $15,000,000, before crediting any withholdings. The real result depends on the tax cost basis you can support, the exemptions and the occasional losses of the year. Ligal calculates your case.
It is an occasional gain if the property formed part of the taxpayer's fixed assets for two years or more; if it was held for less than two years, the profit is net ordinary income and not an occasional gain (Tax Code, art. 300). An asset sold in the ordinary course of business is not a fixed asset either (par. 2). The difference matters because it changes the rate and the applicable rules; the holding period is proven with the acquisition deed and, for inherited property, it is analyzed case by case.
To determine the profit on the sale of real estate, the tax cost basis is subtracted from the sale price (art. 71). Individuals may: (a) adjust the acquisition cost by the percentage increase in real-estate value between January 1 of the year of acquisition and January 1 of the year of sale (percentages published by the Government), and add the value of improvements and valorization contributions paid (art. 73); or (b) take as tax cost basis the cadastral appraisal or self-assessed value shown in the unified property tax return, or in the income tax return, for the year before the sale (art. 72). In both cases the depreciation deducted for tax purposes is subtracted. If you choose the adjustment of article 73, the resulting amount must appear as net-worth value in the income tax returns when you are required to file. Which one is better is calculated with figures.
The value of the property is made up of all sums paid for its acquisition, even if agreed or invoiced outside the deed, or if they correspond to accessory goods or services (contributions, improvements, construction, brokerage, among others). But sums not disbursed through financial institutions do not count as cost of real estate (Tax Code, art. 90). In other words, for cost purposes what matters is that the payment is declared and banked. A cash payment made years ago can be hard to support; the case is reviewed.
Article 311-1 of the Tax Code, as amended by Law 2277 of 2022, exempts the first 5,000 UVT of the profit on the sale of the house or apartment of an individual income taxpayer, provided that all the money received from the sale is deposited in AFC accounts and used to acquire another house or apartment or to pay in whole or in part one or more mortgage loans directly tied to the home sold. In the case of paying the loan, the AFC deposit is not required if direct payment to the loan is verified, under the regulations. The exemption is on the profit (up to 5,000 UVT), not on the total price; the part of the profit above that cap is taxed at the occasional gain rate.
Withdrawing the funds for any purpose other than those listed means the individual loses the benefit and the financial institution applies the withholdings initially not made, under the general withholding rules for the sale of assets corresponding to the house or apartment (Tax Code, art. 311-1). Before withdrawing, check what it is for and whether it falls under the exceptions in the article itself.
Income obtained by individuals from the sale of fixed assets is subject to a withholding tax of 1% of the sale value, which must be paid before the sale of the asset, before the notary in the case of real estate (Tax Code, art. 398). For a house or apartment acquired before January 1, 1987, the percentage is reduced according to the year of acquisition (art. 399). The withholding is an advance collection, not the final calculation of the tax: the occasional gain is assessed in the income tax return with the tax cost basis, and how the withholding is credited is reviewed in each case.
For real estate, a price below cost, the cadastral appraisal or the self-assessed value is not accepted, without prejudice to the market value being higher. Where price lists, databases or offers allow the market value to be determined, they must be consulted. In the deed the parties must declare, under oath, that the stated price is real and has not been the subject of private agreements for a different value, and that no sums were agreed or invoiced outside it. Without those declarations, income tax, occasional gain tax, registration tax and registration and notary fees are assessed on a base equal to four times the value stated in the deed, and the notary must report the irregularity; DIAN keeps its powers to determine the real value of the transaction (Tax Code, art. 90). If you have already signed, we review how to correct it and how to prove the value.
Two moments must be separated. Receiving the property by inheritance is an occasional gain for the heir (Tax Code, art. 302), with its own exemptions: the first 13,000 UVT of the decedent's home, the first 6,500 UVT of other real estate and the first 3,250 UVT of each heir's or surviving spouse's allocation (art. 307); the value of the assets is determined at December 31 of the year before the succession is settled (art. 303). Selling that property later is another transaction, in which the price is compared with the tax cost basis; how that cost basis is determined, and whether the exemption of article 311-1 applies if it was your home, is analyzed with the succession deed and the supporting documents. No general rule is asserted without seeing the documents.
Yes, within the periods the law gives it to review the return. If the price or the cost cannot be supported, DIAN can dispute the value (art. 90), and if net worth or income do not match what was declared, it can resort to the net-worth comparison assessment. That is why it pays to file the return with the supporting documents in order and, if you receive a request, to reply with the evidence of cost and price. See net-worth comparison assessment.
They are different transactions with different tax effects. A gift of real estate is also an occasional gain for the recipient (Tax Code, art. 302), with its own rules, and is not the same as a sale. Which is better depends on the family, the tax cost basis of the property and what you are trying to achieve. See lifetime gifts to children and tax-driven estate planning; Ligal compares the alternatives with figures before you decide.
Ligal is a firm specialized in tax, customs and criminal tax law. Under the direction of Juan Santiago Rodríguez Prieto, a tax lawyer and ex-DIAN, together with Jeysson Pulido, accountant, and LIGAL Auditores (certified public accountants), we combine the legal reading of the rules with the exact calculation of the tax in each scenario, and represent you before DIAN if the price or the cost is challenged. Our work is backed by 5.0 / 5 on Google with 36 reviews: https://share.google/VVzMvULrOj8Mj52Au. The team handles real estate planning, audit and tax litigation cases. No result is guaranteed.
Free. Tell us about the property (when you bought or inherited it, how much you paid, what improvements you made) and the price you plan to set. We assess the tax and the paths.