Modification of limits to property tax increase in Cali

Through the mentioned Agreement, Article 41 of the Extraordinary Decree 259 of 2015 was modified, which imposed the limits for the increase of the property tax in the massive processes of cadastral update, both for properties of residential and non-residential use, providing for a series of reforms as detailed below:

a. The cadastral appraisal for residential properties may not be, in any case, increased by a value equivalent to 25% with respect to the cadastral appraisal of the immediately preceding year. It should be mentioned that, previously, the appraisal could be increased by up to 65%.

The maximum increase may be given in accordance with the appraisal value as follows:

Residential properties 

b. The cadastral appraisal for non-residential properties may in no case be increased by a value equivalent to 35% with respect to the cadastral appraisal of the immediately preceding year. On this point, it should be noted that the previous regulation stated that the appraisal could be increased by up to 75%.

The maximum increase may be given in accordance with the current appraised value as follows: 

The aforementioned amendments do not apply to: i) properties that are incorporated for the first time to the cadastre; ii) developable land that has not been urbanized or urbanized but not built; iii) unbuilt lots whose appraisal arises from buildings or constructions and; iv) appraisals arising from self-estimation registered by cadastral authorities in accordance with technical parameters.

On the other hand, the recent Agreement also added to the Municipal Tax Statute an article whose validity is for five years counted from August 20, 2019 (i.e., until August 20, 2024, inclusive), establishing a limit to the increase of the property tax for the mentioned term according to three assumptions which are summarized below:

1. The property whose cadastral appraisal has been updated and the tax has been paid according to such update, may not have an increase greater than the CPI + 8 points.

2. The property that has not been updated may not be increased by more than 50% of the amount paid in the immediately preceding year for the same concept; and 3;

3. The housing of stratum 1 or 2 whose cadastral appraisal is up to 135 SMMLV ($118,530,000), may not have an increase greater than the CPI.

Likewise, this regulation has exceptions to the temporary limits of the increase, which are: i) developable land that has not been urbanized or urbanized but not built; ii) unbuilt or built lots whose appraisal arises from buildings or constructions; iii) properties with change of economic destination or with modifications in their land and/or construction areas; iv) appraisal arising from the self-estimation registered by cadastral authorities in accordance with technical parameters and; v) properties in the rural sector of less than 100 hectares.

Finally, it is important to mention that this temporary limitation (for 5 years) to the increase of the property tax does not exclude the alternative application of the other growth limits contained in the municipal regulations when these are more favorable for the taxpayer.