Property taxes represent the second most significant source of fiscal revenue in Bogotá, following the Industry and Commerce Tax. The current property tax system exhibits a progressive structure; however, there remains scope to alleviate the relatively higher burden faced by low-income and informal households, while simultaneously improving compliance. Any reform of the property tax in Bogotá must strike a careful balance between enhancing revenue collection and ensuring equity. This chapter examines the role of property taxation in Bogotá and its potential for reform. It begins by providing an overview of the property tax’s fiscal relevance and institutional framework. It then assesses the distributional impact of the residential property tax, with particular attention to household income levels, employment status, and socioeconomic strata, to identify opportunities for strengthening progressivity. Finally, the chapter draws on international experiences from comparable cities to inform policy options for reform. These options are grounded in OECD principles and aim to improve the efficiency, equity, and revenue potential of property taxation in Bogotá.
Reconnecting Bogotá
Abstract
The property tax1 (Impuesto Predial Unificado - IPU) in Bogotá, understood as a recurrent tax on immovable property, is the city’s second source of fiscal revenue after ICA. The property tax represented, on average, 34.7% of Bogotá’s total tax revenue in the 2018-24 period. Since 2021, its importance has fallen 4.7 percentage points, representing 34.8% of total tax income in 2024.
The property tax is an annual obligation for property owners. The property tax currently applies to residential, commercial, industrial properties, vacant lots, undeveloped urbanisable land, and rural areas. The levy is governed by a combination of national laws and district-level regulations, including the national law 1450 of 2011 that defines the criteria to be applied by municipal councils to define the property tax tariffs. In Bogotá, the tax rates vary depending on factors such as property usage, and the property’s cadastral value, following the National Strategy for the Implementation of the Public Policy on Multipurpose Cadastre detailed in the CONPES 3958 of 2019 (CONPES, 2019[1]). In cases where a property does not have an assigned cadastral appraisal as of 1 January of the tax year, the Secretaría Distrital de Hacienda (District Secretariat of Finance) defines a minimum taxable base. Moreover, in 2024 residential properties located in socioeconomic strata 1 and 2 with a cadastral value below 16 monthly legal minimum wages are exempt from paying the property tax. Bogotá applies 33 tariffs to residential properties, two tariffs to commercial buildings and three tariffs to industrial buildings.
This chapter first presents an overview of the relevance of the property tax in Bogotá. Second, it explores the distributional impact of the residential property tax to promote further progressivity, by examining its relative burden across households, with a focus on income levels, employment type, and socioeconomic stratum.2 Then, it presents international city experiences aimed at informing the property tax reform in Bogotá. Finally, the last section presents policy options to improve property tax in Bogotá based on OECD principles.
Property tax is a key source of revenues at the subnational level in Colombia, as in Latin America and the Caribbean and OECD economies. Recurrent taxes on immovable property collected at the local level in Colombia is among the highest in LAC, having reached almost the same level of OECD average economy in 2020 (0.91% of GDP compared to 0.92% in OECD economies). From 2014 to 2021, Colombia’s subnational governments led Latin America and the Caribbean in recurrent taxes on immovable property, before being surpassed by those of Uruguay and Chile in 2021 (Chapter 2).
Property taxes are the second main fiscal revenue in Bogotá. Property taxes in Bogotá represented 0.28% of Colombia’s GDP in 2023 after ICA (0.43%) and above the revenue derived from vehicle taxes (0.08%). At the city level, the IPU represented 1.68% of Bogotá’s GDP and 31.4% of the city’s tax revenue in 2023 (Figure 5.1).
Note: GDP data for Bogotá and Colombia are in constant prices.
Source: Own calculations based on (Secretaría de Hacienda de Bogotá, 2024[2]; DANE, 2025[3]; OECD et al., 2025[4]).
Property tax incentives can be a strategic fiscal instrument for advancing sustainable goals in Bogotá. Cities in LAC and worldwide are using property tax incentives to stimulate the adoption of renewable energy sources, promote cleaner technologies in construction and industry, facilitate the transition to a circular economy and enhance urban green infrastructure, among others (see Chapter 6).
The property tax in Bogotá places a relatively higher burden on low-income households compared to higher income households. In 2022, property tax payments represented nearly 1.7% of reported income for low-income households (quintile 1) and 1.6% for middle-low income households (quintile 2) who declared having paid the levy in Bogotá, compared to 1.4% to 1.5% for other higher income households – indicating that there is still room to improve the progressivity of the property tax (Figure 5.2). In terms of revenue contribution, low-income households (quintile 1) property tax payments account for 1.8% of the total property tax collected in the city, compared to 7.7% from middle-income households (quintile 3). Meanwhile, middle-high income households (quintile 4) contribute 15.6% and high-income households (quintile 5) account for the bigger share at 71.6%. This distribution shows a progressive structure although the design of more targeted benefits or a review of the minimum taxable threshold could be considered to reduce the tax burden on the most vulnerable groups.
Ongoing efforts to reduce property tax evasion in Bogotá may contribute to improving the fairness and effectiveness of the city’s property tax system. Between 2019 and 2023, the city experienced an average property tax evasion rate of 16.4%. The largest expected revenue losses from evasion are associated with residential, commercial, and vacant properties. Although the highest evasion rates occur among lower-income strata (1 and 2), the greatest absolute revenue losses are concentrated in middle and high-income strata (3, 4, and 6) (Secretaría de Hacienda de Bogotá, 2024[2]). Improving collection from income taxpayers at the highest end of the income scale could be a good step in this direction.
Note: The data are based on respondents who reported having paid the property tax within the previous year. Households’ income is defined as: Labour income + Rents+ Government transfers + Private transfers. The following variables from the Great Integrated Household Survey (Gran Encuesta Integrada de Hogares - GEIH) have been used for each income component. Labour income refers to earnings from employment (INGLABO). Rent income includes returns from renting properties or assets (P7500S1A1), interest and investment income (P750S5A1), and severance-related payments (P7510S6A1). Government transfers cover pensions and public assistance programmes (P7500S2A1, P750S2A1, P1661S1A1–S3A1). Private transfers include alimony, remittances, aid from private entities, and other irregular sources such as gambling winnings or asset sales (P7500S3A1, P7510S1A1–S2A1, P750S1A1, P750S3A1, P7510S7A1). The income variables which are reported on a monthly basis (INGLABO P7500S1A1 P7500S2A1 P7500S3A1) have been annualised.
Source: Authors’ calculations based on (DANE, 2024[5]).
Property tax in Bogotá is a relatively bigger burden for informal and mixed households compared to households where all members are employed in the formal market. Property tax in Bogotá represents 1.4% of informal households’s income, where all members are informally employed, almost 1% of mixed households’ income (0.8%), and 1% of formal households’ income. These figures are almost equal to the average impact observed in the average of the ten cities included in the National Quality of Life Survey 2022 (Encuesta Nacional de calidad de vida) (Figure 5.3).
Note: The data are based on respondents who reported having paid the property tax within the previous year. Following the OECD KIIbIH database (2024[6]) comparable definition, informal households refer to those households in which all income earners are informal workers. Mixed households are those in which at least one income earner is an informal worker. Formal households refer to those in which all income earners are formal workers. These classifications may vary depending on the definition used. At the time of this report’s publication, the National Quality of Life Survey (Encuesta Nacional de calidad de vida- ECV-) was the only available database capturing the necessary variables across Colombian cities.
Source: Authors’ calculations based on (DANE, 2022[7]).
Households living in strata 3 and 4 contribute relatively more to the property tax revenue than households in higher strata. Households in stratum 4 contribute almost one-third of the property tax total collection (30.2%), almost 10 percentage points more than those in strata 5 (contributing 20.5%) and 6 (19.8%), while households in stratum 3 contribute more than households in strata 5 or 6 (Figure 5.4, Panel A), relatively similar to the average of the other cities. Official administrative data from the SDH shows similar trends to the findings in the GEIH (Figure 5.4, Panel B). Two exceptions are observed in the contributory share of households in stratum 5 that is lower according to official data (16.6% in official data compared to 20.5%). Moreover, households in stratum 6 contributes less based on responses to the GEIH survey (19.8%) than what they do based on official data (25.5%) (Secretaría de Hacienda de Bogotá, 2024[8]).
Note: The data are based on respondents who reported having paid the property tax within the previous year.
Source: Authors’ calculations based on (DANE, 2024[5]; Secretaría de Hacienda de Bogotá, 2024[8]).
Designing differentiated strategies to address property tax evasion could help improve revenue collection and promote a fairer system. Tax property evasion in Bogotá has been decreasing since 2020 from 18.8% to 13.1% in 2024. Strata 1 and 2, show higher levels of evasion, nonetheless most of the expected revenue is concentrated in strata 3, 4 and 6 (Secretaría de Hacienda de Bogotá, 2024[8]).
A small share of industrial and commercial properties in Bogotá report paying ICA in manufacturing and retail activities, respectively. The SDH of Bogotá performed a casuistic exercise connecting industrial properties that declare paying ICA. From all industrial properties in the city (12 233), a quarter declares to be paying ICA (3 151) while 10.3% (1 268) declare to pay ICA as performing manufacturing activities (section C). Commercial properties show a similar trend. The 26.8% (76 863 properties) of all commercial properties (286 234) are declaring and paying ICA, while only 5.25% pay ICA in the retail commerce activity (section G) (Secretaría de Hacienda, 2025[9]).
International city experiences implementing property tax in the region and worldwide can be useful to inform Bogotá’s property tax reform. This section compares how Bogotá, Montevideo (Uruguay), Barcelona (Spain) and Boston (United States) define the property tax taxable base, how often they update their cadastre, the frequency of tax collection, the available discounts and subsidies and aspects related to evasion and progressivity (Table 5.1).
Source: Authors’ elaboration based on (Secretaria de Hacienda de Bogotá, 2025[10]; Intendencia de Montevideo, 2025[11]; Municipal Tax Office of Barcelona, 2025[12]; City of Boston, 2025[13]).
Regular updates of property values to reflect current market conditions can help ensure that the tax burden evolves in line with property price trends. In Bogotá, the IPU’s cadastral value represents approximately 70% of a property’s market value. The city’s property registry is updated every year with annual inflation adjustments. In Montevideo the Contribución Inmobiliaria is also based on a cadastral valuation, annually updated and closely aligned with real estate market values (Intendencia de Montevideo, 2025[14]). Similarly, Barcelona’s Impuesto sobre Bienes Inmuebles (IBI) relies on a cadastral value that is regularly updated to reflect property dynamics, while Boston applies a property tax directly on the estimated real estate market value of the property, updated annually (Municipal Tax Office of Barcelona, 2025[12]; City of Boston, 2024[15]).
Cities are using more frequent property tax collection and targeted discounts to facilitate payment and reduce social impacts. Most cities prioritise an annual tax collection of the property tax although they offer partial instalments and different discounts and subsidies to facilitate collection. Bogotá offers an alternative to the annual payment of four instalments without interest through the SPAC system (Pago Alternativo por Cuotas) (Secretaría de Hacienda de Bogotá, 2025[16]). The city offers discounts for early payment and to properties affected by natural disasters or terrorist acts. Montevideo offers the possibility of three instalments and applies discounts for early payment and exemptions for retirees and individuals perceiving low incomes (Intendencia de Montevideo, 2025[11]). Similarly, Barcelona also offers options for partial instalments and offers benefits for low-income families and elderly individuals (City of Barcelona, 2025[17]). In Boston, the property tax is assessed annually but collected quarterly (every three months) to all taxpayers. Exemptions and reductions are available for seniors, veterans, and people with disabilities among others (City of Boston, 2025[18]). Qualified homeowners over 60 can work-off up to USD 2 000 on their property tax bill by offering volunteer services to the city, the equivalent to 133.5 volunteer hours at a rate of USD 15 per hour (City of Boston, 2025[19]).
Effective enforcement mechanisms and digital innovation helped increase compliance levels in property tax systems across leading cities. Digitalisation, social incentives, institutional responsiveness and enforcement, visible reinvestment benefits, and robust institutional frameworks have contributed to low levels of tax evasion in cities such as Montevideo, Barcelona, and Boston. These cities rely on centralised and transparent systems – such as Montevideo’s cross-referenced permit databases (Intendencia de Montevideo, 2025[20]), Barcelona’s Institut Municipal d’Hisenda, and Boston’s market-aligned valuation model (City of Boston, 2025[21]; 2025[22]) – which facilitate accurate assessments and efficient collection. Common success factors include regularly updated property records, integrated online portals for billing and payment, and proactive enforcement tools like audits and targeted inspections to help identify non-compliance and deter evasion. Socially equitable measures, such as exemptions for vulnerable groups and user-friendly services, and institutional efficiency through clear communication, responsive customer service, and visible reinvestment of funds in the community contribute to high voluntary compliance.
Any property tax reform in Bogotá requires a careful balance between enhancing revenue collection and maintaining fairness. On the one hand, increasing the number of tax rates can boost progressivity by requiring higher-value properties to contribute more. However, this may introduce greater administrative complexity, higher costs, and increase the risk of tax evasion. On the other hand, a simplified tax structure with fewer rates can help to reduce administrative burdens and improve compliance, but it may result in a less progressive system. Ultimately, the design of an optimal reform should weigh these trade-offs to create a system that is both efficient in revenue generation and equitable in its tax burden.
Going forward, the way the reforms and revenue collection are implemented plays a fundamental role to enhance the efficiency, progressiveness and revenue potential of the taxes on immovable property. Based on OECD experience, regularly updating property values to reflect current market conditions is essential to ensure the fairness and efficiency of property taxation. Such updates enhance both vertical and horizontal equity by requiring households owning properties with rising values to contribute proportionately more, while also reducing market distortions resulting from outdated valuations. In parallel, lowering housing transaction taxes is recommended to facilitate residential mobility and efficient housing allocation, thereby supporting sustainable urban development and fiscal stability. Together, these measures are intended to make property taxation a more stable and predictable revenue source for Bogotá while serving as a critical instrument in fostering a fairer and more efficient housing market (OECD, 2022[23]).
References
[17] City of Barcelona (2025), Bonificacions de l’impost sobre béns immobles (IBI), https://seuelectronica.ajuntament.barcelona.cat/oficinavirtual/ca/tramit/19970000413.
[22] City of Boston (2025), Analyze Boston. Property Assessment, https://data.boston.gov/dataset/property-assessment.
[21] City of Boston (2025), Assessing Online, https://www.cityofboston.gov/assessing/search/.
[13] City of Boston (2025), How We Tax Your Property, https://www.boston.gov/departments/assessing/how-we-tax-your-property.
[19] City of Boston (2025), Older Adult property tax work-off, https://www.boston.gov/departments/age-strong-commission/senior-property-tax-work.
[18] City of Boston (2025), Tax Exemptions and Abatements, https://www.boston.gov/departments/assessing/tax-exemptions-and-abatements.
[15] City of Boston (2024), Assessing Calendar, https://www.boston.gov/departments/assessing/assessing-calendar.
[1] CONPES (2019), Strategy for the Implementation of the Public Policy on Multipurpose Cadastre, https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/3958.pdf.
[3] DANE (2025), PIB total por departamentos - Precios corrientes, https://www.dane.gov.co/index.php/estadisticas-por-tema/cuentas-nacionales/cuentas-nacionales-departamentales.
[5] DANE (2024), Great Integrated Household Survey (Gran Encuesta Integrada de Hogares -GEIH), https://www.dane.gov.co/index.php?option=com_content&view=article&id=2921&catid=178.
[7] DANE (2022), National quality of life survey (Encuesta Nacional de calidad de vida- ECV), https://www.dane.gov.co/index.php/estadisticas-por-tema/salud/calidad-de-vida-ecv/encuesta-nacional-de-calidad-de-vida-ecv-2024.
[11] Intendencia de Montevideo (2025), Contribución inmobiliaria, https://tramites.montevideo.gub.uy/tramites-y-tributos/contribucion-inmobiliaria.
[14] Intendencia de Montevideo (2025), Revisión del valor catastral de bienes inmuebles, https://tramites.montevideo.gub.uy/tramites-y-tributos/solicitud/revision-del-valor-real-de-bienes-inmuebles.
[20] Intendencia de Montevideo (2025), Sistema de Información Geográfica, https://sig.montevideo.gub.uy/.
[12] Municipal Tax Office of Barcelona (2025), Property Tax (IBI), https://ajuntament.barcelona.cat/hisenda/en/procedures-payments/ibi?profile=1.
[6] OECD (2024), “Key indicators of Informality based on Individuals and their Households (KIIbIH)”, OECD Data Explorer (database), https://shorturl.at/IZXl5.
[23] OECD (2022), Housing Taxation in OECD Countries, OECD Tax Policy Studies, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/03dfe007-en.
[4] OECD et al. (2025), Revenue Statistics in Latin America and the Caribbean 2025, OECD Publishing, Paris, https://doi.org/10.1787/7594fbdd-en.
[9] Secretaría de Hacienda (2025), Participación porcentual de los ingresos tributarios (internal document), Comisión de Expertos.
[10] Secretaria de Hacienda de Bogotá (2025), Impuesto predial unificado, https://www.haciendabogota.gov.co/es/impuestos/impuesto-predial-unificado.
[16] Secretaría de Hacienda de Bogotá (2025), ¡Consulta! Bogotá facilita pago del Impuesto Predial 2025 con opción de cuotas, https://bogota.gov.co/mi-ciudad/hacienda/pago-de-impuesto-predial-en-bogota-2025-paga-cuotas-este-tributo.
[8] Secretaría de Hacienda de Bogotá (2024), Ejercicio de presión fiscal (internal document), Dirección de Estadísticas y Estudios Fiscales, Secretaría Distrital de Hacienda, Bogotá D.C.
[2] Secretaría de Hacienda de Bogotá (2024), Recaudo IPU (Internal document).
[24] Secretaría Distrital de Planeación de Bogotá (2024), ¿Sabe usted cómo funciona la estratificación? Aquí se lo contamos, https://bogota.gov.co/mi-ciudad/planeacion/estratificacion-todo-lo-que-debe-saber.
← 1. Unless otherwise indicated, references to property tax in this publication correspond to recurrent taxes on immovable property, and the two terms are used interchangeable.
← 2. The strata (estratos) are a technical instrument used to allocate subsidies and contributions for public utilities (water, sewage, waste collection, electricity, and gas) in Bogotá. There are six strata. Strata 1 and 2 receive subsidies for water, sewage, waste collection, electricity, and gas. Stratum 3 receives all these subsidies except for gas. Strata 5 and 6, on the other hand, contribute financially to these subsidies – a mechanism known as cross-subsidies. Stratum 4 neither contributes nor receives subsidies. Commercial and industrial properties also contribute to the cross-subsidy system (Secretaría Distrital de Planeación de Bogotá, 2024[24]).