  Investing in Argentina Investing in Argentina:Ownership, Transfer Costs and Taxes, Property Tax
A Global Real Estate Investor Country Profile Argentina has been in chaos since December 2001 when they took their peso off of the decade long peg of 1 to 1 with the U.S. dollar. Banks closed, dollar accounts were switched to pesos, and real estate along with other prices fell dramatically. For a period of time some real estate sold for up to 70% off of its pre-crisis values. Most real estate fell between 30% to 50%. As the economy has started to stabilize over the last year and a half and foreigners have taken advantage of the discount on real estate, slowly real estate prices begun to appreciate again. Even with the recent increases of between 5% and 10% from October 2002 to February 2003, the cost of property in the city of Buenos Aires is very low on a price per square meter basis. There aren't many places in the world where you can buy quality historic apartments for $1,100 to $1,300 per square meter. What will the future hold for Argentina? If their currency stays relatively weak, but stable, the tourism industry will continue to grow. Argentina is a beautiful and diverse country that has been underdeveloped for tourism because it was too expensive during dollarization for most people to visit. An investment in the tourism industry could prove very profitable. I believe no matter what happens to the economy and currency quality apartments in Buenos Aires will continue to appreciate from their current levels. Either the local economy will improve to the point that Argentineans will start buying and bidding up good apartments…or foreigns will continue to see the value of the apartments compared to other major cities around the world and bid up prices as has been happening over the last 9 months. Investing in Argentina: OWNERSHIP In Argentina, foreigners have the same rights of ownership as nationals. The purchase process is straightforward, and most real estate transactions are completed within a month or two. There are two basic stages involved in closing: Offer: Once buyer and seller have agreed a price, the offer is documented - stating price, closing date, name of the notary and any special conditions. The offer must be accompanied by a binding sum (usually in dollars). Once the offer is accepted and signed by the seller, this amount (also specified in the offer document) will be forfeit to the seller, should either party back out before the closing date. Escritura: This happens on the date of closing when the actual deed is signed by all parties. Prior to this, the acting notary public will have performed the necessary title searches, received a surveyor's report on the property (if it is required in that province) and verified debts, liens, encumbrances, etc. Generally, full payment (in cash) is made to the seller at this meeting. As a foreign buyer, you will need a CDI (Personal Tax Identification Number) in order to execute a deed. This will take a couple of weeks to obtain. Alternatively, Power of Attorney may be granted to a third person to act on your behalf. Investing in Argentina: TRANSACTION COSTS & TAXES A transfer tax of 1.5% is charged on the sale of Argentine real estate, and is payable by the seller. (This charge does not apply to a resident selling his main dwelling if he commits to buying another property within 12 months). Notary fees amount to around 2% of the purchase price, and are payable by the buyer. Realtor commissions typically range from 3% to 4%--depending on location - plus IVA at 21%. So 3% commission becomes 3.63%. The amount is payable by both parties, so the realtor comes out with 6% to 8% of the purchase price. (Note: Since there is a multiple listing system, and most realtors share listings, there is either one or two realtors involved. The total income to both realtors is 6-8% of the purchase price. Since the real estate commission payable by the buyer does not vary whether there are two or just one realtor involved, it is better to work with one realtor who searches the whole market, and learns what the buyer wants, thus making the purchase process more efficient and faster). Real estate transactions are subject to a stamp fee of 2.2% on the sale value. Levied by the individual provinces, this has been abolished in downtown Buenos Aires for primary home, but is payable in the suburbs. If you are present in the country for more than six months (180 days) in a calendar year, you are considered an Argentine resident for tax purposes. Otherwise, you are regarded as non-resident. As a resident, any income earned through renting your property will be considered as part of your normal taxable income, at a rate of 35%. As a non-resident, there is a withholding tax of 21% on the gross annual rent. In the case where the tenant is responsible for paying tax, the percentage is raised to approximately 26.5%. As an individual, you will not be liable for capital gains tax on the sale of your property. Investing in Argentina: PROPERTY TAX Outside of Buenes Aires (which is free of property tax), these charges are levied by the provinces and are based on the assessed value of the property. Rates vary from one jurisdiction to another. For example, the amount levied on a 3,300 square-feet house on a 5,600 square-feet lot in the northern suburb of Olivos, amounts to about $500 per year (in 5 payments of $100). Investing in Argentina: FOREIGN OWNERSHIP RESTRICTIONS No restrictions. The Argentine Constitution grants foreigners the same rights to work, conduct business, buy, own and sell property as it does to Argentine nationals. Investing in Argentina: FINANCING As with most Latin and South American countries, it is almost impossible to arrange financing in Argentina. And where available, it is on less than appealing terms. Depending on your situation, you might arrange a loan through your U.S. bank, or pool your funds with a group of friends or other investors. | 
