Acceptable apartment size

[EMR]

See this link 0% capital gains taxes in Argentina

http://www.globalpropertyguide.com/Latin-America/Argentina/capital-gains-tax

I also have a report from BDO. You have to buy property the right way and legally. Also you do have property taxes like anywhere in the world but they are very inexpensive.

 

[EMR]

One last comment, in addition the fact that you do not have a cap gains tax on sales makes it even more attractive than purchasing in other places, your net rate of return is higher. If you sell something for 200k in a place where cap gains is 20% and the gain is 100k let's say, that is a tax of 20k. In Argentina you keep the 10k, what does that mean, your net rate in example 1 is 80%, in Argentina is is 100% or 25% more.

Although the fees and commissions are close to par with everywhere else done right, this leaves you with a much higher net rate of return.

I think people do not really know the opportunity because again they hear the horror stories of people that have been burned doing it wrong. What about in the USA where people were talked into buying a house they could not afford with interest only ARM"S at teaser rates of 1% and when they adjusted, people are losing their homes and all of the money they invested. Great system, easy, and secure right? I love the USA but the lack of regulation and what happened with this subprime and securitization of mortgages and easy money (Greenspan should be put in jail as should many others) was devastating and erased significant wealth in the USA.

The easy money and irrational loans to people based on speculation that markets would increase all of the time is what caused this mess. SO I would argue the proof is in the pudding.

 

[EMR]

Sorry, I just feel I need to throw this out there and share this knowledge, another problem in Argentina is the developers that sell in what they call fidecomicio al costo. Some (not all) developers also try to game the system and evade taxes in order to make more than they should so they do not sell properly.

What happens is this, they tell you as an example you can buy in this fidecomicio at a certain price, they say 30-40% down and then 18-24 payments, depending on the deal, then you send th money to them and do a boleto but you send the money Negro, they do not tell you it is Negro but it is, all the payments are in Negro (that is why it i so hard to pay) and in the end, you title but there is no regstration of your payments and it never goes through the central bank. Then the developer adds payments to the deal and you pay 20-40% more than the original price because they have the ability to adjust for inflation or any other costs. The end effect is you buy in Negro, you pay more than you thought and when you sell, you have the problem because there is no way to show where the money came from and the AFIP nails you.

This is also a falut of the developers and not the system. A good developer will sell you on a closed price with no adjustments, do the proper paperwork and also have IVA included in the price, you can still buy pre-sale 40-50% down and make payments, but they are done via bank transfer and not cash. You can pay at their account in the US or at their bank in Argentina, then the money is registered through the central bank because it is a bank transaction not cash and you are ok. Come time to sell, you have no issues at all.

The moral of the story is you do not need to pay cash for things (what I mean is actual currency) you can do things via bak transfers which is the way it should be done. Real developers that are on the up and up do it this way and you are not required to pay cash and can do everything via wore transfer or check. You may pay 5% more in this scenario at most but everything is legit. The other guys do not pay IVA, any income taxes etc and they do this at costs thing and then do cash for their profit, so they make a whole lot more but it is crooked. Doing it legit still allows developers to make a reaosnable profit as it should be.

So, I say beware of the cash deal when buying from a developer and make sure you can do everything via the banking system. Also, make sure you get a good escribano who will make sure it is in Blanco. If you so it right, there are no problems.

 

[perry]

Thanks EMR for your informative posts.
I work in real estate [email protected] in Buenos Aires and selling property as a foreigner is not difficult at all if you have a professional advising you of the process. This rumour of capitals gain tax is being propagated by some to scare people off buying in Argentina.
If you do buy property here in Argentina you must bring in the money legally and as they say in the white. I advise all my clients to do this and recommend them to the right banks that only charge between 1 to 1.5 percent to bring the money into Argentina legally.
Many foreigners have not done this and then when they sell they will be investigated by Afip meaning that many transactions will be hold up for many months.
I also suggest that anyone buying property hire a professional and follow his advice to the T . I recommend highly taking out residency as your tax liabilities will be much less.

When you sell the total fees should be between 4 to 6 percent of the value of the property . This includes Stamp duties of 1.25 percent . Iti tax of 1.5 percent and Property sales tax of 1.25 for non residents. A qualified accountant should make sure that all your taxes ie Bienes personales and property sales tax are paid before the Escritura.

When you sell the total fees should be between 4 to 6 percent of the value of the property . This includes Stamp duties of 1.25 percent . Iti tax of 1.5 percent and Property sales tax of 1.25 for non residents. A qualified accountant should make sure that all your taxes ie Bienes personales and property sales tax are paid before the Escritura.

 

[EMR]

Pericles makes a point about residency, if you plan to live in BA for a year or more, residency is good for many reasons but if you are going to only come every once in a while as a second home and investment rental property, you do not need it. The only extra tax is the 1.25% which I would gladly pay over any capital gains tax anywhere, the government by not having a cap gains tax is creating incentive to invest. The other point he makes about the 1.5% to bring the money in is a currency conversion fee not unlike credit cards that charge 2-3% for foreign transactions. This is a minimal amount to do things right, when you add up all of the costs in a buy and then in a sell, you come our far better than in most places, again because of the lack of cap gains.

It is like the story of when I met a guy who said he made a ton in the stock market, but when they backed out the sales commissions, management fees, cap gains taxes, interest and dividend taxes etc, and factored in inflation, he actually lost money on a 10% gross rate of return. The focus needs to be on the net result not perceived costs.

 

[steveinbsas]

Again, as a foreigner you need a CDI number to buy property not a CUIT and many buy without this and therefore get themselves in trouble.

Ans a CDI is easy to get. All you need is a cetificado de domocillio from the nearest comisaria and your passport.

Thanks, EMR, for the great information about buying property here. You know what you are talking about.

 

[EMR]

Thanks Steve and a CDI is in fact easy as you point out, I actually gave a power of attorney to the accountant and had them get it for me. They even used their address for me to get it and once I bought, we changed the address at AFIP. No biggie

 

[steveinbsas]

Perhaps I am wrong, or at least wrong to call it a capital gains tax, but I have been told by several friends who have purchased property here that a non-resident buying property is subjected to a large penalty when they resell that does not apply if you are a resident with a CUIT number when you made the purchase. You obviously know more then I about this, and if it is true, as I believe it is, any potential purchaser should welcome your sharing any knowledge about this, as residency is not required to make a real estate purchase.

I had a CDI and was a non-resident when I purchased my apartment three years ago, but I was advised that I would be better off when I sold if I had residency and a DNI as it would avoid excess scrutiny from AFIP regarding the purchase and the original transfer of funds (though it was all done en blanco). From the start I was told there was no capital gains tax on an individual selling property here, but that there could be a a 30% penalty imposed if the funds were not transferred properly. Thanks to EMR, I now believe the 30% penalty applies to any unpaid tax that was due at the time of the purchase, not to the total amount of funds transferred. Is that right?

 

[steveinbsas]

Thanks Steve and a CDI is in fact easy as you point out, I actually gave a power of attorney to the accountant and had them get it for me. They even used their address for me to get it and once I bought, we changed the address at AFIP. No biggie

More good advice...

Now back to the topic...

If you're going to be here alone and don't mind sleeping and living in the same room, a studio (at least 30-35mts.) is great. Otherwise, a one bedroom of about 50 mts.) makes sense.

As for buying versus renting, right now I could easily sell my apartment for what I paid three years ago (including closing costs) and perhaps a small profit. If I had rented I would have paid anywhere from 20 to 30 thousand dollars in rent during that time (for a one or two bedroom "average" apartment in Recoleta).