Hefty tax on property sale!

[CarverFan]

A friend of mine has just received his tax certificate from AFIP for the impending sale of his apartment. He is a non-resident and has been charged 14% on the sale price.
Does this sound right or should he appeal?

It's a modest apartment and the tax eats up all his profit, in fact he will be left out of pocket as there are transfer fees for sending money abroad, and accountant and estate agent fees to factor in.

 

[mariposa]

unfortunately this sounds right. that's what AFIP does to non-residents when they sell their apartments. i think there is no point in appealing.

 

[steveinbsas]

It would be helpful if additional details could be provided.

For example, did AFIP charge taxes on "assumed" rents?

I agree with mariposa. An appeal is probably not in his interest and could result in a delay that might give the buyer a reason to sue for double the amount of the boleto (usually 30% of the real sales price) if the sale cannot be completed as agreed.

My advice: Pay the tax, take the money, and run.

It would be interesting to know how long he owned the property. If a 14% tax eats up all his profit, I hope he didn't own the apartment for even one year...in a country where the real inflation rate is higher than 14% per annum. I hope he either saved a lot of money living in the apartment (as oppsosed to renting from someone else) or actually received rental income that made the investment worthwhile.

I hope he will still able to receive dollars for the sale and will also be able to get them out of Argentina.

 

[CarverFan]

Steveinbsas, he bought the apartment at the end of 2007. He's spoken with two people at AFIP in charge of his paperwork and they told him it was a tax for non-residents, all calculated by computer and that there was no "plan b". Unfortunately, he did have residency between 2009 and 2011, in fact it was when he lost his residency that he decided to sell up.

 

[steveinbsas]

Steveinbsas, he bought the apartment at the end of 2007. He's spoken with two people at AFIP in charge of his paperwork and they told him it was a tax for non-residents, all calculated by computer and that there was no "plan b". Unfortunately, he did have residency between 2009 and 2011, in fact it was when he lost his residency that he decided to sell up.

Thanks for the clarification. I'm sorry for his loss, but happy he found a buyer if selling out was really what he wanted to do.

Did he have any idea (in advance) that selling as a non resident entailed paying outrageous taxes?

I'm not bing critical of the seller, I'm just curious.

What you don't know in Argentina (especially about taxes) can really hurt you.

I know from experience. I paid a significant penalty (with interest over 50%) for not paying the bienes personales tax on my apartment for 2006 until 2009. The tax, if paid on time would have been less than $2000 pesos and I paid over $3000. The Argentine real estate agent never told me about his tax and no "factura" (invoice) was ever sent to me.

I was only liable for the tax in 2006 because the "threshold" for the tax was raised in 2007. Thanks to my accountant (who I met when I sold the apartment in 2009) I paid the tax and stopped the bleeding (or should I say bloodsucking?).

If (according to AFIP) there is no "plan b" for your friend there is no avenue for appeal, is there?

 

[CarverFan]

Having searched online, it seems that non-residents do not pay capital gains, only bienes personales (which my friend was exempt of as being under the threshold). It looks as if AFIP are charging him tax on rent as if he has been renting the property out. This is crazy as he has lived there the whole time and it's only a 1-bed apartment....

 

[steveinbsas]

Having searched online, it seems that non-residents do not pay capital gains, only bienes personales (which my friend was exempt of as being under the threshold). It looks as if AFIP are charging him tax on rent as if he has been renting the property out. This is crazy as he has lived there the whole time and it's only a 1-bed apartment....

Did n't AFIP require coppies of every page in his passport as well as the utility bills?

When utility bills do not drop to what can be considerd "unoccupied" levels (near zero) when an owner is out of the country, AFIP is going to assume the property has been rented (even if a friend or relative was living there withoiut paying rent).

If he can prove he was in Argentina the whole time he should not be charged taxes on assumed rents, but if he doesn't sell "as agreed" the consequences (costs in "damages" paid to the buyer) could be much greater than the taxes he must now pay to AFIP.

 

[alpac]

However the geniuses over at AFIP calculate the tax, 14% is not bad if one has had the property for more than just a few years. There should be some cap gain and while the tax is not limited to the gain, it more or less is equivalent to cap gain taxes plus the avoidance of RE taxes over the years (and interest on those taxes). Now , in how many jurisdictions in the US or elsewhere would there be no RE taxes just because the house is under a certain value.........

 

[steveinbsas]

However the geniuses over at AFIP calculate the tax, 14% is not bad if one has had the property for more than just a few years. There should be some cap gain and while the tax is not limited to the gain, it more or less is equivalent to cap gain taxes plus the avoidance of RE taxes over the years (and interest on those taxes). Now , if you have paid those taxes....( yeah , right).

HUH? What capital gain tax are you refering to? It simply does not exist. There is a transfer/stamp tax (aka sello), and it is usuallty split between the buyer and the seller...either 50/50 or 60/40.

The local taxes (ABL) are small and on a property worth less than 305,00 pesos (as of 2007) the bienes personales are zero...and don't apply here.


I don't think you know what you are talking about. What you assert "should be" (taxwise) does not mean the tax exists.

If I am wrong please correct me.

It looks like the seller is being charged taxes on assumed rents.

And, it looks like (as a non-resident) he is being screwed...by assumptions (and policies of AFIP) which have previously been discussed in this forum.

 

[TheBlackHand]

It could have been as much as 35%. He got lucky, if you can call it that. This is a new law that started in 2010. Anyone who owns property in Buenos Aires and isn't a legal resident and wants to sell their property, you should consider becoming a legal resident first.