Is real estate price converted to pesos at purchase?

[garryl]

To the O.P

The price of property in Argentina is in USD. this means you pay the exact price as agreed up with seller in USD - CASH or USD - transfer in USD to his USD account abroad or in in USD denominated account in Argentina.

However, the catch is that the price in the sale deed is put in pesos as per the offcial exchange rate prevalent by the central bank. For example, Lets say you buy a house today priced at 100,000 usd by the seller. you will carry 100,000 usd in CASH to the office of the Notary magistrate or where ever you have decided to sign the lease. However, the amount put in the sale deed will be 7,500,000 pesos and NOT 1,7000,000 pesos which is the real value. This means, when the times comes to sale, your tax liabilities or Capital gain tax will be based on appreciation from 750,0000 pesos to the value in official pesos value on day of the sale. Your property taxy ( bien personales) will be based on 7,500,0000 pesos value and not on 1,7000,000 pesos value.

The amount of commission to real estate agent and to the Notary magistrate will be in USD based on real USD value and as defined by percentage agreement with them. None will accept offcial pesos value for their commission.

It means - all persons involved in the deal will only accept USD cash. And all documentation/taxes/excesses basis Government rules will be done basis official pesos rate.

Hope all clear. Feel free to ask me any more questions.

It makes sense, but I am not sure there is capital gain tax in Argentina ? You pay a transfer tax at the beginning of the purchase.
People have no problem hiding 30% of the boleto part.
US is different, you pay a small transfer tax, .3%, but the annual property tax can kill you, from 1-3%, forever, makes owning a real estate a great burden. The police, teachers, and train system, demand a raise every year, your tax goes up fast at the same time. Property tax system is great threat to retired people with fixed income. This is the place where capitalism is much worse than socialism, where average people get screwed by capitalist system and socialist people. Property tax in US is like the doorman in Argentina, both are cancers.

 

[Alby]

Yes, you can pay in pesos, usd, euros..but sale deed will be written in pesos at official rate of the day of the signature.

no buyer will ask to be paid in pesos at official pesos rate. if they accept pesos, probably will ask for the highest exchange rate prevalent on the day, which will be decided basis the dollar price.

An escritura for a property exchanged for US dollars will show BOTH currencies: AN amount in US dollars (not necessarily THE amount paid) and then later will state a peso amount (the stated US$ amount divided by the official rate). I assure you this occurs.

 

[jlynch]

It makes sense, but I am not sure there is capital gain tax in Argentina ? You pay a transfer tax at the beginning of the purchase.
People have no problem hiding 30% of the boleto part.
US is different, you pay a small transfer tax, .3%, but the annual property tax can kill you, from 1-3%, forever, makes owning a real estate a great burden. The police, teachers, and train system, demand a raise every year, your tax goes up fast at the same time. Property tax system is great threat to retired people with fixed income. This is the place where capitalism is much worse than socialism, where average people get screwed by capitalist system and socialist people. Property tax in US is like the doorman in Argentina, both are cancers.

The capital gain tax is to be paid on the peso amount (even if the dollar amount stays the same - the peso amount would have increased dramatically due to inflation). discussed previously here https://baexpats.org/threads/buying-real-estate-in-ba.42262/post-380772

 

[Sequoia1321]

I don't quite understand. Can someone clarify again why it's not a good time to buy property in BA? Is it different if you're an expat who's going to be living there? Because I thought in BA you can get very high quality property in good neighborhoods for much lower prices than you would pay in US. Are prices going to drop further by big amounts? My concern is what if prices go up a lot all of the sudden? I remember in US after the housing crisis, when prices recovered it happened relatively quickly.

 

[EL_TIGRE_de_Tigre]

I don't quite understand. Can someone clarify again why it's not a good time to buy property in BA? Is it different if you're an expat who's going to be living there? Because I thought in BA you can get very high quality property in good neighborhoods for much lower prices than you would pay in US. Are prices going to drop further by big amounts? My concern is what if prices go up a lot all of the sudden? I remember in US after the housing crisis, when prices recovered it happened relatively quickly.

RE in BA population centers is very overpriced if you ask me. Better value to rent. No liquidity when it comes time to sell.

 

[EL_TIGRE_de_Tigre]

RE in BA population centers is very overpriced if you ask me. Better value to rent. No liquidity when it comes time to sell.

And when you do want to sell, your RE agent will serve themselves and your buyer will be looking to do a trade of something they possess along with some cash. In a word ... NUTTY!

 

[on the brink]

I don't quite understand. Can someone clarify again why it's not a good time to buy property in BA? Is it different if you're an expat who's going to be living there? Because I thought in BA you can get very high quality property in good neighborhoods for much lower prices than you would pay in US. Are prices going to drop further by big amounts? My concern is what if prices go up a lot all of the sudden? I remember in US after the housing crisis, when prices recovered it happened relatively quickly.

Prices have gone down by about 13-15%, depending on location. They will eventually go up again - that has been my experience. May take five years, but Argentines place enormous faith in brick and mortar investments - prices always recover, and then some.

 

[garryl]

The capital gain tax is to be paid on the peso amount (even if the dollar amount stays the same - the peso amount would have increased dramatically due to inflation). discussed previously here https://baexpats.org/threads/buying-real-estate-in-ba.42262/post-380772

Another reason not to buy in Argentina

 

[Alpinista]

I don't quite understand. Can someone clarify again why it's not a good time to buy property in BA? Is it different if you're an expat who's going to be living there? Because I thought in BA you can get very high quality property in good neighborhoods for much lower prices than you would pay in US. Are prices going to drop further by big amounts? My concern is what if prices go up a lot all of the sudden? I remember in US after the housing crisis, when prices recovered it happened relatively quickly.

It is a market price. And by definition it depends a lot on how the future economic development will be here.

Personally I am extremely pessimistic about the future here, but obviously i might be wrong about that. Eg on the brink seems to be more optimistic than i am:

Prices have gone down by about 13-15%, depending on location. They will eventually go up again - that has been my experience. May take five years, but Argentines place enormous faith in brick and mortar investments - prices always recover, and then some.

But even if you are somehow optimistic about the mid and long term prospects here, the real estate prices - from an investors point of view - only return ca 1-2% currently. And this will keep the pressure on the usd prices. (Keep in mind that the listed prices even before Covid were in most cases too high and well above market)
I think for the next 2-3 years the downside is much, much bigger than the upside and it will be a buyer’s market. Personally i expect the usd prices to fall 30-40% (from pre-Covid compared to end of next year)

 

[Greg S]

The question always to ask is: “What ELSE could I do with my money?”

Consider USD$250,000 properties in Florida and in CABA. One you can buy for 20% down and a rock-bottom 30-year mortgage in the most stable nation on Earth. The other, you tie up your entire $250k in real estate in a developing country.

I can think of many better ways to invest a quarter million dollars right now than buying real estate in Argentina.

I love CABA... but here I rent.