Let the property buyer beware

[Ceviche]

Lucky Luke, If your main purpose is to buy and hold the property for at least 10 years or more, you should not worry too much about it.

If you are buying to renovate and resell, then you should consider paying all in blanco

 

[FallenAngel]

Like with anything those with problems will be more vocal. I have bought a property here in Argentina and know several others. There were no great surprises and things were smooth. It is true that the real purchase price is usually not what is recorded. That may or may not be to your benefit. As with anything do your own due diligence and hire a trusted escribano.

 

[BobbyHank]

We bought some land a couple of years ago, cash deal with a few payments over a years time. Having just sold our home in the states, with inspections and mountains of disclosure forms etc... I was foolishly feeling kind of real estate savvy. Mind you my Spanish is really bad and my Spanish finance vocabulary is non-existent, as is my Arg. legal knowledge. Anyway, upon the meeting for the second payment, the agent announced that it was time for him to get paid his commission, and then everyone looked at me.... why's everyone looking at me? the seller pays the commission right...?! I was wrong, and it was an expensive lesson! Ahhhh feeling too old to keep paying tuition!!

 

[jantango]

For example, you agree to buy a property in BA for an agreed upon price. The owner then asks you to reduce the sale price in your property title. The owner pays taxes on the sale at the stated price in the legal documents.

Then 15 years later, you decide to sell the property. Obviously, the value has increased. So, you will pay taxes on the difference between the stated value in the title of record and the current market value -- since the sale price was reduced for the convenience of the seller, you end up paying taxes on more than the difference between the price you actually paid as buyer and the amount you sold it for later.

I'm taking a wild guess at how the tax system works related to real estate in BA. This seems logical, but the seller always ends up paying more after reducing the price at the request of the original seller.

In 2005, the asking price for a unit was $24.000. The seller asked the buyer to reduce the selling price to $18.000 for the property title. The buyer agreed. The current market value of the unit today is $50.000. Selling the property for today at that price means the owner will be paying taxes on the difference between $18K and $50K, instead of $24K and $50K.

Does anyone know the current real estate tax for this hypothetical sale?

 

[BobbyHank]

For example, you agree to buy a property in BA for an agreed upon price. The owner then asks you to reduce the sale price in your property title. The owner pays taxes on the sale at the stated price in the legal documents.

Then 15 years later, you decide to sell the property. Obviously, the value has increased. So, you will pay taxes on the difference between the stated value in the title of record and the current market value -- since the sale price was reduced for the convenience of the seller, you end up paying taxes on more than the difference between the price you actually paid as buyer and the amount you sold it for later.

I'm taking a wild guess at how the tax system works related to real estate in BA. This seems logical, but the seller always ends up paying more after reducing the price at the request of the original seller.

In 2005, the asking price for a unit was $24.000. The seller asked the buyer to reduce the selling price to $18.000 for the property title. The buyer agreed. The current market value of the unit today is $50.000. Selling the property for today at that price means the owner will be paying taxes on the difference between $18K and $50K, instead of $24K and $50K.

Does anyone know the current real estate tax for this hypothetical sale?

I sure don't, but if I read it right, it was announced that AFIP was shuttered today, so I think it's anyone's guess...

 

[Ries]

In Argentina, you absolutely MUST employ a good escribano. and the only way to find a good one is to ask an Argentine who has frequently, or at least recently, bought or sold (preferably both) real estate. The more property, the better.
They certainly exist, as they are involved in every real estate transaction.
I would suggest getting a recommendation from the colegio de escribanos- they are not ALL crooked, and the trade organisation is most likely to know a good one, as opposed to your brother in law who has never bought real estate.
Regardless, hire one.
Its the escribano's job to find unpaid bills and taxes, to make sure there are no legal or financial encumbrances, to make sure its allowed use is what you want, and they can tell what the tax would be today- nobody knows about the future, obviously.
The tax you would pay on sale has been around 10% to 12% of the governments value of the property, which is not the sale price...
they have a very complicated system for appraising, which is sort of the ABL assessment, but I sure cant tell you that with any legal backing- only the escribano, and if needed, a lawyer they recommend, can tell you what the tax might be, and what the "value" is...
The system here is based on the French Napoleonic laws, and does not resemble the USA.
I have bought a couple of places here, and am considering moving- and without an escribano, you are lost...

 

[Mondongo]

I rented a unit for three years before the owner decided to sell it. I decided to buy the unit in 2005. I went into the process blind. I obtained a CDI and transferred payment from my US bank to hers. She asked if she could reduce the purchase price represented in the title. I had no problem with it, but little did I know that she asked so she could pay less in taxes for the sale. Learned my lesson later. The title has a figure that is $6000 less than I paid for the property.

The three sisters who were heirs to their parents' unit next to mine finally sold it a few months ago. I knew that neither the real estate agent nor the heirs would offer any important information to the prospective buyers. I hoped to be able to help in some way, but it didn't come to pass. The new owners bought the unit without knowing what they are getting into. Honesty is not the policy when it comes to real estate transactions in BsAs. One needs to ask lots of questions about every detail of the building property, not only the unit for sale. Knowing the financial situation of the Consorcio (condo association of owners) is of utmost importance. If you don't ask questions, the owners or real estate agent will not offer the information. I met the new owners during a visit, but they already closed the deal. Due to poor management by several administrators, the consorcio has an enormous debt to AySA in excess of four million pesos. If we do not pay the debt in a year, they can obtain a court order to sell the units through public auction in order to pay off the debt. The young couple who will soon be my next-door neighbors knew nothing about the water bill debt. The interest on the debt is $15.000ARS a day!

Ask for a copy of the current monthly liquidation of expenses to get an idea of what is included and how much you will pay. A copy of the internal rules of the consorcio. Get a complete tour of the building in which you may be living before you sign the papers. This will give you a clear idea of whether the building is maintained with repairs, painting, etc. Any debt by the sellers must be paid before closing.

Ask questions. If you aren't fluent in the language and the sellers don't speak English, hire a translator for help. Buying property is too important to overlook any details before signing on the dotted line.

READ BEFORE BUYING PROPERTY IN ARGENTINA

Guide to buying property in Buenos Aires as a foreigner

We will tell you everything you need to know about buying property in Buenos Aires as a foreigner, from legal requirements to finding the perfect neighborhood.

thelatinvestor.com

As the old adage goes, "En todos lados se cuecen habas". Rental scams occur worldwide, not just in Argentina. Argentina should not be singled out as a bad actor, as many professionals—real estate agents, escribanos, and lawyers—conduct honest and straightforward transactions daily. They may take offense at the phrase, "Honesty is not the policy when it comes to real estate transactions in BsAs."

Rental Listing Scams

When you’re looking for an apartment or vacation rental, you’re probably looking at price, location and amenities.

consumer.ftc.gov

 

[Ries]

Double post

 

[LuckyLuke]

We bought some land a couple of years ago, cash deal with a few payments over a years time. Having just sold our home in the states, with inspections and mountains of disclosure forms etc... I was foolishly feeling kind of real estate savvy. Mind you my Spanish is really bad and my Spanish finance vocabulary is non-existent, as is my Arg. legal knowledge. Anyway, upon the meeting for the second payment, the agent announced that it was time for him to get paid his commission, and then everyone looked at me.... why's everyone looking at me? the seller pays the commission right...?! I was wrong, and it was an expensive lesson! Ahhhh feeling too old to keep paying tuition!!

Oof that's a tough way to find out brother. I'm surprised the agent let you get that far along without paying them. I mid purchase and I had to pay the agent before I was allowed to even put in an offer, let alone meet the seller.

 

[LuckyLuke]

In Argentina, you absolutely MUST employ a good escribano. and the only way to find a good one is to ask an Argentine who has frequently, or at least recently, bought or sold (preferably both) real estate. The more property, the better.
They certainly exist, as they are involved in every real estate transaction.
I would suggest getting a recommendation from the colegio de escribanos- they are not ALL crooked, and the trade organisation is most likely to know a good one, as opposed to your brother in law who has never bought real estate.
Regardless, hire one.
Its the escribano's job to find unpaid bills and taxes, to make sure there are no legal or financial encumbrances, to make sure its allowed use is what you want, and they can tell what the tax would be today- nobody knows about the future, obviously.
The tax you would pay on sale has been around 10% to 12% of the governments value of the property, which is not the sale price...
they have a very complicated system for appraising, which is sort of the ABL assessment, but I sure cant tell you that with any legal backing- only the escribano, and if needed, a lawyer they recommend, can tell you what the tax might be, and what the "value" is...
The system here is based on the French Napoleonic laws, and does not resemble the USA.
I have bought a couple of places here, and am considering moving- and without an escribano, you are lost...

Moving local or abroad?