Re: abl (buenos aires taxes) and real estate prices

[steveinbsas]

A few days ago I read a few posts about increases in the BA property
taxes, but I can't find the topic or related remarks in any of the
recent posts. Someone wrote that their abl tax increased by 58%. Mine
increased form $196 pesos to $676 pesos. Yes this is a HUGE increase,
over 300%! Nonetheless, the new amount is just over $200USD. I knew
that my previous tax was absurdly low.
Another poster wrote
that real estate prices in BA have doubled in the past couple years.
Yes, they have doubled from the lows of 2002, but this was after after
declining by as much as 50% following the economic crisis. As of 2005,
average prices had returned to about the level of 1999. In the past two
years prices in Recoleta and Palermo have surged at least another 20-30%,
with sq meter prices now $2,000 to $3,000 (US dollars) for "recycled"
and new apartments in the more desirable locations. These are still very attractive prices to many
foreign buyers, but are no longer affordable for the vast majority of
the locals.If you wonder why there is some resentment from
Portenos toward foreigners, give this some thought. "We" (the
foreigners) have been a bit too gleeful about how cheap everything has
been here, including real estate. I seriously doubt that this is
something the locals appreciate hearing. They assume we are all rich,
even if we aren't. Of course it's relative. Keep in mind that the crash
of the peso (following Argentina's default on IMF debts) in early 2002
left the Portenos with about 33% of the purchasing power they had
previously known, as the exchange rate rocketed from 1-1 to 3-1 in
favor of the US dollar.
Today the median income in
Argentina is the equivalent of about $9,000 US dollars, while it's
$34,000 in the US. Most of us here are living on a lot less, but even a
US retiree receiving full social security benefits is likely to have a
higher annual income than the average (professional) Porteno who is
still working.
Soooo, are the new property taxes really so
high (for expats)? This is a quote from today's yahoo news about a
retiree in North Indianapolis, Indiana who bought a deteriorating
house, tore it down and built a new one. He thought he was financially
secure:
"Then he got his property tax bill that had nearly tripled. His bill in 2005 was about $2,900 and was $4,600 last year. This year's bill — $7,568." I'll pay my Argentine taxes with a smile. I won't complain, but I won't gloat, either.

 

[G]

Holiday Greetings to all!
steveinbsas, with all due respect, you are only addressing the "how well the foreigners have it made" re: ABL, but for those Portenos who earn in pesos,buys and tries to save in pesos, this is a very,very big tax jump. The ABL just do not affect us foreigners, the Portenos have to pay them too and they have it tougher. And think that the Portenos who have no prospect of making much more money next year have to get that money from some portion of their daily budget. The crazy thing about real estate is that, the rules and law of such a business venture affects every one in society - from the real estate foreign mogul to the striving- very hard working person who is trying to own his own home in Argentina.
It is easy to pay something off when you have good prospects of monetary source but what about if you don't. The resentment by the locals towards those foreigners that came to Argentina with savings from the US, to buy property worsens because now the foreigners who came with their dollars or euros CAN pay the higher ABL (no complaints nor gloating involved) and the locals are still struggling to make that ADDITIONAL increase.
The lesson here as I have been told is...in Argentina, just like anywhere in the world,..the gap between the rich (not the middle class, mind you - coz that tax bracket and status in society is shrinking as well) and the poor is getting much bigger fast.
I think the government is really sticking it to the lower class and there is just no heart in that.

 

[steveinbsas]

steveinbsas, with all due respect, you are only addressing the "how well the foreigners have it made"..G, I think that I clearly addressed the economic plight of the Portenos, especially where I noted that their purchasing power had declined by about two thirds after the devaluation of the peso and noted the present relatively low annual income in Argentina. I don't think so many Portenos would resent the ability of a foreigner to pay the tax (increases)...but they would resent a foreigner's thoughtless attitude (glee), which is why I won't gloat about how much lower they still are...here.
I am not a foreign real estate mogul. I own one apartment in Buenos Aires. I have residency (precaria) in Argentina and intend to make it permanent after I have been here three years. I don't have any other property anywhere else in the world. I am not retired. I am also "working to make ends meet" but since I don't rent my apartment to others, I don't consider owning it a business venture. Property taxes are a way for a government to raise revenue, but they aren't based on income so they aren't always fair. The retiree in Indiana (presumably on a fixed income) faces the same problem as the Argentine family: how to pay the increase without the prospect of making much more money. The government may not intentionally be "sticking it to the poor" but that certainly is a consequence of the tax increase.

 

[rmartinbuenosaires]

I have been told twice this past week that the Argentine government under the stewardship of Sra. Fernandez is talking about making some changes early next year. One I've heard is the reevaluation of some real estate prices which, I am told, all of those highrises being thrown up in Palermo and Las Canitas as the price for those (abeit cheap and shoddy construction) is too high for most Argentines to afford. This will not really affect more affluent areas such as Recoleta...so I am told. On the other side, they also recognize that the peso should perhaps be devalued additionally to around 4.5 to the dollar, which when you factor in inflation, quality/availablitity of goods, etc. seems fair. Lets keep our fingers crossed on this one.

 

[Celia]

Although my 58% increase does not sound too bad, the actual bi-monthly increase in my ABL is over $900 or about $4500 a year.
Of course, I know I should be punished for having such a large property even though it is in Constitucion and not Palermo Hollywood...but if my ABL does increase massively again, I don't think I will be alone in having to sell up and move out.

 

[sergio]

Celia, I am just astonished at the increase in your ABL. Just how much is your bimonthly payment? Are you sure that there was not a mistake?

 

[VMSmith]

This is one reason why investing in this country is such a crap shoot.Based on my last year's ABL, I took the sum...divided by 12...and every month put that much money in an envelope. You know, kind of thinking I'd get a little bit ahead of the game. LOL! Well, the game suddenly changed, as seems to be the norm around here.
At some point, this sort of behavior is going to turn around and bite them on the butt.