The Argentine tax entity the "AFIP" is imposing PENALTIES and LOTS of fines to Foreigners SELLING th

[California]

Hi Everyone,
I'm not sure if this is the area of the forum for this topic, but I just wanted to give out a WARNING BEFORE buying property here in Argentina. It might seem cheap, but the AFIP is cracking down!....It's EASY to buy.....but when you go to sell, you will be AUDITED. Read the following: or go to my link: http://www.hereicomeargentina.com/props/taxes.htm
The local tax entity, the “AFIP”, is cracking down on ALL types of real estate transactions. This includes BOTH Argentine AND Foreign purchases. They recently announced that they will be inspecting the real estate offices to compare the values of properties declared in the initial offers with the actual values listed in the titles. IF you’ve been reading my other topics, you will remember that the values declared on the titles almost never represent the real prices paid. So as not to repeat myself, please refer to the following link: and then come back and read this article.
The AFIP is INSPECTING and RETAINING for several months, ALL sales of properties OWNED by Foreigners!
Here’s how it works:
You decide to sell your property. You find a buyer, offers are made, you agree to a price and then the buyer’s Escribano, BY LAW, has you, (the foreign owner), fill out a special PERMIT that then must go to the local office of the AFIP for approval. The local AFIP inspector then RETAINS your case and goes through the ENTIRE history of your property from PURCHASE to SALE. This process has been known to take several months! (and they only do it for foreigners!)
Here’s what the AFIP inspector looks at:
The ORIGIN of the Funds:
He starts with the ORIGIN of the funds for your purchase. Did you bring the money LEGALLY into the country, passing it through the requirements of the Banco Central? MANY Americans come here, and go to exchange house, get their money and buy the properties WITHOUT ever declaring the origin of the funds or proving how the money was made. I am NOT SURE what the exact penalty is here, but I do know they are asking this question and giving fines!
"Impuesto a los Bienes":
They then look to see if you have paid your annual tax, called, “Impuesto a los bienes”. This is a sort of a luxury tax and is usually around 0.75% of the “declared value”. MANY Americans confuse this tax with the “ABL” tax paid 4 times a year, (usually received by mail). They are two different things! The yearly tax, “Impuesto a los bienes” usually requires a a document to be filed, by your tax accountant. If you never paid this tax, you can “catch up” at the time of the sale, but you will still need an accountant to prepare and present the docs for you.
Rental Income:
It’s not over yet! The AFIP then looks at your passport and asks you, “Did you stay in the property, or rent it out?” If your passport shows you were out of the country, then you will BE REQUIRED TO CLAIM RENTAL INCOME. Even IF you didn’t rent it. They will “presume” you did and add some “figures” to your fines and penalties. THIS is an area I CANNOT give exact numbers because I have not met an accountant here that knows the actual answer! (And I’ve talked with several!) They are all taking about it, but the general consensus is that EACH individual AFIP Inspector comes up with his own numbers!
Declared Values on Titles:
The saga continues: The AFIP then checks the original DECLARED value, (what you declared in your title when you first bought it), and compares it with the actual values of properties in that neighborhood. And here, once again, I cannot give you exact numbers of fines or penalties….BUT, I know they are sometimes “adjusting” those figures, causing you to have an increase in both the “Impuesto a los Bienes” AND the “Impuesto a los Sellos”, (a “stamp” tax required when bought or sold).
O.K….You can breath now. There are more details, but I am having a hard time getting all the information because it is not consistent between one AFIP office and another. The accountants have access to the information but there is SO much of it that not all can handle it.
SOLUTION: Do it correct, from the beginning, if at all possible!

 

[realba]

there's no stamp duty for first time purchases in Capital. Buyers in Capital pay stamp duty of 2.5% of the value declared in the escritura only when they buy more than 1 property or on first time buys on properties over us$200k.there's no stamp duty when you sell but you do pay a 1.5% transfer tax which is waived if you're using the funds to buy another property.in BA province, all buyers pay 2.2% stamp duty which is often shared between the buyer and seller.

as a foreigner you can pretty much avoid a lot of problems by getting residency (rentista visa is probably the easiest).and if you do things legally and don't let the locals push you around and into something 'extra legal' then you'll have no problems. I would be very interested to hear what a number of foreign owned agencies have to say regarding the inflow of money under the table. when i've helped foreigners buy i've always made sure it's been all legal. i don't believe the same can be said for 2 or 3 well known companies that help foreigners investing here.

 

[nikad]

I have to agree with you, and being local and working in real estate, I would still feel very unsafe doing these kind of transactions under the table...V

 

[chris]

The crackdown you speak of is for non-residents (investors), right? I believe this does not apply to foreigners who have "permanent residence".

 

[California]

They announced that from January on ALL purchases of property will be required to be done through bank checks or bank to bank wires. This will surely increase their tax revenues since there is an added tax on checks and wire transfers...but THAT IS ALL they will succeed at. They will not prevent the discrepencies between the declared sales prices reported on the titles and actual ones. The Argentines will just wire the amount declared on the title and then "pass" the difference "under the table". Money laundering and "false values on titles" will continue, as it always had. REMEMBER there is SO much undeclared money here in Argentina....it WILL BE spent somewhere! Today it is properties....tomorrow, it might be soccer balls....

 

[oldguy]

"if you do things legally and don't let the locals push you around and
into something 'extra legal' then you'll have no problems." Ha, ha, ha. As if that's generally an option. When we were looking at pouring a ton of money into a new tech company we wanted to start in Buenos Aires, we used a reputable real estate agency promoted heavily by the folks at International Living and wanted to buy in a new 55 unit lujo apartment building going up in Belgrano on Septiembre Once. The developers flat out refused to sell to us unless we told a six figure lie to the government about the price, and the realtor basically told us that was the way it was in BA. They said maybe fifteen percent of the sellers would even consider selling to us if we insisted on reporting the real price, and those seemed to be the ones selling properties that no one else would buy. We asked the folks in the economic development group in the government if they could help us, and they seemed more annoyed with us for rocking the boat than with the folks asking us to commit perjury. We got our deposit back and moved on.It's interesting that the fines are going on foreigners, not the natives, since my bet is that very few of them were the ones initiating the fraud. The problem is systematic, embedded corruption among Argentines, and it's not going to get fixed by fining a few expats who agreed to play by the local rules.

 

[pablosantelmo]

Help!!! we've landed in a bit of bother here and wonder if anyone has a perspective or a contact (we can pay for advice)......

We bought 2 properties here with no problem. Everything above board, correct price registered (despite an escribano suggesting I lower the price to decrease tax , I refused - wouldn't do that ANYWHERE).

For property no3 we gave a power to a real estate agent we trusted (!) and she, WITHOUT OUR PERMISSION, decided to register a lower value at the escritura. The Escribano must have been complicit because he based his fees on the real price. The seller - a US citizen - ditto. The result is we are feeling very FOOLISH but also worried.

We have a property worth 100k registered 2 weeks ago at 50k and the proof of transfer of funds shows 100k (yes, nobody told us what they were doing).

Do you think we should just come clean to AFIP and try to have the escritura amended? Could we just sell and buy something else (in which case we should avoid the income tax on the profit - which with the lower registered - false - value would be a huge amount).

I have never broken a law in my life and I was speaking to the real estate agent and the seller every day before the escritura and the escribano and NOBODY mentioned doing this......

ANY IDEAS?

thanks
in desperation.

 

[pablosantelmo]

re the above....to makes things even stranger....we've just found out the seller had no idea that the price was being "lowered" and he had paid tax on the full AFIP transfer value.

 

[anda]

Hi Pablosantelmo,
I am checking with a lawyer about this on your behalf.
What they have asked me preliminarily is How the seller (not yourself the buyer but the seller who was there during the signing) could possibly be unaware of the prices settled in the Escritura?? He didnt sign it?? He didnt read it??
As I receive the info I will post it here.
rgds,
Victoria

 

[realba]

'tis but a scam...the seller, being american, perhaps doesn't speak perfect spanish and the escribano and estate agents are in cahoots. basically, the seller should pay 1.5% transfer tax on the amount stated in the contract. however, it looks like on this occasion, he was charged 1.5% of the 'real' price. this means that the escribano pays 1.5% of $50k to AFIP, as is his duty, and keeps the 1.5% of the other, undeclared, $50k for himself, probably sharing it with the estate agent. to me it looks like a scam to defraud a) AFIP and b) the seller and c) the buyer. You have unfortunately got caught up in it due to the dishonesty of your power of attorney, the agent. I'm guessing as well that you paid IVA on the agent's and the escribano's fees for the entire amount (ie, 21% of their fees based on $100K), whereas in reality you should have paid:agent's fees of , let's say 3%, of $50k plus 21% IVA ANDagent's fees of 3% of $50k without IVA as the agent will not be declaring it.Same principle for the escribano.Actions to take...you could sue both the agent and the escribano. This will probably take a good 2-5 years and you might not win (depending on who these people know). It will also almost certainly make selling the property nigh on impossible as it will be under AFIP investigation.So, overall, i'm afraid you'll probably have to suck it up and accept that you were done over by a bunch of thieving gypsies (otherwise known as argentina real estate agents). Basically, when you sell you could either lower the amount on the escritura (and thus have lots of undeclared cash) or put the full amount on and possibly end up paying more tax, depending on how AFIP looks at it. You could, just to make yourself feel better, scare the agent and the escribano by paying a lawyer to write a threatening letter to them saying that you're going to report them AFIP blah blah blah but your real course of action is to pretty much forget it and put it down to experience.