When will property be cheap in Buenos Aires?

[steveinbsas]

Temporary residents may be eligible for the exemption, but only on their assets in Argentina.

To clarify, temporary residents are eligible for the exemption and only their assets in Argentina are subject to the bienes personales (personal asset tax).

 

[tangobob]

If you are referring to the bienes personales tax, the last info I had was that the rate varies from .5% to 1.25% depending on the value of your assets (real estate and cars).

Could you please clarify the $250,000 figure? Is is British pounds or US dollars calculated at today's rates?

When I arrived in 2006 the "exemption" (at least for residents with a DNI) for the tax was just over $100,000 pesos.

That was increased in 2009 to about $300,000 pesos.

By 2018 the exemption was increase to just over $1,000,000 pesos.

I don't know what it is this year. Its probably on the APIF website.

It was my understanding that a value of $250000 but as I do not have DNI it is a mute point so I have not checked on it.

Non-residents (no DNI) may pay "on everything" (from zero), but only on the value of their assets in Argentina.

I'm not sure if those assets are subject to a flat rate of 1% or fall into the progressive categories.

That was my understanding.

Temporary residents may be eligible for the exemption, but only on their assets in Argentina.

Permanent residents are (supposedly) subject to this tax on their world wide assets.

I daresay, that's a good reason for a wealthy foreigner (individual or couple) not to get permanent residency.

Unfortunately, (last I heard) migraciones requires temporary residents to become permanent residents at the fourth renewal.

That would cost a wealthy foreign couple a ton of money if they want to live in Argentina more than six months of the year...a lot more than paying the tax (from zero) on everything they own in Argentina if they don't have permanent residency.

That brings up the question. "How would AFIP ever know what assets (real estate and cars) they had in their home country?

I'm not sure how AFIP could ever find out...unless they have a "whistle blower" program and the rich foreigners tick someone off enough to drop a dime on them.



I think it may be possible to avoid taxation of "assumed rents" if you can provide utility bills that show the monthly electricity and gas consumption was near zero while you were not in Argentina, but this process can delay the sale by weeks (if not months).

Again that was my understanding, but knowing how things here change by the day and by whoever you are dealing with at the time, my stance is to just ignore it until the time comes. What you say is probably true today my information is ten years old, who knows what will be the case when I come to sell.

 

[HenryNisental]

Wait until the blood runs in the streets...........

 

[steveinbsas]

Wait until the blood runs in the streets...........

Coming soon to a barrio near you!

 

[camel]

Venezuela is the "blood in the streets" place at the moment.

 

[steveinbsas]

Venezuela is the "blood in the streets" place at the moment.

And I hear property is pretty cheap there, too.

 

[perry]

Again that was my understanding, but knowing how things here change by the day and by whoever you are dealing with at the time, my stance is to just ignore it until the time comes. What you say is probably true today my information is ten years old, who knows what will be the case when I come to sell.

Argentina is attractive for short term investments but long term it is very risky due to punitive laws that can change overnight, devaluations, and economic collapses . This is not a market for the faint hearted and timing is key .

 

[Jed]

I've watched the real estate market casually over the past few years and have seen listed prices steadily rise (who knows what is actually selling). Assuming prices are indeed rising and sales are still taking place, might this be because the economy is looking less and less stable and people are rushing to plant their savings in bricks to hold tight to weather the storm? Demand rises, prices rise. I just don't see the real estate market crashing when bricks seem to be the safe haven here. Thoughts?

 

[earlyretirement]

I've watched the real estate market casually over the past few years and have seen listed prices steadily rise (who knows what is actually selling). Assuming prices are indeed rising and sales are still taking place, might this be because the economy is looking less and less stable and people are rushing to plant their savings in bricks to hold tight to weather the storm? Demand rises, prices rise. I just don't see the real estate market crashing when bricks seem to be the safe haven here. Thoughts?

Many people that don't understand Argentina mistakenly believe because the economy is so unstable and inflation is so high that property prices would plummet. While I do agree that property prices are very high there, I don't think they will plummet. They could soften but in a country where there is NO safe investments except for bricks and land, real estate should always do ok over the LONG term.

With the instability of the peso, many, many many locals use it as a sort of bank account. The rental yields aren't too good but still will make a few percentage points per year in guaranteed cash flow. I still own several apartments but mostly have been selling my properties there in Buenos Aires the past two years as prices are high.

I didn't sell because of a fear that prices would crash. More so, that you can make a much higher yield with much better capital appreciation potential in other places. With the crazy inflation there, HOA and expenses have gotten really expensive even considering the US dollar exchange rate is so high. There has been a total explosion in the # of listings on the market which causes short-term rental prices to be capped for the most part. The only properties that I know of that are still making double digit % cash flow are larger properties that have limited competition. But the studio or 1 bedroom apartment is totally inundated and difficult to make great returns.

Plus Argentina being Argentina you have hassle factor of dealing with shady property managers, horrific utility companies, internet companies which can be problematic to deal with or constantly going down.

I'll always keep a few properties in Buenos Aires but rental yields are not good there. But it's exactly as you mentioned, "Bricks/land" are a safe haven for many locals. Also, you have to remember all of those billions of dollars that came into Argentina during the last amnesty program all went into real estate or will go into real estate. I recently sold 2 very small studio apartments in Soho and sold them within a few days of listing it. My realtor found a potential buyer but in the end I just sold them to a local friend. Their family just continues to build up their real estate portfolio.

Personally, I believe this is a good time to sell. NOT a good time to buy. Most of the buying is NOT by foreigners but by locals. I sold 7 of my properties all in the past 2 years and in each case it was a local that bought it. In each case they were locals that brought back $$ during the last amnesty program.

For foreigners there isn't really any good reason to buy unless you're planning to keep it for the long haul or retire there and you are absolutely in love with the property. Otherwise, with the plethora of properties on the rental market you can easily rent something wonderful on Airbnb vs. buying.

No one can say if property prices can keep going up. Personally I think they are very expensive now relative to rental yields but I'm not in the camp that says prices will crash. What I've noticed is that higher end bigger more expensive properties are sitting on the market longer. But my studio, one and two bedroom properties sold relatively quickly. But they were all move in ready and renovated.

Plus, to add insult to injury for reasons not to buy now...... previously there was 0% capital gains tax. But starting if you purchased a property after January 1, 2018 you have a capital gains tax when you sell your property.

Really the key and what it comes down to when you buy real estate is location, location, location. Over the LONG term I always feel comfortable buying and holding real estate in premium areas. Typically you can get a premium on rentals so you have decent to good cash flow on rentals until you sell. In times of recession, of course the values will go down but over the long term they will typically come back up.

Case in point, in many areas in the USA property prices fell 50%. I purchased properties in the USA in 2011 and 2012 at the bottom and today they appreciated over 50%. Much of the question to ask yourself is why do you want to buy? What's the motivation and what will you do with it. To many people that are buying to live, it's not really an "investment" to them but a "home" where they want to nest and settle down in. If that's the case then even now at the high prices, it can make sense to buy in Buenos Aires.

I have close friends that fall into that category and even though prices are high in Buenos Aires they are still much much cheaper for them vs. NYC or London where they live and bought insanely nice properties in Recoleta and Palermo Soho.

 

[earlyretirement]

If you are referring to the bienes personales tax, the last info I had was that the rate varies from .5% to 1.25% depending on the value of your assets (real estate and cars).

Could you please clarify the $250,000 figure? Is is British pounds or US dollars calculated at today's rates?

When I arrived in 2006 the "exemption" (at least for residents with a DNI) for the tax was just over $100,000 pesos.

That was increased in 2009 to about $300,000 pesos.

By 2018 the exemption was increase to just over $1,000,000 pesos.

I don't know what it is this year. Its probably on the APIF website.

Non-residents (no DNI) may pay "on everything" (from zero), but only on the value of their assets in Argentina.

I'm not sure if those assets are subject to a flat rate of 1% or fall into the progressive categories.

Temporary residents may be eligible for the exemption, but only on their assets in Argentina.

Permanent residents are (supposedly) subject to this tax on their world wide assets.

I daresay, that's a good reason for a wealthy foreigner (individual or couple) not to get permanent residency.

Unfortunately, (last I heard) migraciones requires temporary residents to become permanent residents at the fourth renewal.

That would cost a wealthy foreign couple a ton of money if they want to live in Argentina more than six months of the year...a lot more than paying the tax (from zero) on everything they own in Argentina if they don't have permanent residency.

That brings up the question. "How would AFIP ever know what assets (real estate and cars) they had in their home country?

I'm not sure how AFIP could ever find out...unless they have a "whistle blower" program and the rich foreigners tick someone off enough to drop a dime on them.



I think it may be possible to avoid taxation of "assumed rents" if you can provide utility bills that show the monthly electricity and gas consumption was near zero while you were not in Argentina, but this process can delay the sale by weeks (if not months).

Argentina can't even tax properly on assets people have INSIDE Argentina so the last thing I'd worry about is them trying to track and tax assets OUTSIDE of Argentina.