Buenos Aires
Buy house or flat in Buenos Aires
Because of the devaluation of the Argentinean peso in the past several years, the property prices in Buenos Aires are generally inexpensive. Foreigners are allowed to own properties here without any restrictions. Properties are listed in many multiple listing services, but these are mostly privately owned. Properties are usually sold in Buenos Aires through advertisements or privately owned websites of property companies. Agents in Buenos Aires are required by law to possess a license.
The offer, known as the reservation (reserva) outlines the terms and conditions of the purchase offer including price, transaction terms, and the relevant payment terms. A good faith deposit of approximately 1% of the ownership value credits the buyer as a serious claimant. During the term of validity of the Reservation, the seller cannot offer and/or sell his or her property to any other party. The seller may accept, reject or make a counter offer for the reserva. When both parties agree on a selling price, the buyer will sign the contract of purchase.
The next step is usually the contract of purchase and sale. However, the parties sometimes agree to go directly to the signature of the Title Deed. The Contract of Purchase and Sale (boleto de compraventa) is a contract between the parties where the seller commits himself to transfer the property of the apartment to the buyer on a certain date, and the buyer agrees to make payment. The contract regulates the conditions of the property sale. At the time of the Contract of Purchase and Sale signature, the buyer must make a down payment of an agreed upon percentage of the contract price. The standard down payment is from 30% to 50% of the property value.
The boleto de compraventa does not actually transmit the title of the property, but compels the seller to do so and obligates the buyer to pay the agreed price. Both seller and buyer can legally force each other to close the transaction. The parties establish in the contract the name of the Public Notary who will arbitrate and determine time and venue for the Title Deed to be signed. It is general practice for the buyer to select the Public Notary.
The escritura (Title Deed) is the final property title transfer. At this stage, the buyer will pay the remaining purchase price. The Public Notary (escribano) will then clear the title. Before the Title Deed is signed, Public Notary will request the Real Estate Registry to issue a certificate (certificado de dominio) which temporarily blocks the property against attachment, mortgage or encumbrance for 15 calendar days. If the Title Deed is not executed before the Public Notary during those 15 calendar days, the Public Notary will ask the Real Estate Registry to extend the validity of the certificate. No Title Deed may be executed unless a valid certificado de dominio is held.
The Public Notary is responsible for ensuring that there are no charges or encumbrances over the property of which the purchaser is unaware. The Public Notary also files a record of the transaction to the Argentine tax authorities. The actual ownership rights are transferred when the buyer receives "possession" of the apartment (called tradición, which is perfected by the Title Deed signature and the surrender of the property keys to the buyer. As soon as the buyer accepts this transfer he/she becomes owner of the property. Foreign ownership is unrestricted except in certain areas of national security, such as frontier zones. A foreign investor who wishes to acquire immovable property in such area must seek the prior consent of the National Commission of Security Zones (Comisión Nacional de Zonas de Seguridad).
It is very difficult to obtain a mortgage in Argentina, especially for Argentine citizens. Until very recently all real estate transactions in Argentina were 100% cash. However, when mortgages are available the terms run for periods of 5, 8, 10, 12, 15 and 20 years with interest between 7.5 - 11% for loans up to ten years. Loans for more than 10 years are charged interest between 9 - 12%. The minimum income to qualify for a mortgage is AR$ 1500 /month. Buyers may not be older than 75 years on the estimated closing date of the mortgage. Finally, foreign nationals must have resided and worked legally in Argentina for at least a year in order to get a mortgage.
Transferring money from abroad can become a problem in the process of buying a property in Argentina, but is often necessary. If the seller does not have a foreign bank account, the buyer will have to to transfer the purchase value to Argentina through an Exchange Bureau (Casa de Cambio). 3% of the total amount will be charged as the Exchange Bureau fee. The Exchange Bureau will provide an account number in a US Bank so that the buyer can transfer there the purchase amount, which will be available in Buenos Aires for the seller within24 to 48 hours.
Obtaining legal assistance and using a Public Notary can prevent the Central Bank from withholding 30% annual tax, which would otherwise be applicable to any sums entering Argentina. Among the documentation to be supplied under Argentinean law for the Exchange Bureau, the buyer must fax the buying documentation, a copy of a pay slip, a report of your the buyer's background and the current position, and tax return forms for the previous two years either to the Exchange Bureau or an attorney.
The buyer will also be asked to show "proof of origin" of the funds used in the purchase (W-2 forms, 1040, etc). Money coming from stocks and bonds are considered as cash. There must be a compelling proportion between the transferred amount and the source of income.
The Argentine Civil Code offers certain warranties for the buyer in a real estate transaction. The property buyer warranties embrace the sufficiency of title (Evicción), and the lack of hidden defects and encumbrances, including defects of which the seller is unaware (Vicios Redhibitorios). These warranties guarantee full or partial reimbursement of the purchase price and other applicable charges in the event the buyer is deprived of the use or ownership of the property because of defects existing at the time of the sale. No reduction in the seller's liability will be effective if the seller actually acknowledged the defects. It is common practice to include a clause whereby the seller declares he owns due title of the property and that the property is free from any charges or encumbrances.
It is also customary for the seller to warrant that the property will be transferred with vacant possession, with a provision allowing the purchaser to rescind the contract and claim penalties if seller is unable to deliver the property with vacant possession. Nonetheless, it is strongly recommended for the purchaser to make a visual inspection for any signs of occupation. This is because the new owner will be subject to any rights that previous tenants might have.
Every prospective buyer of an Argentinean property must register for a tax identification number or CDI, which is the basic tax document needed for buying a property if the buyer is not conducting business activities in Argentina. To obtain a CDI, a domicile-certificate reported by the police is required. To obtain the domicile-certificate, the buyer must report to the nearest police station with a copy of his or her passport, along with the original, fill out a form, and pay 15 pesos ($3.50 US) for a domicile-certificate (Certificado de Domicilio). With 24 hours, a police officer will verify the temporary residence in Argentina by personally visiting the apartment or hotel listed on the application, after which the buyer will receive a signed certificate.
The next step is to report to the AFIP (Administración Federal de Ingresos Públicos) agency with the passport and two copies of the first page of the passport and the domicile-certificate. The AFIP will issue the CDI form (Formulario CDI), which the buyer must bring to the Entrance Desk (Mesa de Entradas). After that, the buyer will be issued a CDI or tax identification number and will be eligible to purchase property in Argentina, and pay taxes. It is also possible to execute a power of attorney for a third party to obtain a tax ID number on a buyer's behalf, in which case the domicle-certificate is not required.
The buyer will be required to pay a value added tax (VAT) of 21 % for the closing amount and the relevant charges including the lawyer or real estate agent commission. For a new apartment purchased directly from the developer or builder an additional VAT of 10.50%, however, this amount is usually included in the final price offered by the property developer or the real estate agent. No additional VAT is required on the property price for older buildings. A stamp duty on the purchase is also required. In Capital Federal, the duty is 2.5 % of the purchase value. This tax is normally split 50:50 with the seller. In Buenos Aires province, the stamp tax is of 4 %, which is also normally divided 50:50 between the buyer and the seller. If the buyer rents out the purchased apartment, income tax ranging from 9 to 35 % on all of your worldwide income will also be required. Annual income of more than 120,000 pesos (40,000 USD) falls into the top tax bracket of 35 %. Local taxes will be generally charged to the apartment tenant.
Anyone who resides in Argentina for more than six months (180 days) in a calendar year, is considered an Argentine resident for tax purposes. As a resident, in addition to the VAT and the income tax, an annual tax on personal assets, including residential real estate is also required. The rate is 0.5 % on assets valued up to 200,000 pesos (around USD 63,000) and 0.75 % on assets valued at more than 200,000 pesos. However, there is a non-taxable minimum of 102,300 pesos (around USD 30,500). Finally, there is also a local tax for city services such as street lighting and cleaning the streets known as Alumbrado, Barrido, y Limpieza or ABL, but this usually totals only several hundred pesos.Useful Addresses
Update 3/01/2011
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