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Realtors’ and lawyers’ fees in Argentina and other property purchase costs
Transaction Costs
Fee/ % / Who Pays?
Realtor Fees / 3% - 4% (+21% VAT) / buyer
Notary Fees / 1% - 2% / buyer
Transfer Tax / 1.5% / buyer
Stamp Tax / 1.1% - 1.25% / buyer and 1.1% - 1.25% / seller
Owner’s Fees / 2% - 3% (+21% VAT) / seller
Costs paid by buyer: 7.23% - 9.59%
Costs paid by seller: 3.52% - 4.88%
Roundtrip transaction Costs
10.75% - 14.47%
Property purchase process in Argentina
Foreigners can purchase property without restrictions. A CDI (tax ID) number must be obtained from the Government before buying. Also, an Argentinean representative must be appointed by non-residents to pay the property tax for them.
Middle and high end real estate in Argentina (both for locals or foreigners) is always sold in US$ cash. This is because of the unstable Argentine Peso. Middle and high-end properties cover most of the northern suburbs of Buenos Aires, and most of the areas within the downtown that foreigners invest in, farms, and any tourism related areas in the interior of the country.
Bringing in US dollars is not free. Withdrawal of money from the bank is taxed. Moreover, one can only withdraw Argentine Pesos. A buyer will have to buy US dollars with the Argentine Peso just to convert the currency back to what is accepted in real estate transactions. It is possible to lose around 0.8%-1% of the money value when going through the official system. If one will opt to go through a private broker, she says it is usual to pay around 2%.
Once the purchase price of the property has been agreed on, the buyer is expected to give a “boleto” or a down payment, usually around 30% of the purchase price. This is held in trust by the real estate agent. The “boleto” acts as a security. If the buyer pulls out of the transaction, the down payment cannot be refunded. If the seller backs out, the seller will have to pay the buyer double the amount of the “boleto”.
The “escritura” is the date of the closing of the transaction. All payments are settled and the official transfer deed is signed.
Transfer Tax is paid only if the transaction is not subject to income tax. Stamp Duty in the suburbs of Buenos Aires is at 2.2%, and is shared by the buyer and the seller. Each will pay a 1.25% Stamp Duty in downtown Buenos Aires.
Taxes involved in the purchase of property are imposed by local authorities such as the provincial and municipal governments. Each of the 23 provinces and the Government of Buenos Aires City have the right to promulgate their own tax laws directed at certain economic activities within its jurisdiction. This explains the varied ranges of the tax rates in the purchase of a property.
In the federal district (City of Buenos Aires), the rates for Stamp Tax are progressive and range from 0.75% to 2.5%. In the province of Buenos Aires, the rate is 4%. The rates are 1.8% Catamarca, 1.5% in Córdoba, and up to 2.5% in Mendoza
The purchase process lasts between one to two months. The only documentation required by a foreigner is a Tax ID which is obtained from a Notary Public (Escribano) who, in turn, will require a power of attorney to do so.
In recent years many foreign investors have acquired considerable areas of farming and live-stock raising land, as well as buildings in urban areas in Buenos Aires. Most real estate is held as freehold property; long-term leaseholds are uncommon.
The whole process of registering a property takes about 44 days to complete.
Argentina, make your dream investment come true. |
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