Buying real estate in Argentina

Argentina Real Estate Ownership Laws

Foreign Ownership of Rural Land in Argentina

Foreigners have the same property rights as locals in Argentina. However for purchases of rural lands a special certificate from the national land registry (Tierra Rurales) is required in order to authorize the sale to a foreign national. For properties located within 40 km of the border, a security clearance needs to be obtained from the interior ministry to allow a foreigner to own and receive the title to the land in the Zona de Frontera during which period, a stamped boleto (registered private contract) will act as de facto “title” that gives the right to the land to the new owner until the actual title is allowed to be issued by the interior ministry.

In order to purchase land in Argentina, you would need a CDI (Tax ID) number (also known as CUIL Number – “Clave Unico de Identificacion Laboral” or CUIT Number – “Clave Unico de Identificacion Tributarial“).  A CDI number is normally obtained by the acting notary (escribano).   To optain this number on your own you would go to the Federal tax office (AFIP) and give them your passport and address, they will then give you the simple form needed. You will have to complete the form and provide copies of the related documents in order to get your CDI number.    Once completed, you will be able to purchase property in Argentina and pay taxes.

Real Estate Agents

Real estate commissions or brokerage fees are usually 3% of the purchase price for the seller and 3% – 4% for the buyer – depending on the location of the property. Rural commission rates tend to be higher than urban centers.   Real estate fees are paid at the time a deal is accepted, finalized and a down payment has been made.

Title Companies

In Argentina, a title search is done by an “escribano” (similar to a notary).    It is the notary’s responsibility to supervise all real estate transactions, title transfers, and to uncover any problems with the title.   Argentina has a sophisticated historical title registry.   This helps foreigners trace the ownership history of the property in question.   You will be notified by the notary if there are any problems with your property’s title.   Notary fees can range anywhere between 2% and 3%.

Real Estate Purchase Process in Argentina

A)    Reserva (Offer): stating price, closing date, name of notary public selected and special conditions, accompanied by a strong binder which should be returned doubled if the owner backed out of the deal before closing date. You need to place a deposit with your offer. Typically 10% is enough. If it’s a really expensive property they will ask you to put more. It’s held in trust by your realtor. It basically shows that you are serious about purchasing the property. The seller has 3 options. (1) accept your offer; (2) reject your offer or more commonly (3) counter-offer. It is important to request updated floor plans that reflect actual construction. Failing to this may lead the new buyer to the payment of back taxes otherwise payable by the previous owner.

B)     Boleto (Private contract): It is an intermediary step, usually taking place within the first fifteen days following acceptance of an offer, allowing owners to receive between 30 and 50% of the purchase price and, thus, enabling seller to secure a replacement property for the one to be sold.

C)    Sena (downpayment): If both parties can close fairly quickly then they will forego the “boleto” and they will go straight to escritura. Typically though, they will ask you to do a “Sena”. A Sena is not a full blown boleto but typically 6% to 10%. It works the same way as the boleto. If you back out as the buyer you lose this money. If the seller backs out they will need to refund your sena and double it.

D)    Escritura (Title Transfer): The actual closing date where all parties get together to sign the official transfer of deed. Prior to this situation, the acting notary public must be in possession of the old title deed, have performed the necessary title searches, received a surveyors report on the property and verified debts, liens, encumbrances, etc. When buyer and seller go straight to “Escritura„, 100% of the proceeds are delivered at the time or a transfer to a foreign bank account is set up and verified at a second meeting. It is important to note that the payment required for the escritura is not required to be made in pesos. In fact, most owners will only accept US dollar bills or transfers to their accounts held abroad. It is not required that the buyer personally be present to sign the transfer of deed. One may leave a power of attorney to a third party to sign on one’s behalf. Current banking legislation has been tightened up following pressure from the US government regarding money laundering. In this regard, local banks will require copies of your previous year tax return in order to receive funds.

Financing

Institutional financing for real estate purchases in Argentina is a difficult task.   Most of the time, financing is not available.   If you are able to locate a financing offer, the interest rates are usually astronomical and unaffordable (i.e., as much as 15% per year, 10 year loans with a down payment as high as 50% of the purchase price).  Many real estate agents recommend getting a loan in your home country and then use it to purchase the land in Argentina.    The reason financing opportunities are so scarce for foreigners is that they cannot show proof of income, credit history, and employment within the boundaries of Argentina since their primary residence and income is elsewhere.   Local Argentinean banks will not work with you on a loan without this information.   Foreigners, under most circumstances, must pay 100% cash when purchasing real estate.   Buyers should take advantage of any financing offered by a seller.

Property Taxes

There is an annual “asset tax” or “personal goods tax” that must be paid if you own property in Argentina.   It will usually amount to less than 1% of the value of your property.   The tax return must be prepared by your accountant in Argentina and submitted on your behalf along with your payment.   This tax is assessed to both locals and foreigners.   Buenos Aires properties have a stamp tax, “impuesto de sello” associated with them.   When transferring the title of a property in this area, the fee of 1.25 % is to be paid by both the seller and the buyer to fulfill this tax requirement.    This tax rate can differ between provinces.    If you are purchasing for the first time, and it is your only purchase, this fee can possibly be waived.  There is also a provincial property tax based on a “fiscal” value for the property established by the province tax authorities.

Rural property taxes could be as low as a couple of hundred dollars a year.

Closing Costs

In downtown Buenos Aires the stamp tax is 1,25% for each of buyer and seller, and applies only to properties not declared as 1st. and only personal residence. Stamp fee of 2.5% of the sale value applicable to both buyer and seller only in the rural and suburbs.

Notary costs: Approximately 1% – 2% of closing value.

Notary fees: 2% to 3% of the closing value.

Realtor fees payable by purchaser:

Rural and Suburban Areas the buyer’s real estate fee is 4% + VAT of 21%

downtown BA 3 to 4% + VAT of 21% on same (i.e. 3.63 to 4.84%)

The seller must pay 3% commission plus VAT of 21%.

Homeowners Insurance

Homeowners insurance can be purchased from almost any of the major insurance companies in Argentina.   You can expect to pay about 50% less in Argentina than what you would pay in your home country.

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