buenos-aires-real-estate/foreign-ownership-property-argentina
Legal restrictions on ownership for non-resident persons
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”).
Investor must provide the Commission with documentation concerning the projected use for the property to be purchased (capital to be invested, nationality of labour to be employed, etc.), and documentation concerning the buyer company (company´s by-laws, latest balance sheet, details of the members of the board of directors, etc.), all of which must be certified by a Public Notary, translated by a public translator and legalized in the nearest Argentine consulate in the country of origin of the investor or “Apostilled” through the systems of the Hague Convention of 1961 on Recognition of Foreign Documents if the country of origin of the investor has adhered to the system of the Hague Convention of 1961.
Although the power of the National Commission of Security Zones to grant approval for a purchase by a foreign investor is discretionary, the Commission’s permission is normally granted.Additionally, due to recent regulations of the Public Registry of Commerce of Buenos Aires, any purchase when made by a foreign company, must be also recorded by the Public Registry of Commerce. Moreover if the Public Registry of Commerce considers the foreign company is not merely acquiring the property, but carrying out permanent commercial activities in Argentina, the Public Registry of Commerce may request also the registration of the foreign entity in the named Public Registry of Commerce.
Transfer Money to Argentina
Transferring money from abroad can become a need and a problem in the process of buying a property in Argentina. Therefore, this guide offers you some suggestions to help you trough this stage.
First of all it is very important to acknowledge that all transactions in Argentina are 100% cash.
If the seller does not have a bank account outside Argentina (most of the times), you will have to transfer the purchase value to Argentina through an Exchange Bureau (“Casa de Cambio”). 3% of the total amount will be charged to you as the Exchange Bureau fee. In the process, the Exchange Bureau will provide you with an account number in a US Bank so that you (the buyer) can transfer there the purchase amount. Same amount will be available in Buenos Aires for the seller 24 to 48 hours later.
Legal consultancy and the help of a Public Notary is recommended so as to prevent a Central Bank 30% withholding annual tax applicable to any sums entering Argentina, unless performed for capital expenditures (such as buying a property). This legal support will also help to avert future claims of the Argentinean tax authorities in income coming from the purchase amount.
Among the documentation to be supplied under Argentinean Law for the Exchange Bureau you (the buyer) will be required to fax to either the Exchange Bureau or your lawyer, the buying documentation, a copy of your pay slip, a report of your work background in your current position, and eventually your last two tax return forms.
Due to money laundry policy in Argentina, you (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. When probing the origin of the funds there will have to be a compelling proportion between the transferred amount and the source of income.
Warranties granted to the buyer
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 even those defects of which the seller is unaware (“Vicios Redhibitorios”).
If after the sale of the property and during the term of the warranties, the buyer is deprived of the use or ownership of the property because of defects existing at the time of the sale, the buyer is entitled to claim from the seller full or partial reimbursement of the purchase price and other applicable charges.
Since the above provisions are not of mandatory application, the parties may extend or reduce the seller’s liability for those warranties. However, any reduction in the seller’s liability will not be effective if the seller actually acknowledged the defects. Therefore it is common practice in most purchase contracts 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.
Furthermore, it is customary for the seller to warrant that the property will be transferred with vacant possession and free of occupants. The purchase contract may include a provision allowing the purchaser to rescind the contract and claim penalties in the event that the seller is unable to deliver the property with vacant possession.
However it is recommended for the purchaser always making a visual inspection for any signs of occupation in the property. Because if there were any tenants, the new owner will have to take the property subject to any rights that the previous tenants might have, and could only submit a personal action against the seller for pre-existing damages or eventually for the rescission of the contract.
Taxes
Tax Identification Number
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.
In order to obtain a CDI, you will need a domicile-certificate reported by the police. To obtain the domicile-certificate you must go to the police station in your area, with a photocopy of your passport, along with the original, fill out a form, and pay 15 pesos ($3,5 U$S) for a domicile-certificate (“Certificado de Domicilio"). In one day time, a policeman will visit you at your apartment or hotel to verify your temporary residence in Argentina. After visual inspection the policeman will provide you with a signed certificate.
You will have then to go to the AFIP (tax authorities in Argentina) agency provided in your certificate, with your passport (original and 2 copies of the first page), and the domicile- certificate. In the AFIP Agency you will have to collect a CDI Form ("Formulario CDI"), and bring it to the Entrance Desk (“Mesa de Entradas”). You will be given a CDI or tax identification number and you will hence have the power to purchase property in Argentina, and pay taxes.
If you do not wish to spend time coming down to Argentina, you can execute a power of attorney so that someone can obtain your tax ID in Argentina. If you wish to grant a power of attorney, you do not need the domicile certificate, because your lawyer or grantor will take care of that.
Again a legal consultant would assist you getting your tax ID and sorting things out with the police and the tax authorities.
Taxes to be paid on a property purchase
a) Taxes to be paid by a foreign purchaser who will not live in the property.
First of all, you (the buyer) will have to pay a value added tax a VAT of 21 % for the closing amount and the relevant charges including the lawyer or real estate agent commission.
In addition If you buy a new apartment directly from the developer or builder company, you will have to pay a VAT of 10.50%. However, such tax amount is usually included in the final price offered by the property developer or the real estate agent. Buyers do not have to pay any VAT on the property price for older buildings.
You will also have to pay a stamp duty on the purchase. In Capital Federal, the duty is 2.5 % of the purchase value. However, this tax is normally split 50:50 with the seller (distribution is normally agreed during the trade). In Buenos Aires province, the stamp tax is of 4 %, which is also normally divided 50:50 between the buyer and the seller.
Provided you rent the purchased apartment you will also have to pay the income tax ranging from 9 to 35 % on all of your worldwide income. 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.
b) Taxes to be paid if the foreign person lives in the property he has just purchased
If you are in Argentina for more than six months (180 days) in a calendar year, you are considered an Argentine resident for tax purposes. Otherwise, you are regarded as a non-resident.
As a resident, in addition to the VAT taxes, and the income tax if you do any working activity in Argentina while being a resident, you ( the buyer) ,whether living in the property or leaving it vacant, must pay an annual tax on personal assets, including residential real estate. 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, be advised that there is a local tax for the city services as street lighting and cleaning the streets known as Alumbrado, Barrido, y Limpieza or ABL. Annual amount only comes to several hundred pesos.
Intermediaries and rates
Realtors’ commission is of 3% that is charged to the seller and another 3% covered by the buyer. However, commission can get up to 4% each as some new buildings constructors currently ask for .
