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Real Estate Purchase Process in Buenos Aires, Argentina

 

OVERVIEW

Buying property in Argentina as a foreigner is legally straightforward:

Real estate in Argentina is typically held, bought and sold freehold. Property can be acquired by individuals and corporations. The only restriction concerning foreign real estate ownership applies in the immediate vicinity of Argentina’s borders, where such ownership is subject to prior government approval.

Owning Property in Argentina is safe for the following reasons:

Under the Argentine constitution foreigners have the same property rights as Argentine nationals. The property market is priced in US Dollars. This provides a shelter from economic crises for locals and protects foreign investors from fluctuations of the Argentine Peso. If you follow the well known 3L Rule (Location, Location, Location) you will not lose money.

There are also some differences with real estate transactions in other countries:

In Argentina every single real estate purchase must go through a special attorney called an “escribano público” (Notary Public). The escribano is crucial when buying real estate in Argentina. He has to check that the seller is registered as the owner, all taxes and duties have been paid, there is no lien on the property and that there are no existing mortgages attached. He prepares the boleto (binding pre-contract) and the deed and unlike the realtor he is fully responsible for his advice and actions.

Duration:

After the sale price has been agreed it takes approximately four to six weeks until the signing of the title deed transfer (equivalent to the exchange of contracts). If you are not willing to stay in Argentina for this time period you can grant a Power of Attorney: letting the deed be signed by a person you trust.

DOCUMENTS

The legal side of buying property in Argentina is straightforward. The only documents needed are your passport and your personal Argentine tax number or CDI (Clave de Identificación). To obtain a CDI you must prove your address in Argentina (rental apartment, friend’s house) with a “certificado de domicilio”.

This can be obtained at the nearest police station to where you are staying. With this document and your passport you must then go to the nearest AFIP office (Argentine tax authority) to get the CDI. If you do not speak Spanish it is recommended that you go there with somebody who does speak the language and is also familiar with the system. Otherwise, you can let somebody else do it for you (requires a Power of Attorney). 

BUYING PROCESS

This section explains what happens after you have found the property you wish to purchase. 

Reserva:

You will make an offer to buy the property at a certain price call Reserva. It is wise to always offer a lower price (at least 5%) even if you think the asking price is already attractive. To confirm your offer the seller’s realtor will ask you for a payment in cash amounting to 2% of the offered price. The offer (Reserva) is usually valid for a week. During this period the realtor is supposed to take the property off the market and inform the seller of your offer. The seller will either accept your offer, reject it or, most likely, make a counter offer. Then it is your turn to accept, reject or make a counter offer. If an agreement on the price cannot be reached and the reserva expires, you will get your money back. If the seller accepts your offer and you back out, your money will not be returned.

Boleto:

The Boleto (a binding pre-contract) is a document normally prepared by the escribano. This is an intermediary step where the seller receives 30% of the agreed sale price. It is most commonly used when the signing of the title deed transfer is scheduled 45 days or 2 months down the line. The boleto is basically the point of no return for both the buyer and the seller. If the buyer backs out, they lose the 30% down payment. If the seller backs out, not only do they have to return that 30% but they must also pay another 30% in compensation. But, unlike the reserva, the boleto also gives the prospective buyer the legal right to enforce the property sale (although any resulting lawsuit might take years).

Escritura:

The Escritura is the actual closing date when all parties get together to sign the official deed transfer. The buyer now takes possession of the property. All taxes on the property must be fully paid up at the time of transfer.

The agreed sum is paid in cash at this 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 does not need to be made in pesos. In fact, most owners will only accept US Dollars or transfers to their accounts held abroad. The buyer does not have to be physically present to sign the transfer deed if a third party is authorised by a Power of Attorney to sign in their place. It is important at this point to have requested and obtained updated floor plans that reflect actual construction. Failure to do this may result in the new buyer having to pay the unpaid taxes of the previous owner. This also guards against any unlawful construction done to the property that could lead to problems in the future with the municipal government.

COSTS

Realtor commissions: 3% to 4% of the closing value plus 21% VAT (3.63-4.84%)

Money transfer fee: 3% to 6% (depends on the time of the year)

Escribano fees: 2% plus 21% VAT (1.21-2.42%)

Stamp fee: 3.6% in the city (Capital Federal) of Buenos Aires and 3.6% in the suburbs of Buenos Aires, but if the purchase is in US dollars you have to add a 20%, totaling 4.32%. If the property is for residential use, valued under ARS 600,000, and it is the client’s first purchase the stamp fee is waived. If it is priced over ARS 600,000, the stamp fee will only be paid on the difference (Purchase price minus ARS 600,000). The stamp fee is commonly split 50:50 between the buyer and seller but you must request this when you make your offer.

Transfer Tax: Tansfer Tax is 1.5% of property value, paid by the seller. However, this tax is not applicable if the resident seller is selling his main dwelling and commits to buy another property within a year.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Argentina Real Estate Appraiser Property Appraisal Buenos Aires

Argentina Real Estate Appraiser Property Appraisal Buenos Aires

Argentina Real Estate Appraiser Property Appraisal Buenos Aires. What is the property worth? Get the property valuation today.

Properly appraising a property’s value is often a challenge for real estate professionals.  An accurate appraisal helps finalize a real estate transaction correctly and in a timely fashion.  The correct pricing of a property serves as a starting point on which to base negotiations in a sales transaction.

One of the primary factors in real estate property in Buenos Aires is the property’s location.  This one element strongly influences a property’s price.  An appraisal must weigh the advantages and disadvantages of each location in terms of modes of transportation at hand, the area’s zoning, and the quantity and quality of public services available.  Prices can vary from one block to the next and from one side of the street to another.

The second factor which affects an appraisal are the physical characteristics of the property.  This includes its design and appearance, the property’s age, its condition, the type and quality of construction, its surface area and dimensions, and how well it’s equiped.

A good appraisal should take into account potential clients’ needs, the area, the property’s condition, lighting, what part of the neighborhood it’s in, proximity to transportation and commercial centers, and in the case of aparments, what floor of the building the property is on.

A real estate appraisal is often based on the appraiser’s experience and knowledge of the local market.   Some people in the real estate field simply use the area’s average per square meter value, but others believe that method to be too basic and unprofessional.  Each property has numerous variables, all of which are very important.  A good appraisal is based on visiting the property (inside and out),  having knowledge of the local market, taking into account the supply and demand for that area, and analyzing economic conditions at that time.

Properties in certain neighborhoods increase in value solely because they are located in a coveted area.  Modes of transportation available, the development of the area, and even the prestige of the neighborhood, as in the case of  Barrio Norte, Recoleta, Palermo Chico and Barrancas de Belgrano, are fundamental factors in maintaining a property’s value.  In these areas, the scarcity and high cost of available lots also contributes to increasing property values.

When considering an apartment, another influential factor in appraising its value are the amenities the apartment building offers.  If a buyer is able to afford the higher homeowner association fees for these services, the amenities add value to the property.

Argentina Real Estate Appraiser Property Appraisal Buenos Aires. What is the property worth? Get the property valuation today.

For years, mortgage lenders and consumers have called upon Kier Joffe Appraisals to provide high-quality appraisals on all sorts of properties throughout Argentina. By continuously analyzing Argentine real estate trends and refreshing our knowledge regarding valuation techniques through accredited courses, we’ve been consistently able to generate reliable home valuations for our clients.

All of our appraisers have more than 20 years of experience, and use the latest technology available to provide the most accurate, professional, and eco-friendly appraisals possible.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Basic Legal Requirements When Buying/Selling in Buenos Aires Argentina – Real Estate

Three Basic Legal Requirements When Buying/Selling Property in Buenos Aires

Whether you are buying or selling property in Buenos Aires, it is important for you to be aware of some of the legal requirements.

Firstly, whenever a property owner intends to sell a property, or acquire the right to construct on a property, he/she is required to notify the Administración Federal de Ingresos Públicos – AFIP (federal administration of public income, similar to the Internal Revenue Service in the United States).  The AFIP must be notified only if the transaction will have a value equal to, or greater than, $300,000 Argentine pesos.  The transaction must be completed by the owner or his/her representative by contacting the AFIP by telephone, cell phone or via internet (www.afip.gov.ar).

Secondly, if a real estate broker is going to intervene in the sale, a 90-day contract granting the broker authorization and exclusive rights to sell the property is drawn up between the seller and the broker.   Within 30 days, the AFIP must be notified of the broker’s involvement in the sale.  It is then the broker’s responsibility to notify the AFIP when a deposit is made on the property and when the property title is transferred.

Thirdly, the title transfer must be completed by an escribano publico (notary public).  In Argentina, a notary public is a highly qualified individual with a law degree and additional post-graduate studies. When a property is sold, the escribano publico serves as a public official who guarantees the legality of the property title, the authenticity of the seller, and the legitimate transfer of the property title from seller to buyer.  It is imperative that you ensure you have a qualified escribano publico handling the sale of any property, especially if you are the buyer. *

There are costs associated with these different steps, all based on percentages of the property’s sale price.   A 1.5% property sales tax, known as Impuesto a la Transferencia del Inmueble (ITI), is due if the seller is not reinvesting the proceeds of the sale in the purchase of another property.   The costs of transfering the propery title from seller to buyer runs between 6% and 9%.  The realtor’s commission averages 3% to 4%.

* In Argentina an escribano publico must be registered with his/her local Colegio de Escribanos.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Foreign Holding of Rural Lands in Argentina

Millionaire businessmen, magnates and multinational corporations are all buying up huge areas of land in Argentina. Making the most of the cheap prices and lack of restrictions they now own a significant percentage of Argentine soil. A new law is being introduced to help limit the dominance of foreign holding of rural lands buyers.  The new bill is called ‘Protection of National Dominium of Property, Possession or Holding of Rural Lands (in Spanish, Protección al Dominio Nacional sobre la Propiedad, Posesión o Tenencia de las Tierras Rurales). The President Christina Fernández has decided to urgently push this bill through that will impact the investments of foreign magnates.

The law will limit the control of foreign holding of rural lands to 20%. The law will affect rural land that is already been bought by foreign investors. Non-Argentine owners will be given 180 days to report their possessions to the government. A new National Register of Rural Lands will also be created that will keep a record of land ownership and the nationalities of owners. So why should the government defend the ownership of the rural areas? The government argues that land is a non-renewable resource that is different from normal types of investments. Nevertheless, the main reason for introducing such a radical and protectionist law is the sheer number of hectares owned by foreigners in Argentina.

The worst foreign holder of rural land ‘offender’ is Luciano Benetton, owner of the famous Benetton fashion brand, who possesses one million hectares in Patagonia: is the size of a small country. When Benetton bought the land it caused huge controversy and brought the issue to the attention of the Argentine public and media. Another foreign owner of Argentine land is Douglas Tomkins, a multimillionaire American and ecologist. Tomkins owns 350,000 hectares in Corrientes, Santa Cruz, Neuquén and Tierrra del Fuego. He does put the land to good use: implementing areas of preservation and conservation, however many Argentines feel it unfair that a foreigner could have so much dominium in their country.

Other famous foreign owners of Argentina include; Englishman Joe Lewis owns 18,000 hectares in Río Negro and American Ted Turner owns 5,000 hectares in Neuquén and Tierra del Fuego. It isn’t just millionaire individuals buying up rural areas: in recent years, Arab and Asian corporations have also jumped on the bandwagon. For instance, the Chinese corporation Heilongjiang will use 330,000 hectares of land in Río Negro to produce food products for export.

The new law will limit the percentage of ownership and prevent foreigners from buying more than 1000 hectares in any one place. The bill is similar to legislation in force in the UK and USA.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Argentina Real Estate Market

The Argentine housing market, along with many other parts of the economy, has seen some interesting ups and downs in the last decade. Following the 2002 crisis, the housing market benefited greatly for two reasons: First, as people had lost their faith in the financial market, the started pouring their financial resources into real estate. Secondly, construction costs that were measured in dollars fell dramatically, due to devaluation.

Unlike the 1990s, when demand was mostly stimulated by mortgages, the early 2000s saw many purchases being made in cash. The buyers and builders came from all sorts of different economic sectors, and they all saw a positive revenue flow as a result.

Today, all of these conditions have, once again, changed dramatically. Not only is Argentina is in the midst of economic and political uncertainty, but the mortgage advertisements have made little to no impact, as that credit simply isn’t available. And given the recession, people are less willing to turn their cash into bricks, preferring to retain liquid assets until the political and economic situations develop further. Many have expected a devaluation of the peso after the election, and, furthermore, nobody can tell how long the recession will last.

If the peso continues to fall, so will the salaries of those working in exportation sectors. However, if the dollar falls, it will become increasingly difficult to put any stock in the current dollar prices that apply to the real estate market.

Currently, the market is hampered because most people won’t accept that their home or property is worth less than they think it is, or less than it should be, which is the case for so many. On the other hand, it is important to remember that the market is what dictates these values, and the real price of assets can fluctuate from day to day, or month to month.

So property owners can maintain that their property is worth, say, USD 500,000, but if there are no buyers, then what can be said of that value? At the same time, those who did buy property in recent years are in a great situation, because they have no mortgage companies urging them to sell. They can hang on to their properties longer, assuming the costs of maintaining that asset don’t change too much (taxes, etc.).

If people do not have the resources to buy a place of their own, then, there is always the option to rent. Costs, however, are not so agreeable, and it is increasingly difficult to find people who can actually afford the asked rent. In short, the Buenos Aires real estate market isn’t dynamic because the prices simply do not meet the demand, both in properties for sale and for rent.

But looking at the near future, we can consider the following: 1) given the lack of money currently circulating and available, we can expect the emergence of mortgages that are actually realistic for potential buyers, which will, in turn, invigorate the market. And 2) an increase in the exchange rate will decrease the price per square meter, again, stimulating the housing market.

So it is important to realize that the market can only truly be unlocked if people are willing to accept that all assets have lost some value in Argentina, and the situation will only change if we look at long-term growth. Unfortunately, many are not willing to look at the long-term situation due to the political and economic uncertainty, but it is absolutely necessary in order to move forward into healthier, more prosperous times.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com