Buying Property And Real Estate In Argentina
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Loading... - Jose Arias
- 20 Jul 2022
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Little is required of people looking to invest in real estate inArgentina, and anyone can purchase property. What is required todo so is money. That might not come as much surprise, but, in Argentina, financing options and mortgages are almost nonexistent, and they certainly are not an option for foreigners.
People need to be able to pay for a property in its entirety at purchase, whether that requires some large money transfers or a big chunk of the payment in cash.
Still today many locals are not in a position to make big purchases, and, for the time being, prices have been slashed on properties throughout the country, most notably on the most expensive and luxurious options. Now is the best time in recent history to invest in Argentina.
It’s no secret that Argentina is in a precarious place economically and politically. The headlines out of the country over the last five or so years have been overwhelmingly negative, each spelling one step closer to doomsday: currency controls, import restrictions, and, finally, default. Added into the malicious mix most recently was the shocking “suicide”—widely considered either to have been forced or an assassination tied to the government—of one of the country’s most well-known prosecutors, Alberto Nisman.
It all likely sounds pretty scary to an outsider, giving the impression that the country is to be avoided.
For many reasons, the best opportunities to cash in on this current crisis is in agricultural investment, mining, cattle, and soy are some of the most profitable options right now.
The Purchasing Process
While little is needed to purchase here—no particular visa or time spent in the country, for example—the purchasing process is still detailed and can trip people up. One major difference to purchasing property in Argentina as opposed to elsewhere is that the escribano (the public notary), is a key player in the process. In fact, any person looking to purchase property in the country is best advised to find an escribano to personally tend to them through the process, as well as a lawyer well versed in the process. It is possible for people to navigate alone; however, to maintain consistency and streamline a process where many resources are unclear if they are even possible, a notary and lawyer will help immensely.
It is important to repeat, however, that while it is easy to bring money into Argentina at present, it is challenging to get it out of the country. With inflation jumping during the past years and the current
existence of the parallel blue market versus the official rate, investing in real estate with hopes of selling or turning a profit quickly or in the near future is unlikely. A more advisable approach would be for someone to purchase property to have as a second home or rental property for the time being, and then look to profit with the idea of selling further down the line. When currency controls are more relaxed and in a moment when the economy is more stable—remember, there always are more bullish periods here, too—that would be the moment to sell and profit.
It is wisest for foreign real estate investors in the current climate to protect themselves and their money by only looking to sell or purchase from those who have bank accounts outside the country (in an economy more stable than the present one). This prevents against fluctuations and differences resulting in financial loss when dealing with the country’s official exchange rate, which is what all official business and purchases are conducted in. Payments can be made for property purchased in Argentina between foreign
accounts as long as the process is verified and declared and all necessary taxes in Argentina are paid.
Rural land owned by foreigners is limited to comprising no more than 15% of the state/municipality in which the property is located, and a single foreign entity cannot own more than 1,000 hectares.
The amount of land that foreign owners of the same country of origin can own in a specific area is capped. Additional paperwork and ministerial approval is required of a foreign buyer who wants to
acquire land near a foreign border, and the process can take longer.
How To Own Real Estate in Argentina
To own property in Argentina, a foreigner needs to have a CDI (equivalent to a tax ID number in the United States, Canada, and Europe). Foreigners are only permitted to buy property in this region if they can prove it will benefit the local community. Most investors simply show that they will use local labor and supplies to build a house. Still, the process can take up to a year.
Although construction costs have increased by nearly 40% over the last few years, prices are still much lower than those in the United States and Europe. The current cost for basic new home construction is now US$54 to US$95 per square foot for good quality material.
In most real estate transactions, both the buyer and the seller pay a 3% commission. However, if you buy through the newspaper or an open house listing with no representation, you won’t have to pay the extra fee. Fees also include a stamp fee, which can be 3% or 4%, and notary costs—about 1% or 2% of closing value.
In some cases, an intermediary step called boleto is taken; in this case, the buyer gives the seller 30% to 50% of the price within the first 15 days of the sale agreement. Should you back out of the deal, this deposit will be forfeited. On the other hand, if the seller withdraws, he must pay you double the boleto. This is usually handled in U.S. dollars or bank transfers.
The escritura is the closing date when parties sign the official deed of transfer. An escribano or escribana confirms property ownership, makes sure all the bills and taxes have been paid, and rewrites the ownership papers. You can choose your own escribano. Shop around; fees are about 1%.
At all stages, bear in mind the mañana attitude. Everything takes time in Argentina. Loads of paperwork makes any exchange take longer than necessary. Read More...
