PROCEDURE FOR PURCHASING A HOUSE AND REAL ESTATE SALE

In the short guide to follow, the various parameters to be considered for this type of investment property abroad and the procedures to follow to make the purchase in safety will be detailed.
If you prefer we can do it for you, it will be enough to contact us by email or phone and we will be happy to help you.

1. The issues to be considered from a practical point of view
In recent years, especially due to the exchange rate difference between the euro and the US dollar (the real estate market in Argentina is all in dollars), there has been a significant increase in the purchase of properties by foreigners, especially Italians, in the country.
However, the issue presents some critical aspects that should not be underestimated, from a legal and managerial point of view. In the following points – and without pretending to exhaust the topic – we provide a brief overview of the essential points to keep in mind.
Leaving aside the issues related to the choice of the property, the fairness of the asking price (it is better to always rely on specialized agencies and ask at least three different value estimates to be compared with the seller’s proposals) and the operational aspects also of a legal nature (it is always a good practice to rely on an expert by releasing the necessary powers of attorney) and limiting oneself to the purchase phase only, it should be noted that the main problem is that of transferring the sums necessary for the purchase.
In fact, by virtue of incoming currency restrictions, currency transfers from abroad to Argentina, in order to avoid speculative investments, are subject to a temporary 30% withholding (called “encaje”). Basically, the Banca Centrate obliges the Argentina Bank where the sums were transferred from abroad to retain 30% of the same for a year, with the commitment to return them, without interest and in pesos, on expiry. This restriction, however, does not apply to real estate purchase transactions deemed non-speculative, to capital investments (initial capital endowment and capital increase) coming from abroad and destined for local companies. All this on condition that certain requirements are fulfilled, including (we limit ourselves to real estate purchases) those listed below:
– that the deed is entered into in such a way as to guarantee the effective allocation of the sums to the payment of the price agreed in the deed itself (this sometimes presents quite a few problems, especially of costs, due to the conversion into pesos of the sums transferred in currency and the – almost unanimous – request of the sellers to receive foreign currency instead of pesos The buyer will therefore have to take into account the double conversion, and the relative “spread”, from euro to pesos and from pesos to dollars;
– that there is an absolute identity between the holder of the foreign account from which the transfer was ordered and the buyer. In essence, the sums for the purchase must start from the account in the name of the person who intends to purchase, and this regardless of the foreign country where the Bank is based, which may also not coincide with that of the residence;
– that proof of the economic and financial capacity of the buyer is given (with presentation of the tax return) and that it is certified (by means of a letter sent by the foreign bank) that the amounts intended for the purchase do not come from illegal activities.

2. Tax profiles. Taxation in Italy of real estate in Argentina
Pursuant to the law on income tax in force in Italy, in principle the possession of properties abroad by natural persons resident in our country implies the obligation to declare the relative income, provided that the properties are subject to payment of local income tax abroad.
Since real estate in Argentina is not subject to income tax (“impuesto a las ganancias”) but to the tax on “bienes personales”, as mentioned above, the mere possession of real estate in Argentina is not taxable in Italy and therefore the taxpayer is not required to indicate the property in the appropriate framework of the annual income tax return.
Otherwise, if the property in Argentina has been leased, the rent obtained must be declared as taxable income in Italy, deducting the tax paid in Argentina, and this to the extent authorized by the bilateral convention to avoid double taxation. Finally, if the property is sold within five years of purchase, any capital gain that has emerged must be declared in Italy for the purposes of paying its income tax.
As regards taxes to be paid in Argentina, it should be noted that the transfer of property for consideration of real estate is taxed locally with a tax of 1.5% on the price indicated in the deed.

DOCUMENTS
The only documents necessary to finalize a real estate sale are the Passport and the Argentine tax identification number (CDI – Clave De Identificacion). To obtain the CDI, you must prove your residence address, even temporarily (hotel, apartment for rent, friends’ house, etc.) through a Certificate of Residence issued by the local police authority in the nearest police station. With the Domicile Certificate in possession and the passport, it will therefore be necessary to go to an AFIP (Tax Office) office to obtain the CDI at the moment. It is recommended to carry out this process under the assistance of a person who is fluent in Spanish and of the procedure in question.

COST:
Brokerage commission: from 3% to 4% of the real price plus 21% of VAT (3.63-4.84% of the total)
Bank transfer fee: 0.7% to 3% depending on the entity
Notary’s commission: from 1% to 2% plus 21% VAT (1.21-2.42% of the total)
Stamp duty: 2.5% in the city of Buenos Aires (Capital Federal). Properties that do not exceed the value of 360,000 pesos (ARS) are exempt from the stamp and in the case of the first house. The stamp duty is paid on the value that exceeds 360,000 ARS and is generally shared at 50% between the parties.

Why buy a house in Buenos Aires?
Buenos Aires is tempting thanks to the weak weight
Buenos Aires attracts more and more foreigners, thanks to a “weight” – the national currency – weak compared to the dollar and the euro (the ratio is around 1 to 10 with the euro). And it turns into a favorite place for shopping. Even real estate. For those who want to buy an apartment, follow an obligatory path, which starts in Puerto Madero, the port area restored in recent years, a sort of luxury lounge a stone’s throw from the center. One of these is managed by Luis Perelmuter, one of the most important promoters in the city, at the helm of the Kineret company. Madero center is building a vast complex in the western part of the quay (dique) 4. They are top apartments for finishing and services. In Puerto Madero the prices are the highest in the city, never under $ 5,000 per square meter, but for brand new high-end apartments. “They are still low prices compared to other capitals – says Perelmuter -. I believe there is still room for growth, at least in the medium to long term. An advice? Don’t think you can sell at all times, because Argentina has its ups and downs. And you shouldn’t be forced to sell during difficult times ». Yes, as happened with the 2001-2002 crisis. “But that bad experience has shown that there are areas that recover much faster than others afterwards – underlines Daniel Obetko, marketing director of Covello propiedades -. The safest area for a real estate investment is the North axis, a strip of about 25 kilometers from Puerto Madero to San Isidro ». If you approach the center from the basins of the ancient port area and pass the business district of Buenos Aires, you will arrive in the Recoleta area and in the neighboring one of Retiro. Both represent the heart of the Buenos Aires belle époque that foreigners have always loved. Here too, prices have largely recovered from pre-crisis levels. And they keep going up. Roberto Guichon, at the helm of the Guichon propiedades, recalls that «Europeans are looking for apartments in French-style buildings. These customers use them occasionally for them, in the rest of the time they rent them per week to tourists ». The area for this type of rental is ideal. New buildings are rare in Recoleta. Which, however, are numerous in the nearby area of ​​Palermo, very large and divided in turn into areas each with a particular style, such as Palermo Chico (very exclusive), Palermo Soho (the designer district), Palermo Viejo (lively at night, with many traditional small houses). And Palermo Hollywood, the district of TV and cinema producers, which is now also being converted into a residential area, especially on Avenida Juan B. Justo, an area of ​​old wine cellars undergoing recovery. And with large spaces available where buildings with bold design start to “spring up”, like the two Mirabilia towers. “Prices in this area are lower than in Puerto Madero, but there are more margins for a future increase – underlines Obetko -. The best choice is to participate in the pre-sale of a valid project ».

THE FIRST ATTRACTIVET
Passion for tangoTango tourism is on the rise in Buenos Aires. Two appointments: in the afternoon at the Confiteria Ideal (Suipacha 384), belle époque bar in the center; in the evening at Viruta (Armenia 1366), a mix of all ages in one of the best known milongas in the city, at the bottom of Palermo Viejo.
OTHER STRENGTHS
Shows for all tastes. In the last season Buenos Aires has surpassed New York for the number of theatrical productions, reaching the top of the world rankings. From the magazine to the busiest theater, the capital offers everything. Many productions are offered in other countries and in multiple languages. The most important theaters focus on Avenida Corrientes, in the blocks close to the Obelisk.
Tourist leases
The “temporary rental” of apartments is booming in Buenos Aires, thanks to foreigners who come for one or more weeks. In addition to tourism itself, the reasons are tango and Spanish courses, but also quality health care (primarily cosmetic surgery and cancer treatments) at reduced prices.
Designer benches are those of Diana Cabeza (www.estudiocabeza.com), designed for Puerto Madero, like the rest of the accessories in the public spaces of the new “in” area of ​​Buenos Aires, with references to water and the river. La Cabeza, designer, world reference for urban furniture, has also intervened in other symbolic places of the city, such as the cultural center of Recoleta and La Boca, a popular neighborhood, which lives to the rhythm of the Boca Juniors football team.

If you need further information on investments in Argentina or in particular in Buenos Aires do not hesitate to contact us. Our first real estate scouting and subsequent due diligence service has a relatively reasonable cost: