To begin with: Equal Treatment

The three most important questions to get started:

  • Who can purchase property?
  • How can property be purchased?
  • What can you purchase?

Answer: 3 A's

  • Anyone: There is no differential treatment, nor restrictions or impediments for foreign buyers of property
  • Any way: individual(s), corporate vehicle (local/foreign)
  • Anything: No limitations (such as restrictions on borderline property, beachfront, etc.)

A Solid Legal System

  • Private Property rights strongly protected:

    • Constitutional right, enforced
    • No history of expropriations
  • Title Insurance available ... but seldom requested
  • Solid Registry System

An Safe Payment Process

  • No restrictions or taxes when transferring money into the country
  • No restrictions or taxes when transferring money out of the country
  • Funds stay in the currency you sent
  • Escrow account for closing: no need to pre-open an account

Structuring the Property Purchase

The purchase process requires the assistance by a buyer-appointed conveyance attorney, ( "Escribano"), who:

  • Analyzes ownership history and other details to ensure you buy a clean title
  • Drafts the purchase documents
  • Acts as escrow agent for the deposit
  • Records the purchase at the property registry

The Purchase Process: Steps

  1. The buyer selects a property, and agrees on the price
  2. The buyer appoints a conveyance attorney ("Escribano") from a law firm, who will draft the Reservation Document ("Boleto de Reserva")
  3. The conveyance attorney analyzes the title/deed to ensure the buyer obtains a clean title: verifies registry, tax information, etc.
  4. The conveyance attorney drafts the purchase document ("Escritura"), parties sign, price is paid, property is trasferred
  5. The Deed is recorded in Public Registry

The Reservation Document

  • Secures the purchase, commits parties
  • Sets a penalty if either party breaches
  • Sets the deposit amount (10% of the price). The deposit stays with your own attorney
  • Allows 30-60 day window to verify the good standing of the deed
  • Sets the closing date

Transaction Costs for the Buyer

Approximately 8-9%:

  • Real Estate Agent Fee: 3.66% (including VAT)
  • Notary Public´s Fee: 3.66% (including VAT)
  • Deed Stamp Duties, other duties: 0.591%
  • Registry Certificates: USD 500 (avg.)
  • Property Transfer Tax: 2% of the Fiscal Value of the Property (which is usually substantially lower than the market value: usually half or less)

Transaction Costs for the Seller

The Transaction Costs when selling are lower:

  • Real Estate Agent Fee: 3.66% (including VAT)
  • Property Transfer Tax: 2% of the Fiscal Value of the Property (which is usually substantially lower than the market value: usually half or less)

Taxes on the Property

  • Property Taxes: There are two: Municipal and School Tax. Together, they average less than 1% of the value (avg. 0.65%)
  • Rental Income Tax: 12% (can be reduced to 10.5%)
  • Capital gains (when reselling): 12% of gain

Tips

  • Appoint a conveyance attorney from a respected law firm, who is bilingual and understands tax and estate matters, ownership through companies and laws in your country
  • Leave a limited Power of Attorney

Remember:

  • EASY
  • TRANSPARENT
  • SAFE

References

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.