Buying real estate in Argentina which is in another crisis
Post available in: English
The pandemic has further deepened Argentina’s already serious economic woes. A bad situation has become even worse. But is it a good country to invest in? It is likely the current government will lead Argentina into a serious default just as the same administration has done in the past. Printing pesos to pay off USD debt just causes inflation.
Argentina today is not-so-quietly heading towards the famous fiscal cliff and a very hard landing. ‘Argentina looks absolutely miserable’. However, if you want to make great returns, you’ve got to find value where others see dead money, and then be willing to buy prime assets such as some of the worlds most productive farmland, or an apartment in Buenos Aires one of the worlds most attractive cities now is your chance.
With off-shore income sources, a foreign investor can benefit greatly from depressed prices on farmland, vineyard properties, condos and homesites. If you are looking for an investment that you can also enjoy while it appreciates greatly you’ve got to be bold. You’ve got to buy something of value that, for one reason or other, nobody else wants, then you’ve got to hold and eventually sell when everybody wants it.
If Argentina unravels further, as many pundits expect this year, foreign buyers of real estate whether urban or rural, stand to gain commensurately. Real Estate prices are already off 30% and more in some areas of the country.
However, before you dive in you need to know the rules.
Argentina Real Estate Ownership Laws
Foreign Ownership of Rural Land in Argentina
Foreigners have the same property rights as locals in Argentina. However, for purchases of large blocks of farmland, you will need a special certificate from the national land registry (Tierra Rurales). Here are the rules that are currently in force translated into English for land purchases over 1,000 ha.
For properties located within 40 km of the border, a security clearance needs to be obtained from the interior ministry to allow a foreigner to own and receive the title to the land in the Zona de Frontera.
In order to purchase land in Argentina, you would need a CDI (Tax ID) number (also known as CUIL Number – “Clave Unico de Identificacion Laboral” or CUIT Number – “Clave Unico de Identificacion Tributarial“). A CDI number is normally obtained by the acting notary (escribano). To optain this number on your own you would go to the Federal tax office (AFIP) and give them your passport and address, they will then give you the simple form needed. You will have to complete the form and provide copies of the related documents in order to get your CDI number. Once completed, you will be able to purchase property in Argentina and pay taxes.
Real Estate Agents
Real estate commissions or brokerage fees are usually 3% of the purchase price for the seller and 3% – 4% for the buyer – depending on the location of the property. Rural commission rates tend to be higher than urban centres. Real estate fees are paid at the time the sale becomes unconditional.
In Argentina, a title search is done by an “Escribano” (similar to a notary). It is the notary’s responsibility to supervise all real estate transactions, title transfers, and to uncover any problems with the title. Argentina has a sophisticated historical title registry. This helps foreigners trace the ownership history of the property in question. You will be notified by the notary if there are any problems with your property’s title. Notary fees can range anywhere between 2% and 3%.
There is no Title Insurance available like in the US as it is considered unnecessary due to the strength of their notary system.
Real Estate Purchase Process in Argentina
A) Reserva (Offer): stating price, closing date, name of notary public selected and special conditions, accompanied by a strong binder which should be returned doubled if the owner backed out of the deal before closing date. You need to place a deposit with your offer. Typically 10% is enough. If it’s a really expensive property they will ask you to put more. It’s held in trust by your realtor. It basically shows that you are serious about purchasing the property. The seller has 3 options. (1) accept your offer; (2) reject your offer or more commonly (3) counter-offer. It is important to request updated floor plans that reflect actual construction. Failing to this may lead the new buyer to the payment of back taxes otherwise payable by the previous owner.
B) Boleto (Private contract): It is an intermediary step, usually taking place within the first fifteen days following acceptance of an offer, allowing owners to receive between 30 and 50% of the purchase price and, thus, enabling seller to secure a replacement property for the one to be sold.
Please Note: none of the above is legal advice. Please confirm with your own Argentine Lawyers before acting on this information.
About Geoffrey W W McRae
With a highly distinguished career spanning more than three decades across five different countries, New Zealander Geoffrey McRae has established himself as a leading authority on South American real estate, agricultural, and commercial matters. As the founder of Gateway to South America – a real estate consulting group specialising in six South American countries – Geoffrey has developed a reputation for discretion, expertise, and experience that has seen him represent some of the most prestigious clients in the region. His deep knowledge and experience of South American markets have placed him at the forefront of the industry and given him the opportunity to guide and advise with confidence and surety. His long and successful career – which continues to evolve and expand daily – is a testament to his talent, tenacity, and ambition.
Post available in: English
You should look for properties where the owners have offshore banking facilities. Otherwise, buying via local banks will mean going through the central bank. USD > Official Pesos > local USD. Too hard and non-commercial.
What sort of transaction costs should one expect from the banks? My initial funding would be in USD. Would I have to exchange it to AR$ and back again?
The areas you should look at Tim would be Mendoza and Tucuman initially.
I want to buy land there in argentina.
Atleast 50 acres. Which providence would you suggest for the best returns on farm land.
I was thinking plums. Apples, Olives ,cherries etc.
Tim in Alaska