Buenos Aires Real Estate

In December 2008, Argentina’s national government approved a law whose primary purpose is to encourage its citizens who have money and capital outside or in the country to declare their assets and invest in Argentina.  The incentive scales are designed to make investment in real estate the most attractive option.

Article 27 of law 26.476 allows Argentine citizens to declare their assets between

March 1, 2009 and August 31, 2009 and levies differential tax rates depending on the destination of the funds.

Citizens who declare funds held outside of Argentina and who do not transfer the money back into the country, will be charged a tax of eight percent.  Those who have their newly declared funds in either foreign or national currency in Argentina and who do not purchase government bonds or property with those funds, will be charged a tax of six percent.  Citizens who use the declared funds to purchase government bonds will be charged a tax of three percent, as long as they hold the bonds for a minimum of two years, otherwise the tax amount will be five percent.

Citizens who use their newly declared funds for the construction of new property, the completion of an existing construction, or investment in real estate, agriculture, industry, toursim or services in Argentina will be charged a tax of only one percent.  The property title must remain in the titleholders name for a minimum of two years. You can check for what to buy now in this Buenos Aires real estate guide.

However, when the declared funds are invested in a construction project through a trust making a public offer, as specified in law 24.441, the two-year requirement applies to the trust receiving the funds, not the buyer investing in the title.  If the investor later desires to sell the title before the two year period, he must offer the title in the capital market.

It is evident that the national government is encourging its citizens to openly declare their assets and bring those held abroad back into the country.  The differential tax amounts make it clear that the government additionally wants to stimulate investment in productive activities rather than in speculative markets.  Real estate is a fundamental industry which invigorates a great variety of other industries leading to employment and general economic growth.

At present, despite the uncertainty created by the global financial crisis, foreign real estate development groups have several construction projects under way.  For example, the Spanish group, Nueva Dimensión del Grupo Volcansa SA, is currently constructing three real estate developments under a trust.  Projects such as these provide a valid investment alternative for those declaring their assets under the new government legislation.

The real estate industry is hopeful that this new government regulation will maintain the market active and further stimulate it during the coming months.