Annual Property Taxes
For those of you that aren't familiar with Argentina and the local Porteños, they HATE paying taxes. None of us likes paying taxes but these Porteños tax tax evasion to a new level. I have traveled around the world but I've never seen anything like the system here.
Basically there is a "white" system and a "black" system that the locals talk about. Many businesses in Argentina have two sets of books. A "white" one which is the legal income they make; and a "black" system which is undeclared income. I can't say that I blame them for their thinking. The government has been stealing from its own citizens for centuries. The locals tell me that if they actually saw the money going towards legitimate projects then they would pay their fair share. Instead, they feel like any money they pay will only go into the pockets of the government and its politicians.
Again, I don't blame how the locals feel. Transparency International is a well respected organization that is devoted to combating corruption around the world. It is a non-governmental agency that is known for helping to improve against corruption in civil society, business and governments. Transparency International lists Argentina as one of the most corrupt countries in the world to do business in. Only worse are countries like: Libya, Ethiopia, Zimbabwe, Iraq, Angola, Congo, Nigeria and Haiti. Argentina always tries to compare itself to Europe but they are listed with some fairly shady countries in this survey.
Before I moved to Argentina I saw this survey and told myself there is no way that report could be accurate. After moving here and doing business here I am wondering if Nigeria and Haiti should be rated higher than Argentina. Yes, it is that bad.
When I asked many locals about the annual property tax (asset tax), they told me they don't pay an annual property tax (asset tax). It was mind boggling to me that there was a property tax (asset tax) that some locals seemed to pay and some did not. It's technically an "asset tax". It doesn't really matter what you call the tax, there is a tax that is due each year based on the value of your property or assets owned in Argentina.
As amazing as it is to think about, there is no actual property/asset tax bill that you get in the mail or delivered to your property. In the USA, we dread getting that property tax bill every year at the end of December or the beginning of January. Those of us with no children (or those that have children and sending them to private schools) always complain about how life is unfair and we are paying too many taxes. Complain as we might, we are still accountable to pay our fair share of our property taxes. Here in Argentina, you don't get an actual property tax bill. It is YOUR responsibility to pay this tax to the AFIP (tax office).
As a foreigner that is purchasing property in Argentina, it is ESSENTIAL that you pay this property tax. When you go to sell your property you must get the blessing of the AFIP office via a certificate/permit saying you are up to date on your property taxes. If you aren't up to date you will not be given this certificate. Not only do you have to pay the back taxes but there is a penalty of up to 25% for each year that you didn't pay the property taxes.
For all the economic problems in Argentina going on, one would assume the government would make paying this tax very easy. WRONG. The government won't allow you as a foreigner to pay this tax. Yes, you heard this correct. You must hire an accountant to prepare this property tax for you. Most of these accountants can easily prepare it for not a huge sum of money but not cheap either. I use one of the most respected accounting firms in town and I was charged about u$s 500 to prepare mine.
There are cheaper accountants out there but I tend to use the best in the business when I do business in Argentina. You might think you are saving money by using someone with a cheaper fee but more times than not it will come back to haunt you when it's all said and done with most professional services here in Argentina.
As a non-resident you must have a local resident or corporation in good standing assigned as your local "tax representative". Our company can recommend ethical accountants that can act as your agent.
The property tax is 1.25% of the fiscal value of the property (based on what amount is recorded on your title deed). Here is where things get tricky. You might be asking yourself, "what is the actual fiscal value of the property"? That is a good question. You will find this phenomenon when purchasing property here. The sellers many times don't want to record the actual purchase price on the title deed.
They want to evade paying taxes on the actual amount so many times I have had the seller tell they wouldn't sell the property without recording a title deed of as low as 50% of the purchase price! I don't feel comfortable doing this and I've always paid the full price I paid. A few times I have actually had to pay the seller more just so I could close at the legal price I paid of the property.
So assume you purchase a u$s 100,000 property. You would be paying a 1.25% property tax bill. So you would pay an estimated $1250 per year in property/asset taxes, which is quite affordable compared to many places around the world.
Also, keep in mind there is an annual Tax called ABL Tax which you can pay annually in January of each year or if not it is billed 5 times a year split up in payments. It's easier to pay it once per year. The tax is not much. A few hundred dollars per year. This tax is charged to all properties in Buenos Aires. It goes towards garbage pick up, street cleaning and lights in the street. See the actual ABL bills from 3 apartments in Buenos Aires below.
I never liked paying taxes but always paid a lot of taxes in the USA. I use to always complain in my early years after graduating college. Then one day it dawned on me that if I was paying a lot of taxes it meant I was making a lot of money. I would rather make a lot of money and pay taxes then make no money and pay no taxes.
* I must point out that no realtors told me about this property/asset tax or explained this annual tax. Like most things, I had to research things myself to find out the answer. You will find that most realtors don't want to say or do anything that would cause you not to purchase property. I like to lay all the cards out on the table with my clients and explain everything in detail to them.
Some clients have read this website and thought I was foolish to explain everything in detail. I'm charging money to provide consulting where I give all my clients this information. If you are reading this website in detail, you will understand why it's important to have expert consultation when buying real estate here. You need someone to assist you so you don't overpay, refer you to ethical realtors, lawyers, money transfer firms, furniture stores, architects, plumbers, and painters.
Here in Argentina, you are a victim waiting to be scammed by each of those people that I mentioned. Paying an expert for consultation to avoid problems is the best money you can spend. Read our testimonials section to see how satisfied my clients are.
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