Real Estate Sales How to buy a new or used property with money laundering dollars - Infobae

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How to buy a new or used property with money laundering dollars - Infobae​

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Cómo comprar una propiedad en pozo, a estrenar o usada con los dólares del blanqueo

A pocos días de que finalice la primera etapa del blanqueo de capitales, cómo utilizar el dinero para comprar propiedades

www.lanacion.com.ar

September 23, 2024

With just a few days to go before the end of the first stage of money laundering, how to use the money to buy properties



By Candle Contreras

Money laundering allows you to declare up to US$100,000 without paying taxes or larger amounts under certain conditionsRicardo Pristupluk - La Nacion



There are nine days left until the conclusion of the first stage of the money laundering process that allows the regularization of assets that are outside the financial system. The alternatives proposed by the Federal Administration of Public Revenues (AFIP) to do so are the following:

• If assets of up to US$100,000 are laundered, no tax is paid.
• If larger amounts are regularized, a rate of 5% must be paid until September 30; 10% until December 31; and 15% until March 31, 2025.
• If the money laundering is in cash, it must be deposited in a Special Account for Asset Regulation (CERA) before September 30. If it is left in the financial system until December 31, 2025, taxes are not paid and there is no limit on the amount to be regularized. To use that money before that date without paying taxes, it is possible to do so if it is invested in one of the placements authorized by the Ministry of Economy, including real estate projects in the works. Until December 31, 2025, you can choose the project in which to invest . They must be those works that are up to 50% complete at the time of the law's entry into force and are registered with the AFIP.
• In the case of buying a brand new or used property , no tax is paid if the amount to be cleared is less than US$100,000 or 5% is paid on the surplus if it exceeds it until September 30.

All assets, in exceptional cases, must be valued in US dollars . In the case of real estate, the acquisition value, tax value or minimum value (whichever is higher) must be considered.

“This is a great opportunity to boost the sector. Those who want to invest in developments or need to access the benefit to continue with works already started will be able to do so without paying taxes ,” says Leandro Molina, director of Zonaprop.

Money laundering for purchases in the pipeline includes both new projects and those with a degree of progress of less than 50% at the time of the entry into force of the law.Shutterstock

The resolution includes both new projects and those with a degree of progress of less than 50% at the time of the law's entry into force . In this way, this construction incentive provides benefits to those people who have their money undeclared in the country and can invest it in a real estate project . "We think it is a good measure to promote development and investment in real estate projects. Construction is what generates work, investment, activity and deserves this privileged treatment," says Damián Tabakman, president of the Chamber of Urban Developers (CEDU) .

“The money laundering process is slowly bringing in a share of buyers who were unable to access units in the works and boosting operations at this stage of the year. We expect more measures to activate the market,” adds Jeannine Acuna, Commercial Manager of JPU Urruti.

Those who register for the money laundering scheme must open a Special Account for Asset Regularization (CERA) to deposit the funds in cash. Meanwhile, developers who register in the registry will not need to do so to receive those funds , they simply have to associate and register their own bank account with the real estate project. The head of SDC Tax Advisors, Sebastián Domínguez , commented that the Government's measure "makes money laundering much more flexible" and gave an example: " This allows paying a seller of those assets from a CERA account to any other account of any other type and not to another CERA account. Later, it will be the tax office's job to control that, but it makes it much more flexible."


“We have noticed a great interest from the public in the whitewashing process and the number of enquiries about our projects is increasing. Members of the Chamber of Urban Developers (CEDU) are taking steps to ensure that their projects are suitable for whitewashing , ” says Tabakman.

“Since the measure was implemented, inquiries about properties have increased considerably, revealing a clear interest in small units, such as one- or two-room apartments . Buyers are also prioritizing location, with neighborhoods such as Palermo, Belgrano and Barrio Norte leading the demand,” says Rodrigo Saldaña, Commercial Manager of Oslo Properties.

Now, the big question that arises when deciding to launder cash: what should be analyzed before investing in the real estate market?

Money laundering: what to consider before buying a property?​

In well​

The choice to buy a condominium is not easy, especially if one takes into account that Argentina is a country with macroeconomic cycles and exchange rate adjustments. For this reason, it is never possible to know in advance whether the condominium under construction will cost more or less, in dollars, once it is finished.

When buying a unit from the moment the land is acquired, the most common advantage is the possibility of financing the unit during the construction process and paying it in pesos and in adjustable installments. In any case, the total investment cannot be financed: in general, developers require an average advance of 30% of the value (which can be paid with laundered money) and installments in pesos adjustable by the index of the Argentine Chamber of Construction, CAC , which increases in line with inflation.

“ It is advisable to buy off-site, as long as it is from a solvent, accredited developer who does things right . Because you will be acquiring a new product, with the latest trends and with the ease of paying for it while it is being built,” adds Tabakman.



Ignacio Camps, director of Evoluer Real Estate, agrees on this point and adds: “In addition to the obvious, such as who is developing the project and its legal and financial structure, it is essential to pay attention to the location, however obvious it may seem.”

Market analysts agree that buying in a pit is always a good idea as long as it is from a "solvent, accredited developer who does things right" Shutterstock

In addition to the economic benefit, Valeria Soldati, partner and Director of the Recoleta Office of the real estate agency of the same name, adds another advantage: she says that you can choose between several options that are for sale , such as the typologies and the floor, and “in some projects you can even modify the environments or finishes.”

But, as there are benefits, there are also certain risks that must be taken into account: one of them occurs if the CAC index rises abruptly and directly impacts the value of the installments. “This happened in the last two months of 2023 (17.2% in November and 33.4% in December), because materials rose, and it was affected by values above that of general inflation,” Tabakman reports.

Furthermore, since this is a construction project, the common risks of any construction process must be taken into account : “Sometimes deadlines can be extended due to some issue: weather, staff strikes, delays in delivery of materials, to name a few surprises,” Soldati explains.

For his part, Diego Cazes, manager of LJ Ramos, maintains that the market is being cautious and that " those who launder their money are those who have more than US$100,000 , but that the reaction in the sector will only become evident starting next month."



So, before making the decision, the following points must be taken into account :

• It is key to find out if the land has been registered, if the plans have municipal approval, which developer is carrying out the work and what solvency it has to undertake it. “All projects in the works are a promise to deliver an apartment, on a certain date and of a specific quality and that is why it is very important who is behind that promise that is made,” says Tabakman.
• Analyze with a notary the legal figure used for construction and find out its advantages and disadvantages.
• Get to know some already completed projects from the same developer to understand the style and designs.
• Talk to investors who are involved in this or previous company buildings.

Step by step with laundered money:

CEDU shared the steps to follow to buy a unit in a pit with the laundered money:

• Opening a CERA account in an Argentine bank (the online process takes 24 business hours)
• Deposit the money into the account
• Transfer the laundered funds in the account directly to the developer's account, indicating the COPI number (Real Estate Project Registration Code) of the project in which you wish to invest. This can be done from October 1st and there is time until December 31st, 2025.

“There are cases in which projects are not eligible for money laundering, so some developers decide to 'take charge of paying the 5% tax' by applying a discount of that percentage to the buyer ,” says Patricio Rozenblum, co-founder of PBG Desarrollos.

Brand new​

The main advantage of a finished apartment is that it can be taken over immediately , and if you want to make a profit, you can put up the rental sign right away. Another advantage is that the person who buys an apartment to live in is the first owner and represents a unique emotional value . On the other hand, the person who has the money in hand can find discount opportunities due to the possibility of coming across a developer who needs the cash to start another project.

“ Brand new apartments tend to be the most sought after, because they are generally in projects aligned with current trends, they are modern, attractive and have amenities ,” adds Soldati. In turn, he adds that it is one of the best alternatives if you also need the property to live in immediately. Regarding the difference with a used property , he clarifies that, although it has a higher cost, “the value invested in the purchase remains at high levels for much longer, and when it comes time to sell, you will be favored in terms of time.”

On the other hand, in this case the downside is that brand new units tend to have higher sales prices than those in a well-stocked area and those used. In numbers, the average value per square meter of a brand new apartment in the city of Buenos Aires is US$2,696, while in a well-stocked area the price is US$2,689 and a used one reaches US$2,122, according to the latest report from Zonaprop .

The downside is that when you buy a finished property there are certain additional costs : higher deed fees, regulation fees, the accommodation fund, among others.



Martín Boquete, director of Toribio Achával, explains that a new or brand new apartment always starts at a higher selling price than a used apartment with similar characteristics because they are projects that have more modern materials and a design more adapted to the needs of the moment.

So, although in this case the uncertainty is less, there are aspects to take into account:

• Check if the project already has the subdivision plan and if the unit can be registered
• Know the costs of writing, since in general they are higher for a first sale.
• Test that all services work and review the details of the property, before signing the deed, which is when you can file a claim against the builder.
• Know the coverage offered by the developer for faults or hidden defects

Step by step with laundered money:

• Opening a CERA account in an Argentine bank (the online process takes 24 business hours)
• Deposit the money into the account
• Transfer the laundered funds from the CERA account, as of October 1, to another account of the holder. In this case, the bank will request a sworn statement indicating that the funds are transferred to an onerous transaction: in this case, the purchase of a property.

If the amount to purchase a property is less than US$100,000, no tax will be paid, but if it exceeds that amount, the corresponding 5% will be paid.

Used​

Just like a brand new apartment, the benefit of buying at this stage is that it is already built and can be seen, visited, and tested . Unlike brand new apartments or units, used properties tend to have lower market prices . The ideal thing in this case is to visit the property accompanied by an architect, especially when the building in which it is located is old or has been uninhabited for some time.

In this case, one of the disadvantages is that , as with the brand new option, everything must be paid for at once; however, in the units under construction, there is the possibility of paying for the property in installments.

“ Used property is still being bought at a very good price , but it is too early to say that transactions are already being made, because it was a very hasty money laundering,” says Diego Cazes, adding that “people are very stressed because of the little time they have to open the CERA account, the ideal would be to extend the deadline for laundering cash.”

Points to note:

• It is essential to visit the property with a construction specialist. The law does not establish any specific prohibition regarding the construction or conservation status of a unit being sold.
• Check the correct operation and flow of all services: water and gas pressure, electricity power, among others.
• Check that the apartment is not occupied or rented, since the law does not prohibit the sale of an occupied property.
• Verify the identity between the construction and the plans registered with the corresponding state agency. It is common for there to be differences that hinder or delay the registration of the property.
• Check whether the property is seized, mortgaged, in succession or has any legal restriction, whether the seller is the sole owner or not and whether there are any restrictions on selling.

In this case, the steps to follow to buy a used apartment are the same as with brand new properties.



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