Real Estate Sales Purchase and sale of real estate: The COTI amounts that the owner must process before selling his house were updated - La Nacion Propiedades

[BuySellBA]

Purchase and sale of real estate: The COTI amounts that the owner must process before selling his house were updated - La Nacion Propiedades​

Source:

Compraventa de inmuebles: se actualizaron los montos del COTI que debe tramitar el propietario antes de vender su casa

Los nuevos importes se actualizan a partir del Índice de Precios al Consumidor Nivel General (IPC) para pedir el COTI, un certificado obligatorio en las operaciones de compraventa

www.lanacion.com.ar

April 15, 2024

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The new amounts are updated from the General Level Consumer Price Index (CPI) to request the COTI, a mandatory certificate in purchase and sale operations.

By Candela Contreras

The Federal Public Services Administration (AFIP) updated the minimum values from which the Property Transfer Offer Code (COTI) must be requested . This certificate is mandatory in the property purchase and sale processes , and must be managed by the owner prior to negotiation and transfer .

In this way, starting this month , it must be requested when the tax base of the property is equal to or greater than $22,810,177 , which represents a variation of 143% with respect to the previous year . “This amount is established according to the real estate tax or similar taxes levied on the property, and/or the stamp tax levied on its transmission or the current tax value,” explains Sebastián Domínguez, accountant and CEO of SDC Asesores Tributarios .

The new amount was calculated by the General Level Consumer Price Index (CPI) , provided by the Institute of Statistics and Censuses (INDEC) , of October 2023 with respect to the same month of the previous year - the same update that is used in the Personal Property Law - . It is the first time that this methodology is used for the update, which was established in May 2023 through General Resolution 5362/2023, and was set to be annual and in April. “ With the high inflation of late, updating annually is not reasonable, it should be done quarterly so that it does not become outdated ,” advises Domínguez.

Rent

Before the modification that establishes how the amounts are adjusted, they were set by the AFIP through a general resolution. The last values were established as follows :

• From July 1, 2016 to June 30, 2022, the value remained fixed at $1,500,000.
• From July 1, 2022 to May 31, 2023: $5,000,000
• From June 1, 2023 to March 31, 2024: established at $9,400,000.
• From April 1, 2024 to March 31, 2025: $22,810,177

Who should apply for COTI​

The COTI must be obtained by the owner before putting the property up for negotiation , offering or transferring it for consideration (when the buyer pays a consideration for the property or a certain price in money, for example, through a purchase and sale contract.) or on properties to be built. The owner of the property can be: a human or legal person, a corporation or an association; but it can also be requested by the real estate agency, as long as it is authorized by the owner on his behalf.

The AFIP, with this procedure, knows which properties are for sale and what their offer value is . So that, when it is written, the national body can compare the value with that which was offered and that of the deed. “So, in this way, you can detect underwriting (those who declare their assets inaccurately: for a lower value than what it actually cost to acquire or build them) or other irregularities ,” explains Dominguez. That is, the objective is tax administration: control to try to avoid evasion .

The objective of COTI is tax administration: control to try to avoid evasion.

In which cases it should not be requested​

COTI should not be generated in negotiations, offers or transfers of real estate or rights over real estate to be built in the following situations:

• Belonging to members of foreign diplomatic and consular missions, their technical and administrative staff and/or their families.
• Whose owners are members of the representations, agents and, where appropriate, their relatives who act in international organizations of which the Nation is a part.
• For expropriation operations carried out in favor of the National, Provincial or Municipal States and the Autonomous City of Buenos Aires.
• If these are judicial sales.

What can happen if COTI is not requested?​

If it is not processed, there is no impediment to the deed, “the transaction can still be carried out,” says the accountant. But it can have consequences, such as: not obtaining the real estate certificate; and, if the operation is carried out through a real estate agency, it is subject to fines that are contemplated in law 11,683 (Application, collection and supervision of taxes) that can reach up to $45,000.



www.buysellba.com

 

[Stan]

Even with this I tried to buy a new property last week and the owner only wanted to declare 50% of the real price. I said there was no way I could do this but how would he even be able to get away with this with something like this in place???

 

[Betsy Ross]

Even with this I tried to buy a new property last week and the owner only wanted to declare 50% of the real price. I said there was no way I could do this but how would he even be able to get away with this with something like this in place???

Argentines are MASTER tax evaders. This has to be fixed if the country is going to move ahead. When I purchased my apartment many years ago the seller wanted to declare 50% of the real price. I didn't want to do that but I really wanted the property. Back then, there was a 0% capital gains tax so I didn't have any risk on my end and I had a small benefit of paying less property taxes each year. My lawyer told me that she was taking all the risk. She refused to declare 50% but she said 70% was reasonable and what most locals do. Very strange process there.

We signed a downpayment document called the boleto where I paid 30% to the seller. I just used a cueva. The real prices was on the paperwork. But then at the closing, I was able to wire in the funds for the 70% which matched up with the price on the fake price on the title deed. They required both me and the seller to bring the boleto we signed and they destroyed it. I felt like I was in a movie!

From what I am reading, AFIP is trying to avoid all instances of declaring fake lower prices.

 

[Vince]

Argentines are MASTER tax evaders. This has to be fixed if the country is going to move ahead. When I purchased my apartment many years ago the seller wanted to declare 50% of the real price. I didn't want to do that but I really wanted the property. Back then, there was a 0% capital gains tax so I didn't have any risk on my end and I had a small benefit of paying less property taxes each year. My lawyer told me that she was taking all the risk. She refused to declare 50% but she said 70% was reasonable and what most locals do. Very strange process there.

We signed a downpayment document called the boleto where I paid 30% to the seller. I just used a cueva. The real prices was on the paperwork. But then at the closing, I was able to wire in the funds for the 70% which matched up with the price on the fake price on the title deed. They required both me and the seller to bring the boleto we signed and they destroyed it. I felt like I was in a movie!

From what I am reading, AFIP is trying to avoid all instances of declaring fake lower prices.

Same. I am glad that I am grandfathered in so I don't have to pay any capital gains tax. IIRC, it is 15% capital gains tax now on the price you buy and the price you sell. Still, most that I talk to buying or selling are still on the merry-go-round of declaring fake lower prices. The biggest hassle to me was the money issue paying in cash. I was going back and forth from NYC so much that I had enough entries to say I was bringing in $10k each time we and my wife came.

They also destroyed the boleto at the closing. These Argentines think of everything.

 

[Wally]

Call me crazy but I like Argentina being like the wild west as long as you have a good lawyer. Tax evasion goes on in just about every single industry here. Almost any time I want to get something done they will ask me if I want an official invoice and pay 21% more or simple receipt. You can sure guess which I want!

When I purchased several years ago I was in the same boat. The seller would only sell if I declared about 60% of the real price. There was no capital gains tax so I went along. Then when the lawyer and realtor asked me if I wanted to pay 21% IVA you can guess what I said. . So it is a vicious game we play that maybe needs to end to help Argentina get out of this hole it is in.

 

[Anchor Baby]

I am new to Argentina and haven't made it there but it is much different vs. other countries we have lived in Latin America. For work my husband and I have lived in Brazil and now Mexico. Those countries have good banking systems. Is it really CASH when buying real estate there? You pay the owner in cash???

 

[BuySellBA]

Argentines are master tax evaders. It has been like this for a long time. But AFIP is getting smarter and smarter and making it more difficult but it will probably be impossible for them to get things 100% in white here. Previously, many people didn't mind using a fake lower price as there was a 0% capital gains tax but as mentioned, now there is a 15% capital gains tax so people are more reluctant to list lower prices. Still, the new administration is trying to lower taxes. It remains to be seen how things will shake out.

AFIP is being more stringent with Escribanos as well threatening to take away their legal license if they are involved with fraudulent transactions. It will be better when everything is recorded 100% in white. As Argentina's economy improves, you will see more and more all 100% in white. Digital payments will be much easier in the future as well making it easier to pay for a property easier. There is still not much trust in the banking system so people want to avoid banks and deal with cash.

But there are methods to legally get cash into Argentina with no risk for either side.

 

[earlyretirement]

Argentines are master tax evaders. It has been like this for a long time. But AFIP is getting smarter and smarter and making it more difficult but it will probably be impossible for them to get things 100% in white here. Previously, many people didn't mind using a fake lower price as there was a 0% capital gains tax but as mentioned, now there is a 15% capital gains tax so people are more reluctant to list lower prices. Still, the new administration is trying to lower taxes. It remains to be seen how things will shake out.

AFIP is being more stringent with Escribanos as well threatening to take away their legal license if they are involved with fraudulent transactions. It will be better when everything is recorded 100% in white. As Argentina's economy improves, you will see more and more all 100% in white. Digital payments will be much easier in the future as well making it easier to pay for a property easier. There is still not much trust in the banking system so people want to avoid banks and deal with cash.

But there are methods to legally get cash into Argentina with no risk for either side.

Exactly true. AFIP is getting better and better about getting everything in "white". The difference now in 2024 vs. 2002 when I first started buying real estate in Argentina is night and day. But even today you have totally unreasonable sellers in the market. You have unreasonable sellers that try to pay NO income taxes or capital gains taxes and that isn't a likely scenario with AFIP. I just had to walk away from a deal where a seller wanted to declare a totally unreasonable price. Just when you think you have seen everything you see crazy scenarios. You just have to be willing to walk away from situations like that.

 

[earlyretirement]

I am new to Argentina and haven't made it there but it is much different vs. other countries we have lived in Latin America. For work my husband and I have lived in Brazil and now Mexico. Those countries have good banking systems. Is it really CASH when buying real estate there? You pay the owner in cash???

Yes @Anchor Baby the majority of the transactions are still in actual cash. It's legal to wire directly to the seller if they have a bank account outside of Argentina but the vast majority want actual cash. The issue is this bank account needs to be declared with AFIP (Argentina IRS) and most of these locals don't declare these accounts with AFIP.

I've purchased several hundreds of properties in Buenos Aires over the past 22 years and most of them were with cash. It's very surreal.