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Tax cuts: what has changed for real estate transactions and what costs still need to be considered - Infobae
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www.infobae.com
October 29, 2024
What additional expenses should be taken into account for effective financial planning? Operations increased both in CABA and in the province of Buenos Aires
By Jose Luis Cieri
The real estate market has reversed the negative trend. Two recent initiatives have reduced operating costs, making transactions easier and creating a more favorable environment for property investment (Photo: Getty)
The real estate market is undergoing a significant recovery phase, with a significant increase in transactions , both in the Autonomous City of Buenos Aires and in the province of Buenos Aires. In September, almost 16,000 deeds were signed, reflecting a change in trend after more than five years of crisis.
This favorable context encourages buyers and sellers to pay special attention to the costs associated with real estate transactions, seeking to maximize financial planning.
One of the most relevant recent measures is Decree 902/2024, which reduces the rate of the Real Estate Registry (RPI) of CABA as of October 29. The rate, which is currently two per thousand on the value of the transaction, will be reduced by half, and, in some cases, to 0.5‰. This reduction aims to alleviate the costs of property registration.
In addition, this measure adds to the elimination of the Real Estate Transfer Tax (ITI) , which taxed sellers with 1.5% of the value of the deed.
The repeal of the ITI had a positive impact on property sales operations, by reducing the transaction cost for the seller. This tax, which was in force for 33 years, and its elimination acted as an incentive to make sales prices more flexible.
By reducing the costs associated with transactions, access to the market is facilitated, making it more attractive for both sellers and buyers.
The tax change will reduce registration costs, which represents a significant saving. For example, for a transaction of USD 100,000, the fee payment will be reduced from USD 200 to USD 100 or even USD 50, depending on the type of transaction.
"However, the Income Tax on the sale and transfer of rights over real estate remains in force, except in the case of single-family homes and homes for permanent occupation," the accounting board of the Buenos Aires Real Estate Association, made up of real estate brokers and accountants Román Paikin , Miguel Chej Muse , Alejandro Moretti and Gustavo Balestrelli , highlighted to Infobae .
It is always advisable to carry out the purchase and sale transaction with a licensed real estate broker (Illustrative Image Infobae)
“While this saving does not define the completion of the transaction, it is a gesture that adds to the overall reduction in tax and operating costs, helping to alleviate financial pressure on buyers,” Paikin said.
Both measures are seen as a step in the right direction to simplify transactions and reduce costs for participants. In a context of high tax burdens, any tax reduction is welcome, especially on higher value transactions, where these costs can make a considerable difference.
This has led to an upward trend in property values (in several AMBA neighborhoods, prices are no longer falling and apartments have once again appreciated by up to 10% year-on-year ). Puebla recommended that investors “take their dollars out of the mattress and buy now, because demand driven by loans is reactivating the market.”
Alejandro Moretti advised: “When investing, it is crucial to carefully analyse the value of the property based on key factors such as location, square footage, age, category and state of repair. In the long term, properties have proven to be a reliable store of value against inflation.”
If someone has a budget of USD 100,000 for the purchase of a property, it is essential to consider the additional expenses beyond the value of the property.
When buying a home, in addition to the budget, it is vital to consider the expenses that the operation requires in order to be successful (Illustrative Image Infobae)
“These expenses include taxes, deed fees, notary fees and real estate agent fees, which usually represent between 7% and 9% of the total transaction amount. In this case, additional costs could range between USD 7,000 and USD 9,000. If the purchase is made with a mortgage, the expenses associated with the mortgage must also be added,” clarified Miguel Chej Muse .
To optimize costs, it is recommended to leave a significant deposit that is accepted by the seller and to set a direct date for the deed . This avoids possible problems that could arise in the title study if a prior purchase-sale agreement is chosen.
By signing a ticket and handing over 30% of the price without the final deed, there is a risk of legal complications that could jeopardize the transaction.
The repeal of the Real Estate Transfer Tax (ITI), which applied to properties purchased before 2018, has reduced transaction costs for sellers. This has encouraged several to sell properties, making transactions more attractive and accessible, contributing to greater transparency in the market.
Gustavo Balestrelli added: “In addition, the reduction in the property registration fee, which went from 2‰ to 1‰ or even 0.5‰ in some cases, also generates considerable savings. Although these reductions are not decisive when making a purchase, they do represent a relief in the associated costs, which favors a more dynamic investment context, especially in a market where new properties outweigh used ones in price.”
This strategy ensures that the buyer pays with everything in order and avoids legal complications that may arise during the process.
Getting good advice is essential for the purchase and sale of a home to be carried out correctly (Illustrative Image Infobae)
Puebla stressed that one option is to agree on a free loan for a period of 10 or 15 days so that the sellers can carry out the move without problems. “When someone signs a sales contract and pays 30% of the price, even without the notary having carried out the title study, complex errors can arise that could put the sale at risk,” he warned.
To avoid such problems, it is recommended to proceed directly to writing, thus ensuring a safer operation without surprises.
Other costs are detailed below:
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Source:
Baja de impuestos: qué cambió para las operaciones inmobiliarias y cuáles son los costos que todavía hay que considerar
Qué gastos adicionales deben tenerse en cuenta para una planificación financiera efectiva. Las operaciones aumentaron tanto en CABA como en la provincia de Buenos Aires
www.infobae.com
October 29, 2024
What additional expenses should be taken into account for effective financial planning? Operations increased both in CABA and in the province of Buenos Aires
By Jose Luis Cieri
The real estate market has reversed the negative trend. Two recent initiatives have reduced operating costs, making transactions easier and creating a more favorable environment for property investment (Photo: Getty)
The real estate market is undergoing a significant recovery phase, with a significant increase in transactions , both in the Autonomous City of Buenos Aires and in the province of Buenos Aires. In September, almost 16,000 deeds were signed, reflecting a change in trend after more than five years of crisis.
This favorable context encourages buyers and sellers to pay special attention to the costs associated with real estate transactions, seeking to maximize financial planning.
One of the most relevant recent measures is Decree 902/2024, which reduces the rate of the Real Estate Registry (RPI) of CABA as of October 29. The rate, which is currently two per thousand on the value of the transaction, will be reduced by half, and, in some cases, to 0.5‰. This reduction aims to alleviate the costs of property registration.
In addition, this measure adds to the elimination of the Real Estate Transfer Tax (ITI) , which taxed sellers with 1.5% of the value of the deed.
The repeal of the ITI had a positive impact on property sales operations, by reducing the transaction cost for the seller. This tax, which was in force for 33 years, and its elimination acted as an incentive to make sales prices more flexible.
By reducing the costs associated with transactions, access to the market is facilitated, making it more attractive for both sellers and buyers.
The tax change will reduce registration costs, which represents a significant saving. For example, for a transaction of USD 100,000, the fee payment will be reduced from USD 200 to USD 100 or even USD 50, depending on the type of transaction.
"However, the Income Tax on the sale and transfer of rights over real estate remains in force, except in the case of single-family homes and homes for permanent occupation," the accounting board of the Buenos Aires Real Estate Association, made up of real estate brokers and accountants Román Paikin , Miguel Chej Muse , Alejandro Moretti and Gustavo Balestrelli , highlighted to Infobae .
It is always advisable to carry out the purchase and sale transaction with a licensed real estate broker (Illustrative Image Infobae)
“While this saving does not define the completion of the transaction, it is a gesture that adds to the overall reduction in tax and operating costs, helping to alleviate financial pressure on buyers,” Paikin said.
Both measures are seen as a step in the right direction to simplify transactions and reduce costs for participants. In a context of high tax burdens, any tax reduction is welcome, especially on higher value transactions, where these costs can make a considerable difference.
Price movement
Oscar Puebla , architect and real estate expert, highlighted that the real estate market is lagging in terms of prices and that “due to the increase in construction, which moves in pesos against an almost fixed dollar, new properties are more expensive than used ones .”This has led to an upward trend in property values (in several AMBA neighborhoods, prices are no longer falling and apartments have once again appreciated by up to 10% year-on-year ). Puebla recommended that investors “take their dollars out of the mattress and buy now, because demand driven by loans is reactivating the market.”
Alejandro Moretti advised: “When investing, it is crucial to carefully analyse the value of the property based on key factors such as location, square footage, age, category and state of repair. In the long term, properties have proven to be a reliable store of value against inflation.”
If someone has a budget of USD 100,000 for the purchase of a property, it is essential to consider the additional expenses beyond the value of the property.
When buying a home, in addition to the budget, it is vital to consider the expenses that the operation requires in order to be successful (Illustrative Image Infobae)
“These expenses include taxes, deed fees, notary fees and real estate agent fees, which usually represent between 7% and 9% of the total transaction amount. In this case, additional costs could range between USD 7,000 and USD 9,000. If the purchase is made with a mortgage, the expenses associated with the mortgage must also be added,” clarified Miguel Chej Muse .
To optimize costs, it is recommended to leave a significant deposit that is accepted by the seller and to set a direct date for the deed . This avoids possible problems that could arise in the title study if a prior purchase-sale agreement is chosen.
By signing a ticket and handing over 30% of the price without the final deed, there is a risk of legal complications that could jeopardize the transaction.
The repeal of the Real Estate Transfer Tax (ITI), which applied to properties purchased before 2018, has reduced transaction costs for sellers. This has encouraged several to sell properties, making transactions more attractive and accessible, contributing to greater transparency in the market.
Gustavo Balestrelli added: “In addition, the reduction in the property registration fee, which went from 2‰ to 1‰ or even 0.5‰ in some cases, also generates considerable savings. Although these reductions are not decisive when making a purchase, they do represent a relief in the associated costs, which favors a more dynamic investment context, especially in a market where new properties outweigh used ones in price.”
Optimize costs
Those seeking to optimize costs in the real estate market must pay special attention to the transaction modality. “Not all transactions are the same, but it is preferable, if possible, to leave a significant deposit with the real estate agency that is accepted by the selling party and set a direct date for the deed,” Puebla observed.This strategy ensures that the buyer pays with everything in order and avoids legal complications that may arise during the process.
Getting good advice is essential for the purchase and sale of a home to be carried out correctly (Illustrative Image Infobae)
Puebla stressed that one option is to agree on a free loan for a period of 10 or 15 days so that the sellers can carry out the move without problems. “When someone signs a sales contract and pays 30% of the price, even without the notary having carried out the title study, complex errors can arise that could put the sale at risk,” he warned.
To avoid such problems, it is recommended to proceed directly to writing, thus ensuring a safer operation without surprises.
Other expenses
In general, in the purchase and sale, the real estate commission represents between 3% and 4% for both parties, depending on the district, whether in CABA or in the province.Other costs are detailed below:
- Stamp Duty : In CABA it is 3.5% and is divided between the buyer and the seller. Single-family homes up to $24,889,350 are exempt; if this amount is exceeded, the 3.5% applies only to the excess.
- Income Tax : This is paid by the seller if the property was acquired after January 1, 2018. The rate is 15% for individuals and 30% for companies. It does not apply to single-family homes.
- Pre-deed fees : These are the seller's responsibility and are approximately 1% of the transaction value. They include reports, title studies, and other procedures.
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