To begin with: Equal Treatment
The three most important questions to get started:
- Who can purchase property?
- How can property be purchased?
- What can you purchase?
Answer: 3 A's
- Anyone: There is no differential treatment, nor restrictions or impediments for foreign buyers of property
- Any way: individual(s), corporate vehicle (local/foreign)
- Anything: No limitations (such as restrictions on borderline property, beachfront, etc.)
A Solid Legal System
- Private Property rights strongly
protected:
- Constitutional right, enforced
- No history of expropriations
- Title Insurance available ... but seldom requested
- Solid Registry System
An Safe Payment Process
- No restrictions or taxes when transferring money into the country
- No restrictions or taxes when transferring money out of the country
- Funds stay in the currency you sent
- Escrow account for closing: no need to pre-open an account
Structuring the Property Purchase
The purchase process requires the assistance by a buyer-appointed conveyance attorney, ( "Escribano"), who:
- Analyzes ownership history and other details to ensure you buy a clean title
- Drafts the purchase documents
- Acts as escrow agent for the deposit
- Records the purchase at the property registry
The Purchase Process: Steps
- The buyer selects a property, and agrees on the price
- The buyer appoints a conveyance attorney ("Escribano") from a law firm, who will draft the Reservation Document ("Boleto de Reserva")
- The conveyance attorney analyzes the title/deed to ensure the buyer obtains a clean title: verifies registry, tax information, etc.
- The conveyance attorney drafts the purchase document ("Escritura"), parties sign, price is paid, property is trasferred
- The Deed is recorded in Public Registry
The Reservation Document
- Secures the purchase, commits parties
- Sets a penalty if either party breaches
- Sets the deposit amount (10% of the price). The deposit stays with your own attorney
- Allows 30-60 day window to verify the good standing of the deed
- Sets the closing date
Transaction Costs for the Buyer
Approximately 8-9%:
- Real Estate Agent Fee: 3.66% (including VAT)
- Notary Public´s Fee: 3.66% (including VAT)
- Deed Stamp Duties, other duties: 0.591%
- Registry Certificates: USD 500 (avg.)
- Property Transfer Tax: 2% of the Fiscal Value of the Property (which is usually substantially lower than the market value: usually half or less)
Transaction Costs for the Seller
The Transaction Costs when selling are lower:
- Real Estate Agent Fee: 3.66% (including VAT)
- Property Transfer Tax: 2% of the Fiscal Value of the Property (which is usually substantially lower than the market value: usually half or less)
Taxes on the Property
- Property Taxes: There are two: Municipal and School Tax. Together, they average less than 1% of the value (avg. 0.65%)
- Rental Income Tax: 12% (can be reduced to 10.5%)
- Capital gains (when reselling): 12% of gain
Tips
- Appoint a conveyance attorney from a respected law firm, who is bilingual and understands tax and estate matters, ownership through companies and laws in your country
- Leave a limited Power of Attorney
Remember:
- EASY
- TRANSPARENT
- SAFE
References
- First American, Stewart (title insurance companies)
- World Bank (www.doingbusiness.org)
- Member, Transatlantic Law International (www.transatlanticlaw.com)
- Visit the "PRESS" section of our website www.fs.com.uy for articles in the New York Times, Financial Times, BBC and others
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.