Who can buy real estate in Uruguay?
In Uruguay, there are no restrictions preventing any person from acquiring real estate. The only requirements are to be of legal age and have the necessary economic resources for the purchase. Foreigners only need to present a valid identity document, such as a passport, with no obligation to reside in the country. In addition, the law allows both individuals (natural persons) and entities (legal entities) to own real estate. These entities can be both domestic and international and are free to purchase properties for corporate use or for the benefit of the sole owner, should they choose to do so.
Contáctanos para más información
Steps to buy or sell property in Uruguay
First of all, Once the real estate to be acquired has been chosen and the conditions with the owner have been agreed upon, there is the possibility of signing a Preliminary Contract, which we can call a “Boleto de Reserva”, in which, among other things, the price, the form of payment, the initial down payment (generally 10% of the price), the deadline for the execution of the deed of sale, the conditions for the delivery of the property and the penalties for both parties in case of breach of the agreement, are stipulated, for the purpose of securing the business and the conditions referred to in the contract, term for the granting of the deed of sale, the conditions for the delivery of the property and the penalties for both parties in case of breach of the agreement, in order to ensure the business and the conditions referred to verbally assumed by both parties.
The Reservation Ticket is undoubtedly the most important legal instrument of the entire operation, as it sets forth the terms of the business. We have seen many cases in which the Boleto is signed without notarial and legal advice, with important consequences.
Secondly, in order to formalize the business it is possible to directly carry out a Definitive Purchase and Sale when the intervening Notary Public approves the title and other requirements or the second option would be to sign a promise of purchase and sale, paying part of the price and taking possession of the property, until it is possible to grant the definitive purchase and sale.
Thirdly, there are two aspects that are very relevant when buying real estate, which are the regularity and authorization of the plans of the property before the local Municipality, and that the corresponding contributions have been made to the BPS for the construction and renovation of the property. This must be strictly controlled and forms of coverage must be foreseen in case these two aspects are not in order.
Commitment of Purchase and Sale Costs in Uruguay
In cases where a real estate operator intervenes to make the search for the property to be acquired more effective, his commission is normally 3% plus VAT.
Both the seller and the buyer must pay the Transfer Tax (ITP): 2% of the real value fixed by the National Directorate of Cadastre updated by the CPI.
The seller must pay Personal Income Tax (IRPF): it is paid in cases where there was an increase in assets due to the sale. There must be an economic difference in favor of the taxpayer between the acquisition value of the property being disposed of and the subsequent sale price. If the antecedent title is subsequent to July 1, 2007, the seller will be taxed according to the real criterion, which implies that the referred “capital gain” will be taxed at a rate of 12%; and if it is prior to such date, the lower amount resulting from the application of the real criterion or the fictitious criterion may be applied. The fiduciary criterion is 15% of the sales price. To that 15% is applied the 12% rate, which would be the same as saying that 1.8% of the sale price would be paid.
Finally, in our country, the buyer is the one who appoints the notary public to assist him in the purchase. We normally recommend that the seller of a property also have notarial advice to protect his interests.
Contáctanos para más información
Links of interest:
