Argentina and Private Property

As part of this continuing series of questions, we move on to the next one about private property in Argentina.

Reader's Question

Does Argentina respect private property like it says in the Constitution? No taking of property, or is this a "wink-wink" unless somebody who has money and power wants the property, or a person commits an unpopular crime? Is it common for people to loose their homes because they can't pay property taxes?

In General, Property is Respected

Argentina has not seen the kind of nationalization and redistribution that is going on in Venezuela and Cuba. An ordinary person or small to mid-size business could come here, invest, and not worry about losing their home / business to government confiscation. Foreigners are legally permitted to purchase property and if you have a DNI, you are entitled to all the same rights as citizens (except voting), which includes the right to private property.

Probably the two biggest mistakes you can make is to either not pay your property taxes or not use a good notary when closing on your property purchase. If you don't use a good notary and there is a problem with the title that comes up later, you can lose the property. A good notary will do his research and find out anything funny with respect to the property.

On the other hand, if you don't pay your property tax, then you'll also be in trouble. Property tax is about 1% of the property's value and is paid annually. Where people get in trouble is that they forget to pay this. Unlike the U.S., you don't get a property tax bill in the mail here. You have to hire an accountant to submit a property tax return for you.

Just like all taxes, you get interest and penalties if you don't pay your property tax on time each year. So, suppose you bought a property, didn't pay property tax for 10 years, and then you go to sell it and oops, you have a mountain of penalties, interest, and late fees to pay that have totally eaten up the value of your property. It may look like "confiscation", but you wouldn't have owed all that money if you would have paid your taxes every year.

The Largest Private Property Confiscation

The largest confiscation of private property happened during the economic crisis when caretaker President Eduardo Duhalde confiscated $17.8 billion dollars of foreign reserves from the Central Bank of Argentina. These foreign reserves did not belong to the government, however. They were the legal property of all peso holders, who had the right to exchange their pesos with the Central Bank for dollars at any time they chose.

This wasn't the worst of it, however. The government later confiscated all dollar deposits at all banks and did a forced conversion to pesos at an artificial exchange rate. This action was later overturned by the Supreme Court and the government was ordered to pay back the dollars. The Supreme Court did not overturn the devaluation, however, despite the fact that it was legalized theft.

This is why I advise all foreigners here not to put their nest eggs in Argentine banks. Keep your money back in the U.S., where it is safe. In summary, I think its safe to say that there won't ever by mass confiscations of real estate -- people wouldn't stand for it and you couldn't cloak the taking of real estate as a financial austerity measure designed to spur a nation's economy.

I'll also point out that Title 22, Section 2370 of the U.S. Code provides for the total suspension of U.S. assistance to any country that seizes property owned by U.S. citizens. So, I do think this provides another measure of protection. If your goal is simply to buy some property here, an apartment, a vineyard, a farm, or just a place to call home, I wouldn't worry. Just make sure you have a good notary and pay your taxes and you'll be fine.