Buying Property in Argentina

Even though I've written about this in the past, I want to do another post on property ownership. This will be a summary post that gives the key points of each aspect of buying/owning property here.

Reader's Question

I would like to retire in Buenos Aires. I just saw a great property that is for sale by owner. I will pay cash for it, so financing isn't an issue, but do they have title search companies? What is the procedure since I am buying it through the owner? Are there transfer taxes, and who pays them. Are there annual taxes, etc? What about home owners insurance, etc? As you can see I am starting on my quest and don't know much.

Financing

Foreigners should forget about finding financing in Argentina. It isn't available and when it is available, the interest rates are typically outrageous. If you don't have the cash, you'll have to get a loan in your home country and use the money to buy a property here in Argentina. The main problem is that if you can't show an income and a credit history here in Argentina, the local banks don't want to work with you. They don't care if you have income or assets in the U.S. or anywhere else.

Taxes

There is a stamp tax in Buenos Aires of 1.25% for both the buyer and seller when transferring the title of a property. The stamp tax differs in the various provinces. This tax is waved for your first property purchase. So, generally expatriates do not pay this. If you plan to be buying more than one property then you'll be paying it.

Title Companies

Here the title search is done by a notary or "escribano". It is the notary's responsibility to uncover any problems with the title. Argentina has a sophisticated and complete title registry that allows for the easy tracing of property ownership. Your notary will inform you if there are any problems with your property's title. Notary fees will be anywhere between 1% and 4%, depending on what notary you choose.

Property Taxes

There is an annual "asset tax" or "personal goods tax" that must be paid if you own property here. It will usually amount to 1% of the value of your property. The tax return must be prepared by your accountant here in Argentina and submitted on your behalf along with payment. Don't forget to pay your taxes!

Real Estate Agents

Real estate commissions are usually 3% for buyers and 3% for sellers. In my opinion, real estate agents here are not as good and not as ethical as the ones you'll find in the U.S. I would recommend using them only if you cannot handle buying or selling a property on your own.

Homeowners Insurance

Homeowners insurance can be purchased from almost any of the major banks here in Argentina. Expect to pay about 50% more here than what you'd pay for similar coverage in the United States.

South America Continues Its March Leftward

Bolivia Moves Far Left

With the election of Evo Morales as the new President of Bolivia, foreign firms operating there -- especially oil and gas multinationals -- can expect to be squeezed hard in the coming months. By most accounts, Evo Morales is not a pragmatist like Kirchner here in Argentina or Lula in Brazil. He is more in the mold of Chávez and Castro.

Argentina Continues Leaning Leftward

For Argentina, this comes right on the heels of the firing of the popular (and highly regarded) economy minister Roberto Lavagna, who many credit with reversing the economic decline of the country. Additionally, a few days later, Kirchner announced the complete repayment of the IMF debt. The debt was paid off in full and ahead of schedule.

It was likely not a decision that Lavagna would have supported -- as it depleted a significant amount the country's foreign currency reserves. Additionally, the interest rates on the loans provided by the IMF are typically lower than what Argentina can get from the private sector, meaning Argentina will be paying more to finance its external debt, since it will no longer be using IMF money.

Instead, it was a political decision on the part of Kirchner. Kirchner will now be free of the IMF's intervention in his economic programs. With both Lavagna and the IMF out of the way, Kirchner is free to exercise absolute control over the country's economy. During the announcement, he thanked Venezuela's Chávez for helping make it all possible. Chávez purchased $1 billion of Argentina's bonds this year.

The Effects of Kirchner's Plans Are Still Unknown

It remains to be seen what Kirchner will be doing with this new autonomy. So far, the market has pushed down the peso/dollar exchange rate to 3.05:1, from the previous level of 2.95:1. So for now, expatriates will be getting things 4% cheaper. It remains to be seen what will happen in the long term.

The markets didn't take kindly to the firing of Lavagna either, sending the MERVAL stock index down 5% on the day Lavagna was fired.

With the IMF debts repaid and Lavagna gone, my guess is that we won't see any increases in the utility rates that are being charged by the foreign multinationals that own the utilities here. With the IMF no longer negotiating on behalf of the multinationals, I can't think of any reason why Kirchner would be willing to give any ground on prices now, given his worry about inflation. A raise in utility prices would no doubt only exacerbate the inflation situation.

Dual Citizenship and the Hayworth Bill

I received a question today from a reader who is doing an article on dual citizenship and the Hayworth Bill. I'd like to take this opportunity to respond.

Reader's Question

I am writing an article about the Hayworth bill, a piece of legislation before congress that would criminalize activities associated with dual citizenship--voting in a foreign election for example. I wonder if you could tell me how you became a dual citizen, why it matters to you, and why you would support or oppose a "ban" on dual citizenship.

What is Citizenship?

Let me first clarify something -- I'm not a dual citizen. I'm a U.S. citizen and Argentina resident. However, my desire is to become a dual citizen some day in the future. Argentina requires most immigrants to live here for five years before giving them the opportunity to become citizens. I do expect to apply for citizenship at that time.

What is a citizen and what does it mean to be a citizen? A citizen is a person who owes allegiance to a nation and is entitled to its protection. There is a give and take involved.

Historically, nations have provided individuals with a system of laws, ways to peaceably settle disputes, and they protect individuals and their property from outsiders who would wish them harm. In return, the nation taxes the individual and reserves the right to draft the individual into military service when the nation is threatened.

Dual Nationality and State Oppression

Some people, especially government types, think dual nationality is a paradox -- an individual can't be loyal to two nations. So, they seek to discourage or penalize dual nationals. They want the person to choose between one country or another -- to "take sides" as if there was an argument. What if we don't want to swear our allegiance blindly? Could it be possible that sometimes your country is right and other times it is wrong? Must we all swear undying oaths of fealty to our government and the political ruling class?

I say the answer is no. I believe in the sovereignty of individuals who are free to make their own choices. My government, however, by virtue of my nationality, has complete power over my life. Think I'm being dramatic?

• The government places restrictions on what kind of business you may conduct and who you can do business with.
• The government can, at any time, place restrictions on what countries you are allowed to travel to.
• The government can hold you captive within the United States and revoke your ability to travel internationally. Historically this was only reserved for people awaiting trial. Now its also done for people who owe back child support. Who knows how this could be expanded in the future?
• The government can draft you into fighting in a war that you do not agree with at any time.
• The government can imprison you and can, under the guise of capital punishment, murder you when it feels you are no longer useful.

A dual citizen, on the other hand, can decide to sever a relationship with one of his countries if it decides not to treat him fairly.

The Hayworth Bill

JD Hayworth is a bigot and his view of America is completely anglocentric. Not only does the bill try to criminalize things such as voting in a foreign election, he proposes the complete denial of residency visas to Mexican citizens. What a wonderful way to discourage illegal immigration from Mexico -- by denying visas all the law-abiding Mexicans who suffered through all the bureaucracy, the humiliating consular interviews, the years of waiting, paid the expenses, and did things the right way! What an idiot.

Cell Phones

Here's a question from a reader who wants to know about what he can do about cell phones in Buenos Aires.

Reader's Question

One thing I have yet to tackle...the cellphone issue. Any advice about picking one up upon arrival in BA?

Cell Phones For New Arrivals

If you haven't yet received a DNI, you won't be able to get a cell phone contract with one of the major national cell phone companies. If you do find a phone company that will accept you, you'll be limited to using pre-paid cards.

If you need a phone right away, I suggest using Phonerental, which is a service designed for foreigners. The cost is about 1.5 pesos a minute for local calls and 3 pesos a minute for international calls with a 20 peso per month weekly rental fee (as of November 2005, when my father rented one of their phones). They did a good job and we were happy with the service.

Long term, after you have your DNI, you'll be able to pick between any of the companies here. I picked Nextel for my personal phone and for my entire office because I wanted the walkie-talkie feature (which works internationally between Argentina and the United States, by the way).

Cost of Living in Argentina

A reader recently mentioned that Argentina has experienced inflation of about 10% this year and is expected to experience further inflation of 10% during the next year. With the dollar/peso exchange rate still hovering around 3:1 , that would seemingly be a concern for anyone expected to move here. I'm going to address this issue in this post.

Reader's Comment

Since the Expatriado moved to Argentina, prices have gone up about 25% yet the dollar value has stayed the same. This means that the cost of living has gone up therefore reducing in a dramatic way the advantage of living there. Furthermore, inflation is predicted to go up another 10% or so next year, while the dollar will continue to be steady at around $3. Thus, the promise of living in a cosmopolitan area with a reduced cost of living is coming to an end. Expatriado: Do you think it still makes sense to go live there in light of these new developments?

One of the Cheapest Cities Worldwide

Mercer Human Resource Consulting, which publishes an annual list of the cost of living in cities worldwide, recently put Buenos Aires 142nd, out of 144 cities ranked. What was slightly more expensive than Buenos Aires? Bangalore, India. The only two cities that were cheaper were Manilia, Philippines and Asuncion, Paraguay.

The fact that there was high inflation this last year does not surprise me at all. The economy is on the mend. Unemployment is down. There are more pesos to be spent and more employed people to spend them. Looking at where Argentina ranks -- 142nd out of 144 cities -- there is nowhere for it to go but up. So, yes, things may start to cost more here.

However, you can still live in a cosmopolitan capital city with a very European culture, architecture, and citizenry at the price of living in Bangalore, India. In what European capital city can you buy a 1000 sq. ft. apartment in one of the nicest areas in town for just $100,000 USD? None.

Lifestyle and Culture Matter

Sure, you could go to India, the Philippines, Thailand and any number of other countries and pay about the same as in Buenos Aires. Perhaps next year Bangalore will end up being cheaper than Buenos Aires. However, you won't find anywhere else that lets you live a western lifestyle at the same price as Buenos Aires.

I've spent a few months in India and even though I was amazed at just how cheap everything was, there was a price to pay for that -- people urinating in the streets, rampant poverty, shantytowns everywhere there was an open space. It wasn't just the poverty, it was the culture also. The television programs don't show men and women kissing. When I went to a bar / dance club the men and women were not dancing together. Most of the guys my age were still virgins and didn't date because they were expecting their parents to find them a wife.

There is no way, despite the amazing cost savings from living in India, that I could ever live in a place like that with such a foreign culture. If you look at the other cities that are on the list that are near Buenos Aires -- not a single one can provide the same kind of lifestyle that Buenos Aires does.

Expect Costs to Increase

It is only natural that costs are going up in Argentina. They are just so low right now that it would be difficult for them to go any lower. Nevertheless, this place is a bargain. In 2002 there were 10,000 American expatriates who were registered with the U.S. Embassy as permanent residents here. Today that number is 35,000. My parents just bought an apartment two blocks from mine because they came here and fell in love with the city. Their downstairs neighbor is American also. One of the biggest real estate companies in the city has its hands full just dealing with expatriates who are coming here.

There's never been a better time to be in Buenos Aires and if my expenses go from $1000 USD per month to $1100 USD per month next year, so be it. It'll still be a far better and cheaper lifestyle than when I was in the U.S. Costs won't go up forever, either. They'll rise until they hit some equilibrium. If inflation really starts to get out of control, the exchange rate will rise and American expatriates who have their income in dollars will be protected.

Money Options For Expats

I got a question from a reader today who has e-mailed me several times before and, like many of us here once did, is struggling to make the decision to move here. While I'm always very eager to point out Argentina as a great place for people to choose to live or retire, I certainly don't want to do that if people aren't going to be comfortable financially here.

Reader's Comment

Hello. I've come across your site many times. Anyways, I am an American/Argentine girl with so much confusion, 35 years old, been back and forth and need to decide something. Sometimes I just want to do it - [move to Argentina] and let whatever happens be. What makes it so hard is that I have had ups and downs here and there. I wish I had all the money in the world - you can do whatever, clean up after after any mistakes, try something else, not have to plan.

Money Options For Expats

Your case is a little different than most expats because you're Argentine, bilingual, you have a DNI, and you don't need a visa to come here. For most people, however, when they decide to come here, one of the first things the Argentine government is going to ask them when they apply for a visa is how they're going to support themselves. Basically, the entire Argentina visa process is designed to let in people who are going to contribute to the economy and keep out people who are not.

You should ask yourself the same questions. When I applied for my visa, I was given three options, which are pretty much the same three options that will apply for you as well.

1. You can support yourself with an income from abroad. I did this with my small IT consulting business. Others do it by telecommuting, working as some kind of consultant, or simply living off the income generated by their investments. For those lucky retirees out there, you can support yourself with an income from social security, annuities, or a government / private pension.
2. You can start a business in Argentina. The government requires that an immigrant have $40,000 USD to invest in a business to get a visa, but since you don't need a visa, you wouldn't necessarily have to invest $40,000. You'd only need to invest enough to make enough profit to support yourself.
3. The final option is to simply get a job. Unemployment has fallen dramatically since 2002 and the economy is growing at 10% annually. Companies are hiring again. For most expats, they're limited by the language factor. If you don't speak Spanish, you're pretty much limited to teaching English, working in tourism or some other job focused on foreign English-speaking clients, or else you're being relocated here by some Fortune 500, in which you're being paid in dollars and money is not an issue.

However, you're a little different than most people who are moving here. As a bilingual Argentine who's been living in America for a long time, you should have no problem at all finding a job in the local market. Unlike the rest of us who are limited by our knowledge of Spanish, you have no such limitation. You could probably do whatever you're doing in the U.S. here. Maybe it'll take you a little longer to find a job, since you don't have a lot of contacts here, but there's no reason to believe you couldn't work here successfully.

Considerations For Workers

If you're going to be working in the local market, remember that you'll be earning a salary in pesos now. There are a lot of fully bilingual Argentines that you'll be competing against for a job and even though you've lived in the United States for a long time and perhaps have acquired some extra skills that put you a step ahead of your peers here, you won't be able to command a huge salary from an employer.

There is, perhaps, one exception to this rule. If you have good contacts in the U.S. and you can bring-in business for a company here, you can probably be paid well as a sales person. Barring that, I don't think any American expat should expect to earn anywhere near what they did in the U.S. when they're here.

You should ask yourself whether you're OK with that. Remember that it will also be much harder to return to the United States someday if you take a job in the local market here. Realistically, you're probably going to be earning one-fifth or less of what you earned in the United States for doing the same work. Suppose you worked here 10 years. You'd lose out on 10 years of Social Security credits, 401(k) or pension contributions and you'd save a lot less money. It may put you in a difficult position if you intend to retire in the U.S. someday.

Sure, you'll be building-up an Argentine pension, but as much as I don't trust Washington politicians to follow-through on their Social Security promises, I sure as hell don't trust the ones here. They've already cut pensions and retirees are given a pittance. At 35, the worst-case scenario for you with Social Security is that you get your benefits cut by a third.

Recommendations

My recommendation for anyone thinking of coming to live here for a significant amount of time (who is not independently wealthy) is that you try to have a job that pays you in dollars. Barring that, make sure you have a nice retirement fund and enough credits to quality for Social Security. You don't want to jeopardize you're retirement to come here. I certainly wouldn't want to end up being forced to work as a Wal-Mart greeter at 85 because I don't qualify for Social Security.

Good luck and I hope you're able to figure out a way to come to Buenos Aires!

Always Take Radio Taxis In Buenos Aires

There was some discussion recently about using Radio Taxis here in Buenos Aires and I wanted to set the record straight on this issue.

Readers' Comments

Where / how do we find radio taxis when we are in BA.

Truth be told, while Radio Taxis are everywhere, all taxis are safe. I have taken about 400 rides in the last few years and have not had one problem.

Why You Must Take Radio Taxies

Ever since I got here, my Argentine friends and coworkers always told me that I should take a Radio Taxi every time I need to go somewhere. A month ago an Argentine friend of mine, one who always told me about the need for Radio Taxies, was in a hurry to get somewhere. She called a Radio Taxi to pick her up, but was told the wait would be 15 minutes. Since she was in a hurry however, she decided to go and catch a taxi on the street.

A few minutes after stepping into the taxi, she noticed the taxi was going in the wrong direction. When she pointed it out to the driver, he stopped. Two men, who were following in the car behind the taxi, got in next to her and put a gun against her side. They ordered her to hand over her wallet.

The taxi then drove on, heading outside of Buenos Aires. While she was held hostage in the taxi, one of the men took her wallet and went to an ATM machine. He used a walkie-talkie to communicate with the other thief in the taxi. He requested her pin number to make a withdrawl. Each time the ATM asked a security question, such as to provide a DNI or CUIL number, the man called back on the walkie-talkie and she was forced to provide all the information.

After driving her out of the city for 30 minutes, they dropped her in the middle of a shantytown outside of the city without her wallet, cell phone, or even her calendar/agenda. Fortunately for her, she had a few coins in her pocket and was able to find a phone to call a friend -- who then called a Radio Taxi to pick her up and bring her back to Buenos Aires.

Like many other people, I've taken taxis on the street and I've never had a problem. However, the chance is always there that you will have a problem. After seeing this happen to a friend of mine, I always make an effort now to call a Radio Taxi. I have a few of the companies programmed into my mobile and I call them and have them come right to the corner that I'm on. Maybe I have to wait five minutes longer, but I think avoiding an experience like this is worth the wait.

The way I see it, taking a taxi on the street is similar to walking around a bad section of town at night. The vast majority of the time there won't be a problem, but you never know when it'll be your turn to get robbed. Stay safe!