The tax burden is an important factor when determining where to invest in real estate, whether to live or rent.
When investing in real estateone of the most important aspects to take into account, in addition to the budget and the objective of buying a property, is the real estate tax burden which may vary depending on the city chosen to invest.
In Americasome of the cities most chosen by Uruguayans to invest are Buenos Aires, Montevideo and Miami. That is why Roberto VivaldoHead of South American Operations of the Century 21 real estate company, with a presence in the three countries, spoke with scope.com to explain what are the aspects that investors must take into account in relation to real estate tax charges.
First of all, it is necessary to know the approximate values of the properties in these three cities, which obviously vary depending on the characteristics and the location where they are located. In Miami, a house with two bedrooms and two bathrooms is around $425,000while in Montevideo it costs 186,000 and in Buenos Aires $185,000. Regarding the departments, with similar characteristics to each other, the values in the US city are around 320,000 dollars, in the capital of Uruguay, 139,000 dollars and in the Argentine capital, 142,000 dollars.
As for the closing costs of a property purchase – which include property transfer costs, legal costs and associated taxes – can vary significantly depending on the city. In Montevideo, for example, closing costs represent between a 2% and 5% of the value of the property where taxes and legal costs can range from 1% and 4%. In Miami, for its part, the costs are the same as those of Montevideo, but taxes can become a 0.5% more. Buenos Aires has higher closing costs, reaching up to 8% of property value where legal costs and taxes can represent the 2% up to 5%.
The tax burden of a property in Montevideo, Miami and Buenos Aires
Regarding the tax burden of a property, according to Vivaldo, they can vary depending on national and local taxes. Among the most common taxes in these three cities are the property tax, personal property and income tax.
In Montevideo, the real estate tax is based on the cadastral value of the property and can range between 1% and 4% of it. The personal property tax is applied on the total value of the owner’s assets and can range from 0.7% to 2.5% of the total value of the property. While that of the rent, which applies to those people who obtain income from rentals, can vary between a 10% and 12% of your gross incomebeing lower than in the other two cities compared.
In Miami, the real estate tax percentage is applied to the market value of the property and can vary between a 1% and 2%. although in Florida the personal property tax does not apply, people are subject to the federal income tax that is between a 10% and 37% of gross income.
Buenos Aires has a real estate tax that is based on the fiscal value of the property and can range from a 0.5% and 1.5%. As for the tax on personal assets, it depends on a certain threshold that, by 2022, was applicable to those who exceeded the $260,000. The income tax, for its part, oscillates between 5% and 35% of gross income, being less than that of the United States.
According to Vivaldo, it is necessary to take into account when investing what is the objective of that investment since, if you want to buy a property to live in, you must take into account other factors such as the relative salary in dollars and the cost of living. The situation varies if, on the other hand, a property is acquired to be used for rent temporarily where the tourist demand that the city has and if it has it all year should be taken into account in order to estimate the cost/benefit of the investment.
Source: Ambito
