Buying Costs, Tax , Legal
Buying Costs, Tax and Legal
The buying costs for Sugar Loaf Ocean Club & Spa are set at 4.5% of the purchase price plus a one off water connection fee of USD$750.
The tax situation for investors in Uruguay is very favourable.
We recommend that you speak to a qualified tax advisor who can give you more information on the tax benefits of investing in Uruguay. Please contact us for more details.
Income Tax
Uruguay is highly unusual in that no individuals are subject to income tax (whether residents or non residents).
Capital income, including rental income, earned by individuals is subject to 12% tax.
Property Tax
Individuals owning immovable properties in Uruguay are subject to a property tax, imposed by departmental governments. The tax base is the local cadastral value of the property, as determined by the collection office (local tax authorities). The tax rates vary depending on the department. For the department of Montevideo, the country's capital and largest city, property tax is imposed at progressive rates ranging from 0.84% to 1.6275%, wherein the applicable rate applies to the whole taxable value. No other deductions are allowed. For non resident property owners, a surcharge of 100% applies, wherein the effective property tax rates become 8.4% to 16.275%.
For non-resident property owners residing in neighbouring countries of Uruguay, the surcharge is reduced to 50%. In a special area of the coast line that is a major tourist interest, the non resident owners are not liable for the surcharges. A tax for basic education is also levied on immovable properties in Uruguay, payable by the owners. The tax base is the cadastral value of the property as determined by the Cadastral Bureau. The tax rates vary from 0.15% to 0.30%, depending on the property value.
Capital Gains Tax
As of 01 July 2007, capital gains are taxed at a flat 12% rate. The taxable income is the difference between the sales price minus the acquisition cost, which is updated by taking into account the Consumer Price Index.
Tax on Transfer of Property (Inheritance)
However, transfers of immovable properties are subject to tax on transfer of property (impuesto a las transmisiones patrimoniales). The tax base for this tax is the cadastral value of the property as adjusted for inflation in accordance with the changes in the consumer price index. The tax rates vary depending on the kind of transfer involved. For transfer of properties to heirs (ascendants and descendants), the rate is 3%. For gratuitous transfers, the rate is 4%.
Legal
Except for areas considered part of the national security domain, there are no restrictions on the ownership of private property or the establishment of any business. Corruption is not a serious problem in Uruguay. Before the sale, four different non-encumbrance certificates must be presented as guarantee to the buyer. The first one from the Banco de Provision Socialâ ascertains that the owner is free of any social security debt. The others are acquired at the Real Estate Office, the Registro de Actos PersonalesÂ, and the Municipality. There can be no transaction without these certificates.
This process ensures that there is no pending mortgage, lien, or any other encumbrance on the property.
Transfer of title is executed before a public notary. A notary is very important in the transaction as the deed will be rendered invalid without it. Value Added Tax (VAT) does not apply to the transfer of real property. Loans are generally 30 years, and the government establishes maximum interest rates. The Mortgage Bank of Uruguay (Banco Hipotecario del Uruguay) is the only mortgage bank in Uruguay and the principal intermediary of medium and long-term funds for housing in the country. The whole process of registering a property can be completed in around 66 days.
Buying a property in Uruguay is a relatively straightforward process, however we always recommend consulting an independent professional solicitor to advise you on the purchase.
The legal fee is included in your 4.5% buying costs.
The land title is assigned to the purchaser upon paying the full price. When the first instalment is paid, the buyer is given the right by contract to obtain full title when he completes payment of the full price. Since the contract is recorded in a Public Registry, this is enforceable by a judge (in the event that the seller did not want to give title).
First American Title Insurance is available at extra cost for those who wish to have a further level of protection.
Currency
Property and land in Uruguay is payable in USD and as such is subject to exchange rate fluctuations between the USD and GBP.
When purchasing a property in foreign currency it is of course important to ensure that you are getting the best rate of exchange available. We have partnered with one of the UK's leading currency brokers in order to give you excellent rates of exchange. Not only will they help you get the best rate they can also assist you in the timing of the transaction as well as looking to reserve good rates for payments you may have to make in the future.
Reservation Fee
A £500 administration fee is payable on reservation of a unit to cover expenses relating to sourcing the development and pre and post-sales work. Developer partners will work with you all the way through the purchase process and continue the relationship after purchase. They will provide updates on the project and be available to help you with any related issues.
PROSPECTIVE BUYERS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MATERIAL AS LEGAL, INVESTMENT OR TAX ADVICE. EACH PROSPECTIVE BUYER SHOULD CONSULT HIS PERSONAL LEGAL COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO THE LEGAL, TAX; ECONOMIC AND RELATED ASPECTS OF PURCHASING REAL ESTATE. EACH PROSPECTIVE BUYER IS RESPONSIBIE FOR THE FEES OF SUCH COUNSEL, ACCOUNTANTS AND OTHER ADVISORS.
