Buying real estate in Uruguay
There are no restrictions on who can purchase property–except for those affecting rural property—but you must use a public notary to prepare the legal documents. The notary will advise you on the nature of the transaction and ensure the title deeds are all in order. For example, that there are no outstanding debts on the property.
The standard fee for a notary is 3% plus 22% VAT. You should calculate that between estate agents fees, all expenses and taxes, transaction costs on a purchase will be around 8% of the purchase price of your property in Uruguay.
The process starts with the signing of a reservation contract – a boleto de reserva in Spanish. This is the formal acceptance of an offer to purchase and binds both parties to go ahead with the transaction. However unlike in other parts of the world the title investigation is only carried out after the signing of the contract. So if any defects in title are found then the contract can be rescinded without penalty. A 10% deposit is normally paid on the signing of the contract and if one party defaults then it is usual to include a penalty clause equivalent to the deposit to be paid by the defaulting party. The deposit is held by the notary or Real Estate agent in an escrow account. It is normal for the reservation contract to establish a period of between 30-60 days to proceed to closing.
Currency for transactions
Uruguay has a legal regime which provides for the free entry and exit of foreign currency and also permits it to be freely converted into the local currency.All real estate transactions are carried out in US dollars. As will be seen below, for certain tax aspects the value is recalculated in Uruguayan pesos and taxes are paid in pesos, but the transaction itself will always be in US dollars.
Taxes are applicable on a transfer of property
The tax regime on properties in Uruguay at the time of writing is as follows. It’s worth noting that the rateable value of the property is usually much less than the real value. Impuesto a las Transmisiones Patrimoniales (ITP) – Asset Transfer Tax This tax is payable at the time of purchase and also on any later sale, whoever the purchasing or selling party is. The rate of tax is 2% of the rateable value of the property. Remember the rates are normally considerably less than the real value.