The Uruguayan real estate market is a dynamic and rapidly developing space that has experienced tremendous growth in recent years. This step-by-step guide provides potential buyers and sellers with essential information and resources to acquire prime real estate in Uruguay and ensure a successful real estate transaction. With insights into legal requirements, financing options, and recommended real estate experts, this guide is designed to help you navigate the Uruguayan real estate market with confidence.
How to buy a property in Uruguay?
Buying property in Uruguay requires careful research and planning. It is important to familiarize yourself with local real estate regulations, taxes and costs associated with the purchase. Also, consult a real estate agent if you need help understanding the laws or negotiating an offer. When discussing financing options with your lender, be sure to obtain all necessary documentation beforehand. Finally decide to work with only one trusted real estate agent who guides you through the whole process and looks out for your best interests.
What is the buying process?
The Uruguayan government offers excellent conditions to live and invest in prime real estate. Investors should be assured that corruption is not an issue in Uruguay and that they are free to own private property or establish businesses except in areas that are part of the national security domain.
The execution of the transaction may differ in some respects, but do not worry – here you will find step-by-step instructions that will guide you through the process:
- The agent finds a property that meets the buyers needs and negotiates an acceptable purchase price.
- The buyer’s notary draws up a preliminary contract, the so-called reservation bill (boleto de reserva), in which all the conditions of the transaction are described:
- The buying and selling parties involved in the transaction are identified, and all relevant parties are bound by the purchase and sale agreements entered into.
- The property is identified by its Padron number, property size and other characteristics.
- The methods of payment and the price are indicated. The method of payment can be either in full or in installments depending on the seller, with or without guarantees.
- The buyer and seller agree on the purchase price, whereupon the buyer pays a 10% deposit to his notary escrow account at time of signing the preliminary contract (Boleto de Reserva). The notary then receives the title documents from the seller.
- The deadline for the conclusion of the contract is set. Within this period, the notary verifies the legality of the property, taxes and cadastral documents going back 30 years. In case of irregularities, the contract is declared invalid, the deposit is returned and all title deeds are duly returned.
- In the event that one of the parties does not fulfill its obligations, a penalty is established (usually 10%), which is enforced.
- Once the reservation ticket (boleto de reserva) is signed, the notary fulfills his task by verifying and certifying the authenticity of the document:
- The notary verifies the legal titles and requests relevant documents, including property certificates, cadastral and municipal documents, to confirm that the property is free of any obligations, attachments, mortgages or liens.
- The notary public then drafts the deed of sale, which is signed when the property is fully paid for or when a payment plan has been agreed upon between the parties. Subsequently, the title deed is deposited at the Land Registry to legally secure the transfer and recognition of ownership to the buyer.
Costs for buying or selling a property in Uruguay
The terms and costs associated with buying or selling property in Uruguay can vary depending on location and other factors. It is important to be aware of all possible costs when considering a real estate investment in this country. Professional help from a certified real estate agent can help ensure that the process goes smoothly and according to regulations.
Costs of buying property in Uruguay
The cost of buying a property in Uruguay is usually between 7% and 8%.
- Real Estate Agent fee = 3.28% + VAT (22%) = 4%
- Notary fees (including Montepios, FONASA and IRPF) = 3% + VAT = %3.66
- Registrations, certificates and other registrations = approx. US$1,500 to US$3,000
- Taxes for transfer of ownership (ITP) = 2% of the taxable value. Tax value is much lower than market value.
Costs of selling a property in Uruguay
Selling a property in Uruguay can be cost effective. You should consider the following costs when deciding to sell:
- Brokerage = 3.28% + IVA (22%) = 4%
- Real estate transfer tax (ITP) = 2% of the taxable value. The taxable value is often much lower than the market value.
- Profit Tax. Is the 12% difference between the purchase value and the sale value. If you bought the property before July 2007, the tax is the lesser of 1.8% of the sale price or 12% of the difference between the purchase value and the sale value. Sellers notary or a local accountant can calculate the taxes to be paid for a seller.
All in all, buying and selling real estate in Uruguay is a multi-faceted endeavor that requires diligence and professionalism. You need to research the market before investing, find the right partner, register your property with the right authorities, and know what costs are coming your way.
At Team Haverkate, we help you choose the ideal property type and style when investing in real estate in Uruguay. We are very familiar with the characteristics and locations of these prime properties and work a lot with one of the largest and renowned law firms together who specialize in real estate transactions besides other businesses.
With our support, you can benefit from some of the best incentives in the world when it comes to investing in real estate in Uruguay. With this step-by-step guide, you should have all the information you need to begin your journey to becoming a successful real estate investor in this beautiful country.