Pages

Uruguay real estate - five frequently asked questions

This article answers five frequently asked questions about buying real estate in Uruguay.

1) What is required for me, as a foreigner, to invest in Uruguay real estate? Do I need to become a resident or get a special approval from a government agency?
 Foreigners may purchase and own real property in Uruguay without any preauthorization, special forms, or residency requirements.



2) How much is the average real estate commission and who pays it?
In Uruguay, the buyer and seller each pays his own real estate company. I have observed commission rates of 3% from the seller to the listing office and 3% from the buyer to the company that represented him, for a total of 6%. If a party buys through the listing broker, that listing broker will usually collect both sides of the commission.

3) When I was in Uruguay I saw the real estate signs of several companies on one property for sale. Why is that?
The concept of an exclusive listing does exist and is sometimes practiced. However, many times a listing is non-exclusive, meaning that a property is listed with more than one real estate office. With non-exclusive listings, any office that has a listing may represent the seller. 


4) How do I know that I am getting clear title when I buy a property in Uruguay?
Uruguay has a trustworthy and secure property registry system. A professional, called an escribano (or notary) is hired by the buyer to protect the buyer’s title interests. The escribano manages the closing process, including the title search, investigation for any outstanding judgments, payment of transfer taxes, and recording the sale documents. Escribanos normally charge a fee of 3% of the sale price.


5) What are the typical Uruguay real estate acquisition and sale costs?
Acquisition costs
  • The real estate agent’s fee is commonly 3% of the purchase price for the buyer and is subject to a 22% value added tax.
  • The escribano’s fee is commonly 3% of the purchase price and is subject to a 22% value added tax. There will be additional fees of around $250 for searching public records and then for registering title.
  • The ITP tax is due from both the buyer and the seller and is 2% of the registered value. (Registered value is often less than the fair market value) 
The base acquisition costs are therefore approximately 8% to 9% of the purchase price.


Sales costs
  • The real estate agent’s fee is commonly 3% of the purchase price for the seller and is subject to a 22% value added tax.
  • The ITP tax is due from both the buyer and the seller and is 2% of the registered value. (Registered value is often less than the fair market value) 
The base sales costs are therefore approximately 4.5% to 5.5% of the sale price.

Note: This information about real estate transaction costs is provided as general background information only. Some real estate agents and escribanos may charge more, and there can also be additional costs, which could include, but are not limited to, a power of attorney, legal or accounting advice, or a property inspection by an architect. It is recommended to independently learn all the costs associated with any specific transaction before making a decision to proceed.

No comments: