Residential Real Estate Incentives Law

On November 16, Law No 26,158 (the “Residential Real Estate Incentives Law”) was passed, establishing a new incentives regime for the acquisition and construction of permanent one family residences that includes, among other provisions, the grant of financing to tenants under lease agreements. The new regulation also seeks to benefit those tenants entering into leasing agreements and those owners of land who construct such units on their land. The law also provides for the devolution and compensation of Value Added Tax to those who construct such residential units.

The Residential Real Estate Incentives Law establishes that those individuals who

(i)            have been renting their residences as tenants under urban leases for at least 8 months, and

(ii)           have made all rental payments in due manner, may benefit from the regime established thereunder.

Accordingly, the Residential Real Estate Incentives Law establishes that monthly payments granted by the new financing must be similar to monthly payments that tenants make under their leases. Additionally, the amount of such credit facility should allow the tenant to acquire a house of similar characteristics to the one under the original lease agreement at the moment of the request for financing.

The Residential Real Estate Incentives Law also provides for the possibility of granting a credit facility to those who enter into a leasing agreement with the owner of a unit that will later constitute the subject of the financing.

The system established by the Residential Real Estate Incentives Law will also apply to the financing of the construction of permanent one family housing on land owned by the borrower. In this case, a grace period of not more than 18 months shall be applicable.

Finally, the Residential Real Estate Incentives Law establishes the application of the benefit of Value Added Tax established in the Residential Real Estate Incentives Law to construction companies that carry out projects, whatever their legal form, for the construction of real estate exclusively for the purpose of permanent one family housing, implemented by way of acquisition, rentals and/or leasing agreements subject to the Residential Real Estate Incentives Law.

Construction companies may request a credit against other taxes payable to the Tax Authority (Administración Federal de Ingresos Públicos) or the reimbursement of Value Added Tax paid for the acquisition, manufacturing, or definitive import of goods or services related to the construction of real estate property under this regime.

The above-described benefit applies only to:

(i)            the construction of new housing units and its infrastructure, and

(ii)           the completion of housing units and their infrastructure already under development at the time of the entering into effect of the Residential Real Estate Incentives Law.

In order to take advantage of such fiscal benefit, the Residential Real Estate Incentives Law establishes the following requirements:

(i)           the housing units under rental or leasing agreements must be occupied for a period of at least 72 months;

(ii)           housing units to be constructed must be ready for occupation within 3 years of the application for the described benefits, and

housing units for sale must be acquired by individuals who totally or partially pay the purchase price through a credit facility granted by a financial entity under the terms of the Residential Real Estate Incentives Law.