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B. Tax on Real Property
Any purchase of real estate, according to article 1220 of the Civilian Code most be signed by both parties, (seller and purchaser) before a Notary protocolized in a Notarial Deed, and filed for recording at the Public Registrar office. Once recorded the Deed will affect third parties. To purchase a new lot or to segregate one from a larger lot, the map establishing the boundaries and location, must be filed and approved by the cadastral department ( Ministry of Economic and Finance) and then by the Ministry of Housing and after receiving a stamp from the surveyor and stamp from both public offices, must be protocolised and recorded. The Fiscal Code refers to: I. Capital gain tax on transfers is also regulated by Article 701, the 2% tax paid in advance on the sale price will become deductible for the seller in the income tax declaration form. If there is a capital gain, this tax will have to be paid, and the applicable formula will depend if the seller is a natural person or a juridical person. II. Inheritance tax was regulated by Article 819. This tax was abolished in 1985 with the enactment of Law No. 22 of 1985 and reestablished with Law 6 of 2005. III. Tax incentive for new building Since the enactment of Cabinet Decree No. 109 of 1970, successive legislation has been passed establishing tax benefit to Developers to keep the Construction Industry in a constant growth. At the present there are tax incentives in favor of the developer and in favor of the buyer of newly built real property.
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