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Oct 22, 2013

Total transaction costs are low in El Salvador


How high are realtors’ and lawyers’ fees in El Salvador? What about other property purchase costs?

Transaction Costs

Who Pays?
Real Estate Transfer Tax
(Over the excess of US$28,571.43 of the total price)
3.00% buyer
Registration Fee 0.63% buyer
Notary Fee 0.15% - 1.00 % buyer
Real Estate Agent´s Fee 5.00% seller
Costs paid by buyer 3.78% - 4.63%
Costs paid by seller 5.00%
ROUNDTRIP TRANSACTION COSTS 8.78% - 9.63%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in El Salvador?

Foreigners can invest and buy property in El Salvador, and can hold dollar accounts and use these accounts when seeking local financing. No single natural or legal person--Salvadoran or foreign--can own more than 245 hectares. Rural lands cannot be owned by foreigners except for industrial purposes.

El Salvador oceanview properties There are no restrictions on foreigners buying urban land. Foreigners should be aware of the need to be cautious about property rights.

All property is registered in the Instituto Libertad y Progreso, a state owned registry that clearly identifies the owner of the property. The accuracy of this registry, which is currently being computerized, makes property insurance obsolete. This type of registry system is common in Central America and is considered a safe way to guarantee ownership.

A notary prepares and notarizes the sale agreement. He then facilitates the payment of the registration fee (Derechos de Registro por Venta de Inmuebles, also known as the Alcabala), which is 0.63% of the property price. An additional 3% over the excess of US$28,571.43 should also be paid as the Transfer of Real Estate Tax (Impuesto de Transferencia de Bienes Raices). After which, the deed is presented to the Registry office, and finally to the Municipality.

The whole process of registering a property can be completed in around 18 to 32 days.



Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Transfer of Real Estate Tax  (Impuesto de Transferencia de Bienes Raices)
Transfer of real estate tax is levied at a flat rate of 3% on the property value exceeding US$28,571.43.

Registration Fee (Derechos de Registro por Venta de Inmuebles, also known as the Alcabala)
Registration fee is around 0.63% of the property value.

Notary Fee
Notary fees are around 0.15% to 1% of the property value.

Real Estate Agent’s Fee
Real estate agent’s fee is around 5% of the property value.






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