Total transaction costs are low in Peru
November 20, 2017
How high are realtors' and lawyers' fees in Peru? What about other property purchase costs?
|Transfer Tax (Alcabala)||3.00%||buyer|
|Notary Fees||0.0025% - 0.81%||buyer|
|Real Estate Agent's Fee||3.00% - 5.00%||seller|
|Costs paid by buyer||3.91% - 4.06%|
|Costs paid by seller||3.00% - 5.00%|
|ROUNDTRIP TRANSACTION COSTS||6.91% - 9.06%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in Peru?
Foreign residents and nonresidents alike may buy Peruvian property. Investment in Peruvian real estate property does not require government approval, except if such property is close to Peru's frontiers. Foreigners are restricted to own property near government installations and military bases.
Real estate ownership is generally absolute. It is recommended to be represented by a real estate agent during the transaction. The whole process of registering a property can be completed in around 6 to 16 days.
Transfer of real property must be made by public deed. Notary publics are obliged to report to the tax authorities all transfers they register. All deeds must be hand-written and kept in the notary's registry.
To ensure that the title is clean, a Property Registry Certificate must be obtained from the property registry. This ascertains the property's existence and information details, and if it is free of mortgage debt, liens, or any other encumbrance.
The Notary Public prepares and files the Sale Purchase Agreement (SPA), or "minuta", for registration and to be converted to a public deed. It is advisable to use the option to "block" the property register for 60 days while the SPA has not yet been converted to a public deed. This can be done through a pre-emptive registration to prevent any third party filings.
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 tax is generally levied at 3%. The tax base is the municipal value of the property exceeding the 10 official established tax units (Unidad Impositiva Tributaria or UIT. The threshold amount is PEN39,500 (US$11,618) for 2016, and PEN40,500 (US$11,912) for 2017.