'What are the prospects for Americans in Uraguay?' Retirement

Robert Stevens (12.64.12.231) -

We have a nice place in NW Indiana with a large, very nice house, land, horses, etc. Nothing wrong except the weather, lack of affordable help, the cost of heath care insurance, the very low property values in Indiana, and George Bush et al.

I have looked at Mexico - politically unstable at the moment; Costa Rica - appears to have had their fill of foreigners and lack an infrastructure; Panama - property prices are as great as the depressed US prices in Indiana; and now Uruguay.

Can anyone interpret the meaning of the election of a Leftist government? What about the cost of living and more importantly to me, the cost of buying a nice house on a nice piece of land?

Comment #1 Jim (152.163.34.201) -

Your analysis on Costa Rica is right on. Mexico you missed that the State Department recently referred to it as one of the most dangerous places (kidnappings).

In Uruguay you can find prices low and high. Once you get away from Montevideo it becomes rural... most of the highway bill boards are for farm products.

You will probably find land (with a house) more than affordable (compared to Indiana). You will probably find property taxes to be insigficant (in comparison).

The key is an extended trip to explore and experience the culture.

Comment #2 Patrick McDonnell (86.132.27.214) -

Great minds think alike :-)

We live in rural Suffolk, England where there are similar problems and have spent the last 4 years looking for the right retirement destination. We spent a month touring the country last year and are going again next month to look at Colonia department more closely. If it still seems as excellent as it did last visit, I'm planning to throw myself into small town life next February on a 3 month rental basis to get my Spanish up to speed. If I survive that, I'll be ready to buy or have built house and land.

> Can anyone interpret the meaning of the election of a

> Leftist government?

El Presidente may have banned smoking but you have Bush and we have Blair both of whom have done worse. I'll be talking to tax lawyers in Montevideo next month as I hear that the Prez is doing some tax adjustments. I also have appointments with the British consul and the Irish consul in BA so I should know more after that.

> What about the cost of living and more importantly to me,

> the cost of buying a nice house on a nice piece of land?

Its hard to say as I live in a very expensive country. Everyday stuff seems reasonably priced but gas and electricity might seem expensive to you though living here on Treasure Island, they seem cheap to me.

I've been averting my eyes from Se Vende signs until I'm sure but there are numerous agencies on line. "Chacras" are probably what you are looking for. Broadly speaking a 4 bed rural Uruguayan house with 5ha of land costs between one tenth and one twentieth of the British price for similar.

Jim's advice is sound. You've really got to go and look but in my view, it is well worth doing so.

Patrick

Comment #3 George from Dead Like Me (Contact Member) -

What a very interesting conversation. I feel like a fly on the wall. I have learned so much. No I think I could successfully move to Uruguay and be prepared.

Comment #4 peekaboo from my frozen igloo (Contact Member) -

Where I live, I better any where is better tax wise! Our taxes here are so outreageous. I get tire of supporting other people. I would love to move to another country where I am welcome.

Comment #5 Lee from Pocitos (Contact Member) -

In Uruguay *currently* there is no personal income tax, no personal capital gains tax, income from outside the terrority of Uruguay is not taxed at all.

The "sales" tax (IVI) is 23% and prices are always shown included IVI. Import taxes are high, if you receive a package valued more than US$50, you wil be assesed a 60% import tax by the customs service (which includes the IVI).

So the country is basically supported by the sales tax and imported items are very expensive. Corporations of course pay income tax, etc.

The employment taxes for health and pension are probably quite high % wise as well.

If you consume you pay. If you save you don't.

Property taxes are quite low compared to what you would find in the USA. In Montevideo there is a quarterly tax of about $15 per property (house/apt) which goes for the street lights, etc.

There are significant tax law changes in the works that keep getting delayed.

Comment #6 Steve Bowman (68.220.39.42) -

Robert-

I’ve watched this conversation for a while….the answer to the question, “Is Uruguay right for me?” depends on your national/regional and personal profile. One size ain’t gonna fit all!

Since you’re in Indiana, city and coastal real estate may not be the bargain many of us see. But if you’re looking for farmland and an inexpensive house, Uruguay may be pretty reasonable. You can get decent land, not to far into the boonies for $200, 300/acre and a nice house for less than $100, 000. The house may not be a deal by IN standards, but I don’t suspect there’s much good farmland in the US, near desirable population centers for that kind of money. For many people in North America and just about anyone in the EU, this is drop dead wonderful deal!

Stop by Coastal Uruguay, this is the type of question we’re trying to answer.

Steve Bowman

Comment #7 Lee from Pocitos (Contact Member) -

You will also find that the seasons are much milder than Indiana... but unlike living in Costa Rica you'll still have seasons and higher quality food.

Comment #8 Milly from Wisconsin (Contact Member) -

Sounds like I should brush up on my spanish. I hope to retire very soon and I know here in the US it is pretty impossible to someone to retire unless you have a very nice nest egg.

Comment #9 Linda from Montevideo (Contact Member) -

You may find some cheaper places to retire, but you can't beat the quality of living here. Don't be scared by that, to meet the immigration requirements to live here you need to show your pension is US$500/month, or more.

Comment #10 RiverQueen from EARTH, MILKYWAY (Contact Member) -

Well, from what I'm reading it sounded like the ideal place to retire. The cost of housing, land, climate all sound ideal.

Then I got down to the part where sales tax is 23%? Why is sales tax so high? And import tax 60%? That is totally unrealistic.

You mean to say if someone sends me a Christmas gift of $100.00 I have to pay $60 to receive it? That seems atrocious to me. Don't you feel that it is way way too much?

Comment #11 Lee from Pocitos (Contact Member) -

You'll find property taxes to be quite low. Until the new tax law changes things no income tax and no capital gains tax for individuals.

You'll find most of Latin American has very high import taxes. Buy locally made stuff! They do have an exemption for gifts under US$50... I suspect a lot of gifts are under valued on the customs forms.

I paid 62 pesos for dinner (US$2.58 including tax)... it was a small dinner... but you can get a great meal for US$5-$7.50 or so including tax.

So which is better paying 30% tax on your income plus 4-8% sales tax or just 23% when you buy something?

Comment #12 New toys from toy chest (Contact Member) -

Well when you put it that way, Lee, I guess I'd choose the 23%. I'm still not wild about the 60%. I had to send something to a friend in Canada once and she didn't explain about declaring value and I just chose a number, she had to pay an exorbitant tax on the item. Wow!

Comment #13 ribbon from around town (Contact Member) -

It seems like things are very expensive there. I don't think I have ever been able to get away with paying $3.00 for a meal.

Comment #14 Misty from Mississippi (205.188.116.203) -

I have the advantage of having lived in Hong Kong, Singapore, Malayasia, Japan, Australia as well as the good Old USA. Have been researching Central America (Costa Rica, Panama Zone, etc) and finding Uruguay the best so far. If I can learn Cantonese, Spanish is a piece of cake. Especially since it seems to be the "second" language in most states near the southern borders of the US.

Culture shock is to be expected, but it is only as difficult as you allow it to be. You have to learn to blend in, accept a few of the limitations (so maybe you won't have a dishwasher). Go for at least six months to get the feel of your surroundings and the lifestyle.

I have been back in the US for almost 20 years and am still miss international living. Would try to explain it but, you sort of have to have done it to understand.

Lee, are you and your family up for showing an ex-pat around?

Do have one question - what about my dog? I had to quarantine my cats for six months in HK, but didn't bring my dog as I felt this wasn't a humane thing for them to be caged for this long.

Thanks,

Misty

Port Gibson, MS

Comment #15 Lee from Pocitos (Contact Member) -

Maybe your dishwasher comes a couple times a week and cleans your house too!

I think there is another message about pets... if they come from USA, or Europe and are chiped or have papers its not a big deal. Coming from other places might be different.

Stop by the Sunday meeting and there will be lots of people to give you ideas and/or help show you around.

Comment #16 Irv in Pocitos from Montevideo, Uruguay (Contact Member) -

There's no quarantine for animals coming from the US... none at all. You'll need shots done a certain number of days before travelling - I think it's a week - (ask the Uruguayan consulate for the specifics). You get the document from the Vet stamped by a USDA official. I think you may need a document from the Uruguayan consulate also, but I dont remember. I brought a ferret through Buenos Aires and I remember I had to go to the Argentine consulate for papers from them because we had to clear customs to switch airports.

They deliver your dog to you in baggage and you just walk out with him/her. That's it.

Good luck learning Spanish. The biggest impediment here is that almost everywhere you go, someone speaks English. We've talked about this with other expats. The consensus is you learn a language best when you have to. You can get by with english in most restaurants, shops and lastly, most movies on TV are in English as are DVD rentals.

Comment #17 Ivan (190.64.135.205) -

I am Russian excuses by my english. eh decided to know Uruguay 2 years ago since they informed to me that it was a beautiful place, and asi was! I know everybody almost, but this small country reune best: Colonia-Montevideo-Punta Of Este-Rocha-Lavalleja Minas, is incredible places, eats, people very well is pretty and educated, the climate he is very good, and people are as in europe:(italian, Spaniards, Germans, Swiss...), and Montevideo loa city where alive it is a fabulous mixture of artdeco-artnoveau! Ivan L.

Comment #18 Santiago Torres from Montevideo, Uruguay (Contact Member) -

The tax reform (in place since July 1st, 2007) has introduced major changes.

And as for the politcal climate for certain investments, there are contradictions inside the ruling leftist coalition that put a question mark on some key aspects.

Albeit those aspects, I still think (*still*) that Uruguay is a country that's friendly for both foreign immigrants and foreign investment.

If you wanna learn more about these items, I might help.

Comment #19 Wilbur Corncob from Punta del Este (Contact Member) -

I think a political climate that discourages money from outside is bad for Uruguay. With no population growth or even a decline how can the economy survive without it?

Right now if an American decides to live in Urguay they are likely to bring money here that would not otherwise come. They are likely to put money in the banks here that would not otherwise come. They will buy more expensive stuff that they wouldn't other wise.... and so on.

If you tax their affairs outside Uruguay they will be inspired to go someone else (ie: spend there money NOT in Uruguay).

They should expand Zone America to the whole country. Make it extremely easy for businesses from outside Urugauy to setup shop here and employee lots of people for income that is made elsewhere. And not just unskilled stuff like telemarketing and manufacturing.

Comment #20 Santiago Torres from Montevideo, Uruguay (Contact Member) -

The tax reform does not tax income from foreign source. But if you open a bank account in Uruguay, you'll have to pay income tax for the interests (the bank will collect the money directly). The banks already raised the interest rates to compensate the loss introduced by the income tax.

Anyhow, in my opinion, the tax reform, particularly the introduction of the personal income tax (completely foreign to us), has been one of the worst mistakes made by this government. When the rest of the world is thinking how to get rid of that nuisance, we end up "buying" it. Besides that, Uruguay is no a country of high incomes. Therefore, in order to make the tax reaccly collect money, is has to affect people with moderate to low income (only income from 0 to +/- U$S 3600 per year is exempted). From a more philosophical perspective, the income tax punishes effort. What Uruguayan need is a stimulous to work more, no the opposite. As usual, the poorest and the richest (if you're rich, you put your money abroad and collect interests without having to pay the tax) are those who are safe. The middle class is the one who pays.

This is important: If you invest in Uruguayan public debt, the interests will not pay taxes. So, if you trust in the Uruguayan tradition of paying the debt without hesitation, just buy Uruguayan Treasury Bonds and you'll be exempted of the income tax (lower middle class Uruguayans cant't afford them).

Comment #21 Lee from Pocitos (Contact Member) -

Discount bank doens't pay interest in savings accounts less than US$25, 000... so don't count on much interest income or taxes!

The reducion in the IVA did little for the poor. The food iva went from 14% to 10% and the prices stayed the same for almost everything so the stores kept the extra 4%. Same for other stuff that went from 23 to 22%.

Comment #22 Santiago Torres from Montevideo, Uruguay (Contact Member) -

Lee, I couldn't agree the most with you. You've got it right. I still wonder why the heck the government introduced this tax reform. To accomplish with electoral promises, a symbolic tax on high revenues would have sufficed.

Anyhow, any foreigner, with income earned abroad, would do wonderful here.

Comment #23 Jim (1) from New York (Contact Member) -

It may also be that the tax on rentals doesn't affect American's that invest here, but of course puts a pinch on the renters and the Uruguayan Investors.

The renters of course will have to pay higher rent to cover the tax (assuming the Uruguayan Investor raises their rent to cover the tax they have to pay).

However, for the American investor the tax is really irrelevant. Here's why. American's are required to pay tax on 100% of their worldwide income. However, they get a tax credit for any foreign income tax they pay.

So if an American invests in property in Uruguay before July 1, they only have income tax in the USA on the rental income. After July 1, they pay income tax in both countries on the rental income, but receive a credit in the USA on the tax paid in Uruguay. The end result is the same total amount of tax paid but after July 1 some of it would be paid to Uruguay.

So while the rent tax negatively impacts the Uruguayan investor and all renters, American investors have the same bottom line.

Comment #24 Santiago Torres from Montevideo, Uruguay (Contact Member) -

Thanks for the input, Jim. Interesting thing to learn about.

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