Recent growth in the number of new construction residential projects geared toward the middle class is allowing the Uruguay government to expand affordable tax exemptions for builders and ease borrowing guidelines for would-be owners.
The government passed the social housing promotion law last year, and private developers responded to the tune of 4,460 units being built in 149 different residential buildings, a trend that El Observador’s Martin Viggiano describes as “a construction boom in areas far from the coast.”
The 149 buildings currently under construction in Montevideo (72%) and other Uruguayan cities are valued at US$404 million which translates into an average cost per unit of US$90,000 for a two-bedroom apartment.
Buyers of these units are exempt from paying the 2% Property Transfer Tax as well as tax from any rental income earned. Private developers are exempt from paying the value-added tax on all materials, the wealth tax, and rental income tax for 10 years from building completion.
Given the nascent program’s success, the Uruguay Mortgage Bank (BHU) is now lowering the down payment requirement for units in buildings with the Ministry of Housing (MVOTMA) stamp of approval from 30% to 10%. The BHU will lend borrowers, who must have monthly income between US$1,200 and US$2,500, up to 90% of the cost of the unit. (Full Story in Spanish)
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