Escribanía - 24/05 - Parte 4

Understanding the Income Tax System

Introduction to the Session

• The session begins with a greeting and acknowledgment of group members present.

• A count of participants is mentioned, indicating there are 21 attendees.

Overview of Income Tax

• The discussion shifts to income tax, specifically Law 20628 and its regulation by Decree 824 from 2019.

• Income tax is defined as a direct tax, meaning it cannot be transferred like VAT (Value Added Tax).

Characteristics of Income Tax

• Unlike VAT, which can be passed on to consumers, income tax directly affects the taxpayer's earnings.

• Individuals have a fiscal year that aligns with the calendar year; businesses may have different fiscal closing dates.

Business Entities and Taxation

• The closure of a business entity's fiscal year is found in its social contract or statutes.

• All entities classified as "subjects" under income tax law are subject to taxation regardless of their legal status.

Understanding Subjects Under Income Tax

• Entities without legal personality but with fiscal identity (e.g., trusts, mutual funds) are also taxed under this law.

• Businesses are always liable for income tax due to the theory of wealth increment.

Individual Taxpayers and Habituality

• Individuals and undivided estates share similar treatment under income tax laws; however, individuals typically engage in transactions rather than estates.

• For an individual to be taxed under income tax, they must regularly engage in activities generating taxable income.

Criteria for Habituality in Income Generation

• An individual must demonstrate habitual engagement in revenue-generating activities for taxation purposes.

• Habituality requires not just repeated actions but also maintaining the source of revenue over time.

Practical Example: Real Estate Investment

• Selling properties does not automatically classify someone as a habitual trader unless they reinvest profits into further real estate ventures.

Understanding Habituality in Real Estate Transactions

The Complexity of Proving Habituality

• The speaker discusses the challenges in proving habituality in real estate transactions, noting that it is particularly difficult for tax authorities (FIP) to establish this status.

• They mention having only heard about habitualists a few times in their professional life, acknowledging that while there are developers who operate as habitualists, they often also have corporate entities.

• The speaker emphasizes the rarity of individuals claiming habitualist status based solely on reinvestment from multiple sales within a specific timeframe.

Tax Implications for Non-Habitualists

• While habitualists exist, determining this status is complex; agents may struggle to classify clients without clear evidence or recognition from the client themselves.

• Acknowledgment that some developers correctly identify as habitualists and comply with tax obligations by declaring their income and understanding retention requirements.

Categories of Income Subject to Tax

• The discussion shifts to how non-habitual individuals can still be subject to income tax if their earnings fall into one of four defined categories.

• The first category mentioned is "renta de primera categoría," which includes income from land leasing, rental agreements, usufruct rights, and surface rights.

Detailed Breakdown of Income Categories

• The second category discussed is "renta de segunda categoría," encompassing capital gains from various sources such as securities, cryptocurrencies, and real estate transactions.

• It’s noted that real estate transfers fall under this second category along with personal rights related to properties.

Business Activity Income

• Moving on to "renta de tercera categoría," which pertains to business activity income generated by companies or individual entrepreneurs engaged in commercial activities.

Understanding Rental Income Categories

Overview of Rental Income Types

• The discussion begins with the classification of rental income, identifying it as a human economic activity that can be categorized based on the type of property and its use.

• A distinction is made between individuals renting out commercial properties versus those managing multiple rental properties, emphasizing that significant rental activities may classify as an economic exploitation rather than mere income generation.

• The FIP (Federal Administration of Public Revenue) recognizes cases where individuals with numerous rental properties are considered to have an economic exploitation status due to their business-like operations in real estate.

Implications for Legal Professionals

• An example is provided where a lawyer owning two rental properties would report under first-category income, indicating that not all property rentals qualify as economic exploitation.

• The speaker clarifies that merely generating profit from assets does not equate to running an economic exploitation; thus, legal professionals must understand these nuances when advising clients.

Taxation and Deductions

• The conversation shifts to taxation categories, noting that both individual taxpayers and businesses fall under third-category income for various types of revenue generated from real estate transactions.

• It is highlighted that transferring lots from subdivided properties incurs taxes classified under third-category income if more than 50 lots are created from a single property.

Differences in Tax Rates

• Different tax rates apply across categories; second-category income has specific rates established since 2018, which require separate declarations and calculations for tax purposes.

• General deductions exist across all categories but some deductions are unique to specific categories. This necessitates careful categorization by taxpayers during filing.

Filing Requirements and Compliance

• Individuals with mixed incomes (e.g., first-category and third-category rents alongside other business revenues) must file separate declarations for different types of income due to varying tax implications.

Tax Implications of Lot Sales

Overview of Taxation on Lot Sales

• The speaker discusses the taxation implications for selling lots, specifically noting that selling more than 50 lots from a subdivision (fraccionamiento) within two years triggers income tax obligations.

• It is emphasized that this rule applies even if the lots come from different subdivisions of the same property.

Specific Cases and Examples

• If an individual sells over 50 lots within two years, regardless of whether they were part of one or multiple subdivisions, they will be subject to income tax starting from the first sale.

• The focus is on sales rather than just subdividing land; thus, any transfer involving more than 50 lots in two years incurs tax liability.

Types of Transactions Covered

• The term "sale" encompasses various forms of onerous transfers including sales, exchanges, and contributions to partnerships. This broad definition ensures comprehensive coverage under tax regulations.

• Individuals acquiring already subdivided lots are also liable for taxes if they sell more than 50 lots within the specified timeframe.

Case Study: Inheritance and Sale

• A case study illustrates a father who subdivided 120 lots but passed away before any sales. His heirs sold all 120 at once, mistakenly believing they were only subject to property transfer taxes instead of income taxes.

• The FIP clarified that all heirs are taxed under income tax laws because their combined sale exceeded the threshold.

Strategic Considerations for Tax Planning

• To avoid taxation, it’s suggested that heirs should partition their inheritance before selling. However, if they sell as co-owners without prior division, they remain liable for taxes due to exceeding lot limits.

• The discussion highlights misconceptions about dividing properties to evade taxes; simply dividing does not exempt individuals from taxation if overall lot counts exceed thresholds.

Practical Implications for Notaries

• Future notaries must understand these rules as information about lot counts comes directly from official plans. They cannot claim ignorance regarding taxable status based on previous transactions by clients.

Understanding Tax Implications in Real Estate Transactions

Declaration of Sale Limits

• The transferor must declare under oath that they have not sold more than 50 lots or transferred them for profit within two years from the first sale of the property, including the current transaction.

• Notaries can only inquire about this declaration; if the transferor claims not to have sold more than 50 lots, it is accepted as valid.

Taxation on Lot Sales

• If a plan indicates more than 50 lots, any sale of those lots is subject to income tax regardless of how many remain available for sale.

• The taxation applies even if some lots are designated for other uses (e.g., reservoirs or parks), emphasizing that the number of marketable lots does not affect tax liability.

Construction and Income Tax

• Construction intended for commercialization incurs income tax when sold. This applies whether built by an individual or a company.

• Historical rulings indicate that individuals who construct without intent to sell may avoid income tax unless their intention changes post-construction.

Change of Property Use

• Time spent using a property for non-commercial purposes can influence tax obligations. For example, living in a constructed building rather than selling it demonstrates a change in intent.

• Rental agreements can serve as evidence that there was no initial intent to commercialize at construction time, impacting potential taxes owed.

Legal Framework and Recent Changes

• The law states that construction aimed at commercialization falls under income tax regulations. It is up to the transferor to prove lack of commercial intent during construction.

• Following reforms in civil and commercial codes, real estate sales from urban projects are now taxed under income regulations without exceptions.

Exploitation and Transfer Taxes

• Transfers made within two years after ceasing exploitation activities are also subject to income tax.

Tax Implications for Monotributistas in Property Transactions

Overview of Taxation on Asset Sales Post-Exploitation

• Gabriela discusses the tax implications if she sells any assets from her previous business within two years after ceasing operations, indicating that these sales will still be subject to income tax.

• While the assets were part of a sole proprietorship, all income generated was taxed under third-category income tax. After two years, the assets become personal property and are no longer tied to the business.

• A ruling from FIP clarifies that if Gabriela was a monotributista (a simplified tax regime for small contributors), she would be exempt from income tax during her primary production activities.

Selling Property as a Monotributista

• If Gabriela sold an asset while being exempt from income taxes due to her monotributista status, she would not incur capital gains taxes but instead be liable for another type of tax known as ITI (Impuesto a la Transferencia de Inmuebles).

• The ITI applies specifically when properties are sold and are not subject to capital gains taxation. This is crucial for understanding how different types of taxes apply based on one's status.

Clarification on Income Categories

• The FIP ruling states that if Gabriela was exempt from income taxes as a monotributista at the time of selling property, then only ITI would apply.

• It’s important to differentiate between third-category income (business profits) and fourth-category income (personal labor). The latter includes salaries and professional fees.

Understanding Fourth Category Income

• Fourth-category income encompasses earnings from personal labor, whether dependent or independent. This includes wages withheld from employees and pensions.

• There are ongoing issues regarding taxation on pensions and retirements which also fall under fourth-category income but require separate consideration.

Taxation on Properties Received as Payment

• Any transfer of property received as payment for services within two years is also subject to capital gains tax.

• If someone receives property as payment while being a monotributista, they may not be liable for capital gains but rather another form of taxation like ITI upon selling it later.

Conditions for Being Monotributista

• To qualify as a monotributista, one must meet specific conditions; this regime simplifies payments rather than categorizing all revenue under gainful activities.

Understanding Monotributo and Income Tax Regulations

Compatibility of Monotributo and Income Tax Registration

• The speaker explains that selling real estate disqualifies one from being a monotributista, as this activity is not included in the monotributo regime. However, one can be registered for income tax while also being a monotributista if the income source does not fall under monotributo.

• It is possible to be both a monotributista for legal services and registered for income tax if engaging in activities outside the scope of monotributo, such as selling lots obtained from land subdivision.

• The speaker clarifies that it is incompatible to be subject to VAT (IVA) while being a monotributista. However, one can still register for income tax if their activities do not fit within the monotributo framework.

Restrictions on Activities Under Monotributo

• An employee whose earnings are subject to withholding taxes can also engage in autonomous activities and remain a monotributista. This applies similarly to retirees who may have income withheld but still operate as a monotributista.

• If an individual operates two or more activities that qualify under the same category of services (e.g., legal services and property rental), they must choose either all under monotributo or none at all; mixing registrations is not allowed.

Limitations on Number of Activities

• To maintain status as a monotributista, individuals cannot exceed three distinct activities or units of exploitation. Each rented property counts as an individual unit.

• For example, if someone practices law and rents out three properties, they would exceed the limit with four units (law practice + three rentals), thus disqualifying them from being a monotributista.

Implications of Receiving Property as Payment

• A lawyer receiving property instead of cash for fees remains classified as a monotributista provided they continue paying their monthly dues without declaring additional income through gains.

• The concern arises when such properties are sold later at significantly higher values than what was declared during initial transactions; this could trigger scrutiny from tax authorities regarding compliance with regulations.

Tax Authority Concerns Regarding Property Transactions

• The focus of tax authorities will likely shift towards how properties received in payment are valued compared to reported earnings rather than just transaction processes like notarization during sales.

• There’s an emphasis on potential discrepancies between market value and declared earnings which could lead to investigations by tax authorities into whether proper taxes were paid based on actual asset values received by the taxpayer.

Role of Agents in Withholding Taxes

• Individuals acting as agents responsible for withholding taxes must ensure compliance during specific operations involving real estate transfers; failure to do so could result in shared liability for unpaid taxes owed by sellers.

• Agents are specifically tasked with withholding taxes related only to certain transactions like real estate transfers, share sales, or participatory interests—not across all taxable operations which may create confusion about responsibilities.

Understanding Tax Categories in Property Transfers

Protocol and Constitutionality of Property Transfers

• The speaker discusses that protocol is not mandatory for property transfers, as the Constitution allows for private instruments to legitimize general inspections of legal entities.

• In Buenos Aires, corporate constitutions require public instruments, affecting how participation sessions and share sales are conducted.

Categories of Income from Property Transfers

• The focus begins on property transfer taxation, emphasizing its importance in understanding different income categories.

• A distinction is made between first-category income (land rental) and third-category income (business activity), questioning where rental income from a corporation fits.

Clarifying Rental Income Classifications

• It is clarified that all income generated by a business entity falls under third-category income, regardless of whether it involves real estate rentals.

• The discussion shifts to individual taxpayers; if they sell subdivided lots, this would also be classified under third-category income.

Implications for Individual Sellers

• Notaries facilitate formal acts like property transfers; the classification of second-category income includes real estate sales.

• An example illustrates that an individual selling subdivided lots will classify their earnings as third-category income rather than second-category.

Taxation Based on Acquisition Date

• If an individual sells a property without having developed it or subdivided it themselves, the tax implications depend on when they acquired the property.

• The law (27430), effective January 1, 2018, introduced specific rules regarding capital gains from real estate sales based on acquisition dates.

Determining Applicable Taxes for Sales

• If an individual's sale does not qualify as third-category income due to lack of development or subdivision, it may fall under second-category taxation depending on acquisition date.

• Properties acquired before January 1, 2018, will be taxed differently compared to those acquired after this date concerning capital gains tax.

Inheritance and Donation Considerations

• When properties are received through inheritance or donation, the applicable taxes depend on when the original owner acquired them.

• If inherited properties were obtained before January 1, 2018, subsequent sales by heirs will follow specific tax guidelines based on prior ownership history.

Chain of Ownership and Tax Implications

• The discussion emphasizes tracing back through ownership chains to determine applicable taxes based on initial acquisition dates.

Understanding Tax Implications in Real Estate Transfers

Overview of Acquisition and Tax Structure

• The instructor emphasizes the importance of a structured approach to understanding tax implications, indicating that this framework will be revisited throughout the year.

• A discussion on the instructional nature of the "cuentito" (story), which serves as a guide for determining applicable taxes during real estate transfers.

Key Conditions Affecting Taxation

• Ownership title from March 2018 does not exempt one from taxation if possession was established before January 1, 2018; payment evidence must be substantial (at least 75%).

• If at least 75% of the property cost is demonstrably paid prior to January 1, 2018, then sales are taxed under ITI rather than cedular tax due to investment timing.

Possession and Payment Considerations

• The instructor clarifies that taxation cannot occur retroactively based on laws enacted after an investment decision was made.

• Emphasizes that possession prior to January 1, 2018 or substantial payment can influence tax obligations significantly.

Sale Scenarios and Their Tax Implications

• Discusses scenarios where properties constructed post-January 1, 2018 still fall under ITI taxation if they were acquired before this date.

• Explains how different acquisition dates for property shares affect tax treatment—one half may incur IT while another half incurs cedular tax depending on purchase timing.

Analyzing Transfer Types and Tax Categories

• Outlines steps for assessing whether a transfer by an individual or company falls under income tax or other categories based on habituality in real estate transactions.

• Clarifies that any deviation from established guidelines could lead to incorrect tax assessments; starting with income tax based on habituality is crucial.

Specific Cases in Property Sales

• Provides an example where selling lots obtained through subdivision after acquiring land post-January 1, 2018 results in third-category income classification due to volume sold.

• Reinforces that once classified under third-category income, second-category considerations become irrelevant.

Cedular Tax Rates and Retention Responsibilities

• Introduces special rates for cedular taxes: dividends at 7%, share sales at 15%, highlighting their relevance for participants in real estate transactions.

• Notes that participants are not agents of retention for cedular taxes unless dealing with foreign residents who do not file local declarations.

Impuesto Cedular y Transferencia de Inmuebles

Conceptos Clave sobre el Impuesto Cedular

• El impuesto cedular se aplica a residentes nacionales, quienes deben ingresarlo mediante declaración jurada. Si el transferente es un residente del exterior, el agente de retención es el operador en Argentina o su apoderado.

• En caso de que un residente del exterior venda un inmueble a otro residente del exterior, la autoretención debe ser realizada por el apoderado del vendedor. Los compradores pueden recibir asesoría sobre este proceso.

• La alícuota del impuesto cedular para la transferencia de inmuebles es del 15%, calculándose sobre la diferencia entre el precio de venta y el costo de adquisición actualizado por IPC hasta la fecha de venta.

• Es importante realizar los cálculos en pesos; las conversiones entre dólares y pesos deben hacerse tanto al momento de la adquisición como al momento de la venta para determinar correctamente la diferencia sujeta a impuestos.

• Se pueden restar costos de intermediación y escritura del precio de venta antes de calcular el impuesto cedular. Esto se discutirá más detalladamente en clases futuras.

Exenciones Relacionadas con Casa Habitación

• La venta de una casa habitación está exenta del impuesto cedular según el artículo 26 inciso n de la ley de ganancias. Esta exención no requiere reemplazo ni compra adicional.

• A diferencia del ITI (Impuesto a las Ganancias), donde hay un régimen de reemplazo, en el caso del impuesto cedular no existe tal requisito si se trata de una casa habitación.

• Es crucial entender que no se mezclan los regímenes: en cedular hay exención directa para casas habitación, mientras que en ITI hay reemplazo obligatorio.

Información Adicional y Recursos

• Se compartirá un resumen con los contactos intermedios para facilitar consultas durante todo el año académico.

• Se menciona un curso sobre normativa antilavado organizado por OBR; los interesados deben esperar información adicional sobre costos e inscripciones.

• Se anima a los estudiantes a hacer preguntas y se asegura que se continuará desarrollando estos temas durante todo el año académico para mayor claridad y comprensión.