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Home        Vol  VI    Issue 36           May 17, 2011         Previous Issues

 

 

Sparkling Beaches, Excellent Infrastructure and a Reasonable Cost of Living Greet Expatriate Retirees in the Posh, Foreigner-Friendly, Seaside Resort of Punta del Este, Uruguay

Cost of Living:  Meets the U.S. National Average (All Prices are in U.S. Dollars)

 

 

 

Uruguay is a small country (population 3.3 million) tucked along the southeastern coast of South America, and Punta del Este is a chic, seaside resort located on the country's southern edge.  Renowned throughout Latin America for its top notch restaurants, exclusive high rise buildings, wide boulevards, manicured lawns, 5-star hotels, glittering nightlife and twenty miles of pristine beaches, this upscale locale is where wealthy European, Argentine and Brazilian tourists come for the summer (December, January and February). The year-round population is about 8,000 people, but vacationers boost the population to 500,000 or more during the summer high season.   Infrastructure and amenities are first-rate, and more U.S. expatriates and retirees are discovering Punta del Este's extensive charms.  

The Spanish first came to Uruguay and the Punta del Este area in the early 16th-century, but colonization did not start for nearly another 300 years.  Today, Uruguay is a constitutional democracy with an educated, prosperous middle class and a stable economy.   While government corruption is not unknown, it does not rival the malfeasance found in many other Latin American countries.   The country is safe, although there is crime in the capital city of Montevideo (a Paris-like delight in itself).   Ninety-eight percent of the population has access to safe drinking water, and 95% has adequate sanitation, something not found in all Latin American countries.

Almost all of Punta del Este's population is of European descent, primarily Spanish, Italian and Portuguese, and the city is characterized by colonial architecture interspersed with contemporary buildings.   The city's main thoroughfare, Gorlero Avenue, has designer shops, trendy eateries, cafes, casinos and art galleries, and because an early resident let his botanic garden get completely out of hand, gardens overflow with plants from around the world.  Palm trees sway, and neighborhoods are well kept and many are quite elegant.  The beaches are clean and open to the public (Bikini Beach attracts the rich and famous and Finger Beach has a giant hand sculpture).  Some stretches of sand have calm waters for swimming, while the strong waves of others beckon to surfers.  Restaurant choices are varied, with many establishments offering international menus and plenty of seafood.   Punta del Este is often called the St. Tropez of Uruguay, and it is hard to find a Latin American city with a more robust appetite for the good life.  

Overall, Uruguay is one of the least expensive places to live in the world.  Punta del Este, because it is a resort, is more expensive than other areas of the country, but the cost of living is not much more expensive than the U.S. national average.    Electricity usually runs about $100 or more a month for a single family home.  Water and sewer are about $35 per month.  Cable TV is $50 per month.  A telephone line is around $15 per month, plus charges for each call ($.10 to $.25 each depending on whether a call is to a landline or a cell phone).   Internet is about $50 per month (plans vary).  Food costs run $300 to $500 per month for a couple, but less can be spent by shopping in the local markets and cooking at home (meat and dairy products are produced locally and are very good).  A housekeeper may cost $3 to $4 per hour.   Car insurance is about $100 to $125 per year.  

A nice perk of a Uruguayan retirement is that offshore income, such as Social Security, is not taxed by the Uruguayan government. In May of 2010, there was some panic within the expatriate community over the fact that Uruguay might begin taxing the offshore income of expats, but as of January 1, 2011, only three types of income generated outside of Uruguay are taxed:  interest on deposits, interest from loans to a foreign company and dividends. The rate is a flat 12%, but if a person already pays income tax abroad on any of those three types of income, he or she will not have to pay tax in Uruguay. Thus, salary, capital gains on sale of shares or property, pensions, leases, income and any other type of income are not taxable. However, any income earned inside Uruguay, including rental income, bank interest, etc., is taxed.

Non-residents must also pay an annual Net Worth Tax, which is a flat rate of 2% on their net worth exceeding the prescribed tax-free amount (for 2011 the tax-free amount is roughly $111,000 for single individuals and $222,000 for married couples). Net worth is the difference between taxable assets (including properties, assets and rights within the country) and deductible liabilities (debts with banks in Uruguay), and is fixed by assessment by the General Real Estate Registry.     And real estate tax is levied on "immovable properties" in Uruguay.   The tax base is the cadastral value of the property as determined by the Cadastral Bureau. The tax rates vary from .0015 to .003 depending on the property value.  

When it comes to housing, Uruguay is foreigner-friendly and gives foreign investors the same property rights that citizens enjoy.   For many years, affluent Argentines purchased most of the real estate here, but that is changing as more Mexicans, Europeans, Chileans and Americans step into the market.   Buying real estate requires hiring an escribano (notary) and an abogado (lawyer) and following certain procedures - a 10% to 20% down payment is required, and the buyer must receive four guarantees that the property has no liens.  The property must be registered in its locality, etc.   A 2% tax is applied to properties bought and sold and split between the seller and the buyer.  Overall, the process is fairly straight forward.   

 

Punta del Este, Uruguay


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 This is an interactive map.  Click on the arrows in the upper left hand corner to move the map to the East, West, North or South, and click on the +/- signs (more than once if necessary) to zoom in and out.

Punta del Este real estate comes in all sorts of shapes and sizes, from modest bungalows to high-end, seaside luxury homes, and most residential dwellings are painted white with red tile roofs.  Small apartments can be found for less than $75,000 (but apartments in high rises start in the $300,000s), and single family home prices start in the mid- to high-$100,000s for modest residences (two bedrooms and two baths), some within two to three blocks of the beach.  More typically, though, homes are more expensive, in the $200,000s and up (in some cases, way up).   Still, for such a fashionable destination, these prices are not as high as might be expected.   La Barra is the neighborhood in which to buy, but it is also one of the most expensive and tends to attract a younger crowd.    

Renting a residence is also an option, and during the off season, homes along the beach can be had for less than $1,000 a month.  Once January and February roll around, though, prices easily quadruple   When renting a house, a deposit of five to six times the monthly rent is also common.  A recent law allows individual tenants who are Uruguayan tax residents to deduct from their Income Personal Tax (“IRPF”) 6% of their rental payments if they report the identity of their landlord to the Tax Authority.

 

 

U.S. citizens do not need a visa to stay in Uruguay for fewer than 90 days.  When it comes to retirement, any foreign visitor can apply for a residency visa.  Generally, the requirements include owning property in the country, having a bank account with adequate funds, having a clean police record and having proof of income, such as Social Security or other pension, of $6,000 a year or more.   The government encourages foreigners to settle in Uruguay so obtaining residency is fairly easy (as is obtaining a Uruguayan passport and dual citizenship).  

Medicare is not accepted outside of the U.S., and so health care, and paying for it, is always a concern when thinking about retirement abroad.  As in many other Latin American countries, medical care costs much less in Uruguay than it does in the U.S.  Low income foreigners and nationals are entitled to free medical care in public hospitals, but this is not recommended.   Instead, most expatriates buy private health insurance (an interview, blood tests and medical tests are usually required), or they buy a membership at a hospital for around $75 a month (although hospital memberships are usually not available to people age 70 or better).   English-speaking Punta del Este expatriates favor membership at Hospital Britanico (British Hospital) - probably the country's best hospital - in Montevideo, 90 minutes away by car.  This modern facility is staffed with doctors trained in the U.S., Canada and Britain and caters to the expatriate population.   Purchasing international health insurance is another option when living in Uruguay. 

The quality of the care, depending on where it is received, is fairly good (Uruguay has one of the lowest mortality rates in Latin America).  According to a 2000 World Health Organization study (which was somewhat controversial), Uruguay ranked 65th out of 181 countries when it came to the quality of its medical care (the U.S. ranked 37th).  It is worth noting that the country ranked slightly behind Mexico, a place where thousands of Americans travel each year for health care and cosmetic surgery. 

 

Summer temperatures (December through March) reach the 70°s and 80°s.   Between late April and November, strong winds sometimes combine with rain, cooling temperatures into the 40° and 50°s, and salty sea air permeates the city.

Capitan de Corbeta Carlos A. Curbelo International Airport, a few miles outside of city limits, services Punta del Este, and the city can be reached by airplane from Buenos Aires or by ferry from Buenos Aires to Montevideo and then by bus to Punta del Este.  Within the city, buses are not prevalent.  Expatriates usually keep a car or a motor scooter.

Retirement in Punta del Este has some drawbacks.  Getting back to the U.S. is a 13 hour flight.   Spanish is the official language, and even though a little British English is spoken here and there, it really is necessary to speak some of the native language.  Winters are chilly and damp.   Culture shock is always a possibility.   To help ease the transition to life in Punta del Este, though, there is an English-speaking expatriate group that meets regularly for lunches and potlucks and welcomes new members.   So, really, what excuse is there not to retire in this lovely, lively city by the sea?

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