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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)
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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.
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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.
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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.
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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.
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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.
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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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