by Anna-Catherine Brigida and Eliana Raszewski

BUENOS AIRES (Reuters) – As Argentina’s inflation rate exceeds 100% and the value of the currency plummets, Luis, a 33-year-old IT worker, has found an economic lifeline: renting out his apartment on Airbnb for coveted dollars and finding a way to hide his earnings from tax officials.

Luis’s apartment in Buenos Aires makes about $800 a month, 60% more than his salary in IT, which was paid in pesos and was worth only $490 at the black market rate until last July, when he gave up trying freelancing.

The income that Louis earns from his Airbnb rental, he said, is paid in dollars to a digital account on American payments platform Payoneer. Luis said he then buys dollar-denominated stablecoins on overseas crypto markets, which he exchanges for pesos on peer-to-peer exchanges in Argentina – all this while under the radar of Argentine tax and financial authorities.

“I was overworking, putting in extra hours [in IT]And I said, ‘Fuck it,'” said Lewis, who used only his first name to avoid being identified by tax officials. “I’m going to be my own, work for myself and earn more.”

Reuters has found that thousands of property owners in Argentina are turning to Airbnb and other short-term rental platforms to shore up their earnings against wildly inflation – and many are avoiding foreign exchange controls and income tax on their earnings.

Reuters interviews with 18 hosts, real estate agents and executives, an analysis of previously unreported rental data and reviews of landlord chat groups showed that while some property owners declare their income, many keep these transactions off the books, taking advantage of regulations that rely on landlords to come clean.

Reuters found that many of the hosts were struggling professionals rather than large-scale landlords who wanted to stay afloat amid an economic crisis that has left four out of ten Argentinians below the poverty line.

When hosts exchange dollars for pesos in informal markets, they divert money from the official economy, draining foreign exchange reserves, leaving the country struggling to make payments on debt and imports.

The short-term rental trend has pushed up local home prices and made it hard to find homes available to rent in pesos. There are now 1,200 homes available to rent in pesos in Buenos Aires, down from about 8,000 in 2020, according to a registry kept by the Argentine Real Estate Chamber.

Hosts in Argentina on Airbnb can receive payments from a local or foreign bank account as well as Payoneer and Paypal, the options on one host’s account reviewed by Reuters and confirmed by Airbnb showed.

Deposits to a local bank account are converted from dollars to pesos at the official exchange rate. Argentinian law also requires banks to report deposits in excess of $400 per month.

According to a central bank source, opting for payment through an overseas bank account or global platform – and converting at the black market rate – provides 88% better returns and allows hosts to avoid tax authorities. But the source said it would be illegal.

The central bank source, a payments expert who was not authorized to speak on the record, said, “The only way to not legally expose someone using Airbnb is to make a transfer to a local bank.”

Short term rental boom

The terms and conditions listed on the websites of Airbnb, Paypal and Payoneer oblige individuals, not companies, to report income to local tax authorities.

Airbnb told Reuters in a statement that guidance published on its website advised hosts to register their short-term rental properties with Argentine authorities.

The company said that it is the responsibility of each host to do so, as is the obligation to use legal payment methods.

“Hosts must comply with all applicable rules as expressly required in Airbnb’s Terms of Service, which all users agree to by creating an account on the Platform,” Airbnb said in a statement.

According to information on the company’s website, the company collects information from hosts that use a US payment method for its reporting to the Internal Revenue Service (IRS) in the United States.

Airbnb said about 40% of hosts in Argentina used the platform “to help keep up with expenses related to the current cost of living”.

Payoneer declined an interview request from Reuters. PayPal (NASDAQ: ) said that “as a global payments company, we comply with applicable laws and regulations.”

Argentina’s tax authority AFIP said it “always encourages people to declare income”.

Ramiro Raposo, Argentina-based vice president of development for US-based cryptocurrency payments firm Bitwise, said that using digital tender to transfer assets was legal in Argentina, although it was up to users to declare their earnings.

“Tax evasion is obviously not legal, but it has nothing to do with us,” he said.

Argentina’s short-term rental market has been booming since the adoption of a 2020 law seeking to protect tenants by limiting landlords to one rent increase per year.

Instead, this legislation led to an explosion of the short-term rental market.

Data shared with Reuters by AirDNA showed that more than 18,500 properties in Buenos Aires were listed on Airbnb in June. However, the Buenos Aires tourism department told Reuters that only 570 properties were listed on the city’s short-term rental register in June.

AIRBNB in ​​the political spotlight

“We are seeing owners increasingly turning to temporary rentals because they are in hard currency, in dollars,” said real estate agent Ariel Yeager, who notes that short-term rentals now make up 90% of the agency’s listings.

Property owners paying in dollars can earn double the rent of long-term contracts in pesos, he said, because short-term renters with access to hard currency have more purchasing power.

Tenants include remote international employees; students and medical tourists from nearby countries and Russians fleeing war and possible military service, he said.

Gaston Levy, 38, an administrative worker and part-time DJ, said he worries about finding a place to live when his lease expires in February. His landlord was threatening to increase the rent, whereas the law allows only one rent increase a year.

“It seems impossible for me to buy an apartment earning in pesos or rent a place when the prices are in dollars,” he said.

In a chat group for Argentine landlords reviewed by Reuters, hosts discussed the best ways to get paid on Airbnb and to convert unrecognized money back into pesos.

“It’s a game you have to play,” said a 29-year-old host earning about $1,000 a month, who spoke on condition of anonymity to stay on the tax authorities’ radar.

Gustavo, who rents an apartment for temporary living through a local real estate broker at $1,500 a month, said he accepts pesos, but at the black market rate. The official rate, he said, is a “hypothesis”.

“Hopefully soon, there will be only one exchange rate and that will be better for everything,” he said.

The rent law and the growth of the short-term rental market have drawn criticism from legislators and presidential candidates in the October general election.

Four of the most prominent presidential candidates have spoken out against the rent law and ruling Peronist coalition lawmaker Ana Maria Ianni has proposed fining Airbnb for not registering hosts with Argentine authorities.

“This is a forum that is doing a lot of damage around the world in this regard,” said Ianni, vice chairman of the Senate’s tourism committee.

It was not intended to put Airbnb out of business, he said. “What we want is that when they offer a property for tourist accommodation they do so by complying with this registry.”

Airbnb declined to comment on Ianni’s offer.