Frequently Asked Questions About Puerto Vallarta Real Estate
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The Closing Costs in Mexico consist of various fees and expenses and generally total between 4% to 6% of the actual purchase price. The seller will bear the cost of the real estate fees and his capital gains taxes, as applicable.
The Difference between a Notary Public and a Notario Publico in Mexico is that the Notary in Mexico is an experienced lawyer who has been selected and appointed by the Mexican state after practicing law, completing a rigorous application process, passing a stringent exam and also meeting all qualifications set by the government. A Notario designation carries a great deal of responsibility as all real estate purchases must be registered with a Notario; they are legally responsible to ensure the deed title is clear and recorded at the Public Registry.
They provide security for original records and documents and are responsible for filing the documents with the Public Registry of Property. A Notario can be held liable in both civil and criminal terms.
In the simplest terms, a Fideicomiso is a bank trust that allows you to invest in any Mexican property and own it as a beneficiary. Its main idea is that you have all the rights of real estate ownership while a Mexican bank holds the legal title to it as your trustee.
AMPI Mexico is the National Real Estate Professionals Association that since 1956 groups under its Statutes and Ethics codes the professionals dedicated to the real estate activity such as: administrators, commercializing agents, mediators, appraisers, promoters, financing consulting agents, consulting agents, etc.
Manifesting is simply recording the amount of money spent on a home’s construction or remodel, in order to add it to the Owners’ cost basis. Adding to your cost basis is the key to reducing your capital gains tax. Proper documentation and manifesting your construction are vital to building your new home.
If you have not manifested your construction, Mexican tax law will not recognize your construction costs and you will not be able to use them as a deductible expense. All of your receipts, cancelled checks and bank statements will not help unless you have completed your manifestation.
Mexico applies a capital gains tax on residential property of 25% on the gross sales value of the transaction without any deductions OR between 1.92% and 35% on the value of the gain (purchase costs less allowable exemptions and deductions): the percentage is calculated on a sliding scale in relation to the gain and we recommend you assume 35% as residential property sales with a gain above $250,000 pesos (c.$13,000 US dollars) will be subject to this rate.
Tax Calculations
Taxes due on the sale of residential property are calculated by the Notary Public, who also withholds these amounts for direct transfer to the Mexican Treasury. The tax law makes each Notary Public fully liable for taxes due, so they will absolutely ensure that the rules have been followed and certify that sellers qualify for any exemptions and deductions they are claiming for tax relief.
Mortgage financing and loans in Mexico are typically granted in Mexican pesos with the potential for loan-to-value ratios of up to 90%, with fixed-rate interest plans. Current interest rates vary from between 7.9% and 10% per annum with some banks offering lower rates depending on credit ratings and eligibility. However, Mexico is becoming an increasingly popular place for foreigners to buy property, either as second homes, vacation or retirement homes. While traditionally these transactions would be conducted in cash, there is now increasing availability of financing for property, both in Mexican pesos and US dollars.
From making the deal to taking possession of the property will be approximately 40 to 45 days. The closing date depends on many factors; whether the property is pre-owned or presale construction or if there are any obstacles in verifying title and non-debt certificates. It is also dependent on the bank and the notary’s workload.
The title is official the day that the title is signed by all parties. You will receive a certified copy of the deed one week later, the Notario will record the deed in the Public Registry. This process may take up to three months. Mexlaw will follow up to ensure the buyer receives the registered title deed.
