LEGAL
TIPS |
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Buying
Real Estate In Mexico With
proper advice, buying Real Estate in Mexico is safe and easy.
Until recently, foreigners could not buy land in Mexico unless the
title was placed in a Trust (Fideicomiso).
Now a foreigner can purchase a home or vacant lot in his own name,
except for property located within 50 kilometers of the coast, or national
border. A home in Puerto Vallarta
or Nuevo Laredo would still need to be purchased in the name of a trust.
Some homeowners in Chapala continue to use the trust, but this option
is becoming less attractive, because the trust fees charged by Banks are
getting higher. Also, a deed to individuals can provide for secondary owners
so that probate can be avoided by a clause that provides that descendants
will acquire the property in the event of the death of the primary owners. In
Mexico, a deed (escritura) must be prepared and processed by a Notary.
The original, signed document is kept in the notary’s archives, and
a summary of the transaction is certified and delivered to the purchaser.
The purchase must then be reported to the town registrar (registro).
Before a foreigner can buy land in Mexico, permission must be obtained
from the State Department (Secretaría
de Relaciones Exteriores).
When
property is sold, the foreign seller needs to be careful to avoid unnecessary
taxes. Capital gains taxes are not calculated as they are in the United
States. There, taxes are paid
on the difference in the amount expended on the property, and the amount
for which the property is sold, i.e., the profit.
In Mexico, an expert makes an appraisal (avalúo) of the property,
and the notary’s fees, as well as the taxes (impuestos) are based
on a percentage of the appraised value.
Non-resident foreigners pay much higher capital gains taxes than
do residents. Even
though you can purchase a home or property on a Tourist Visa (FMT), you
can avoid paying capital gains taxes down the road by getting a Temporary
Resident Visa (FM3) or a Permanent Resident Visa (FM2).
These
migratory documents can easily be applied for here in Mexico. The FM3 can
also be applied for in the United States or Canada at any Mexican Consulate.
Please note, if you apply for an FM3 outside of Mexico, you have to have
it registered in Mexico within 3 months of obtaining it. The other rule
for saving on capital gains is you must own the property for at least 2
years and keep your migratory status, whether it is permanent or temporary,
current. The added bonus for having
an FM2 or FM3 is that you have a 6-month window from the time your migratory
document is approved to move down your personal belongings with no taxes,
duties, or penalties applied. This is easily done by creating an inventory
list of the items you want to bring down, including applicable model and
serial numbers, in Spanish. Then bringing it to a Mexican Consulate nearest
you and having them approve it. They will also advise you on how to label
your inventory list on the boxes you are shipping or bringing down. Even
though an attorney in Mexico cannot process a real estate transaction without
a notary he or she can be very helpful in selecting the best notary for
a particular transaction, and in advising the client on the type of deed
to use, and can help him avoid many of the pitfalls that foreigners encounter
when dealing in real estate. My
partners and I work with notaries in Chapala, Jocotepec, and Guadalajara.
We know that some notaries specialize in fields other than Real Estate,
and may not keep up with the constantly changing rules regarding the sale
of land. We have been successful in coordinating transactions to the benefit
of foreign investors. Adriana Perez Flores |