Specializing in the coastal area north of Puerto Vallarta


Buying and Selling

Mortgages
The Mexican economy is not an economy based on credit. Mexican banks do not offer mortgages, which is why you see so many houses in various stages of construction. People build as they earn, a few bricks at a time. There used to be a bank in Texas that offered mortgages in this area of Mexico, but it was acquired by another bank that discontinued foreign mortgages.

If you need credit to buy and build in Mexico, the most efficient way to get it is to refinance your house in the States or Canada, and use that equity to build here. Occasionally, you will find a developer who will sell you a house with a 5- or 10-year payment schedule. If so, expect the interest rate to be much higher (+/-15%) than what you may be used to in credit-based economies. In the case of purchasing an existing house, you can explore the owner's willingness to accept a mortgage. Many will do so if you can put down a significant slug of money upfront.

Negotiating Real Estate Purchases
It is a good idea to haggle over the price of real estate just as you would haggle with a beach vendor. You may find that the owner is firm on his price; but just as often you will find that you can negotiate a price as much as 30% below asking.

The Importance of the Notary
In Mexico, land transactions are researched and recorded by a Notary Public. Without exception, notaries in Mexico are lawyers. They are competent and honest and are the class of professional held in highest esteem by Mexicans themselves.

When you have identified a piece of land you wish to purchase, you must visit the Notary. He will function as your lawyer, and as your Title Searcher. As all deeds are recorded in Mexico City, your notary will go there to make sure the person who is selling you the land actually owns it, and he will record your deed and help you set up the bank trust.

As in the U.S., you will be asked to put down earnest money to be held in escrow by the Notary pending closing of the sale; and the closing itself will generally occur in the Notary's office with him overseeing the transfer of land and cash.

Closing Costs
Closing costs average 5% of the purchase price. The Notary's fee is incremental, and is usually around U.S. $2,000. The seller generally pays the broker's fee.

Capital Gains
Capital gains on real estate are treated as normal income in Mexico. Thus, any gain on real estate can be taxed up to the maximum of 35%. (Gain = selling price less inflation-adjusted acquisition cost, improvements and broker commission.) There is, however, an exception for foreigners. If you lived in your home for at least 6 months a year for the two years prior to selling it, your gains are tax-free in Mexico (not necessarily so in the U.S.).



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email: seggerman@gmail.com    |    in Mexico: 52.329.298.1376