See Nick Fong’s Q and A about Real Estate in Mexico and Los Cabos
Watch Nick Fong of Ronival Real Estate answer some important questions that get asked regularly. His new real estate agent, Melissa Murphy, was asked by Nick to forward a list of questions about real estate in Mexico that she had compiled. Nick realized that these were asked very often. Since there are many misunderstandings out there, Nick wants to set the record straight and provide solid answers to these common questions about real estate in Mexico. Continue reading to see what is being asked and what the answers really are.
Three top questions answered by Nick Fong
After reviewing the list of questions from Melissa Murphy, there were three that stood out. Nick realized that there are some real misconceptions out there. Therefore, he decided to focus on three top questions:
How do you pass your real estate in Mexico on to your kids?
This question was asked by someone who stated that they “know” there is a 99-year lease. They asked how to pass the property on to there kids. In the video, Nick answers that real estate in Mexico purchased by a foreigner is not leased. It’s purchased and owned. The deed is called an escritura in Spanish and is purchased by the buyer in a real estate transaction in Mexico.
Fideicomiso (Mexican bank trust)
After closing your real estate transaction in Mexican, the deed or escritura is held in a bank trust, called a fideicomiso. This fedeicomiso can be renewed every 50 years. Also, your heirs that are listed within the fideicomiso will receive the property, so no will is required. The transfer process is simple, safe, and secure.
Article 27 of the Mexican constitution requires that any foreigner buying real estate in Mexico, within the restricted zone (50km from the coastlines and 100km from the border) must acquire the property rights through a Mexican bank trust, known as a fideicomiso. And, it’s renewable thereafter by you or your heirs. The average cost is about $2000 and $500 each year to maintain it.
Who handles sale transactions and how does money get to the US?
Mexico has closing companies that handle real estate transactions, like an escrow company and a title company in the US. This closing company handles all the paperwork and the transaction logistics. To explain, they are a liaison between the notary, attorney, and the real estate agent. All money is held in an escrow account while the details are being handled. After completion of the transaction (closing), that money will be wired to the seller’s bank account right away.
What are the tax consequences with real estate in Mexico?
Yes, those involved in a Mexican real estate transaction are responsible for property real estate taxes. To explain, taxes are paid every year in January. And when you pay your full tax bill in full at the beginning of the year, in January, you receive a 20% discount.
Capitol gains taxes, which you must pay when you sell, is 35% of the gain in Mexican Pesos. Your cost basis is determined at closing when you buy. The price you pay is converted to Pesos when money is transferred. Then, the value in Pesos is calculated when you sell and the 35% is calculated from the difference, when the value goes up and when the value of the Peso changes, when calculated against the Dollar amount paid for your property.
One of the great advantages of real estate taxes in Mexico, as compared to the US and Canada, are very low. To be specific, one tenth of one percent of the property value, every year, which is much less than what you’re probably used to. There are deductions, like for home improvements, as well. Now watch the video to see more details from Nick Fong.
Baja California Sur real estate
Many Americans, Canadians, and people from other countries choose to make Los Cabos and other magical towns in Baja California Sur, Mexico, their home or vacation home. Discover how to purchase your dream home in Baja. Make an appointment with the top Real Estate Broker in Baja: Nick Fong. He’s featured on HGTV’s Beachfront Bargain Hunt.
Since 2010, Ronival has been helping clients find the best homes in Cabo and throughout Baja California Sur. And, they’re highly-skilled negotiators that’ll get you the best price. Whether you wish to buy a property or quickly sell your Baja real estate, they’ve got you covered!
If you’d like to take a tour of a property in Cabo or anywhere else in Baja California Sur, just click CONTACT to inquire. Or, call directly at 619-831-2000. Ronival will be happy to answer your questions. You can also schedule a time to show you around this breathtaking location.
Ronival on YouTube
Thank you for reading See Nick Fong’s Q and A about Real Estate in Mexico and Los Cabos. Be sure to read other posts about Cabo and Baja California Sur on the Ronival blog. There, learn about the many wonderful aspects of Baja California Sur, Mexico, from blog posts like this.