Mexico condos are popular investment options for Americans, Canadians and British and even more so those which are in the pre construction stages But identifying the risks and knowing how to manage such risks are important factors to ensure good returns and avoid costly surprises
One question was brought to our attention from a reader which is listed below:
Q.) I have a question I'm wondering if you can answer about tax implications for pre construction condo purchases. I entered into a contract in July 2007 for a unit a Mexico real estate project X It was still in with a good reduced price when I purchased They required a 30% down payment and a final payment of 70% at close My contract is all in US dollars. My question is “What will be the peso amount captured on my Mexico title deed given that in 2007 the Mexico exchange rate was $10 pesos and in 2009 the exchange rate is $15″
A.) Linda Neil of Linda Neil Properties from the La Paz real estate market advises the following:
“the 30% paid in 2007 should be shown at the exchange rate the date paid and the remaining 70% at the rate on the date of that payment. Acquisition taxes will be paid on the total amount but that is only 2% of the total.”
A.) Ivan Castillo, regional director and practicing Mexico real estate lawyer from Stewart Title responded:
“Even though the purchase price was set in US Dollars, the deed by which the property is transferred will mention Pesos It s important that the purchase price calculated is well determined, since it could affect the parties when calculating closing costs.”
A:) Thomas Lloyd from Lloyd's Real Estate in the Playa del Carmen real estate market included the option “there are money exchange homes that can lock in exchange rates for future payments If you see your currency is slipping in strength, this may be a viable option Write us and we can give you more details”
A.) Linda also included that “This figure, plus allowable deductions, creates basis for the eventual sale of the property so it is not a negative to show the higher peso amount.”
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