sell

How To Sell Your Property in Mexico

hi everyone and thanks for joining us

I'm amber from my in Revere properties

in Puerto Morelos Mexico and I'm gonna

be hosting your workshop this evening if

you're not familiar with Puerto Morelos

we are just south of Cancun in the state

of Quintana Roo Mexico and the Yucatan

Peninsula so I know most of you have

probably heard of Cancun and and we're

just south of there just about 15

minutes south of the Cancun Airport I'm

gonna go ahead and jump right into the

workshop the first thing I'm going to

cover is a brief introduction and then

we're gonna get right into the topics

about selling your property in Mexico

this is a little bit about our company

my in Rivera properties I establish my

in Revere properties in 2006 we are

amperi letters that means we belong to

AM B which is the National Association

of Realtors in Mexico and so the logo

for AM P is this here

hi everyone thanks for joining us I'm

amber from mayan riviera properties in

puerto morelos mexico and i'll be

hosting the workshop this evening if you

don't know where Puerto Morelos is we

are just south of Cancun we're about 15

minutes south of the Cancun Airport in

the state of Quintana Roo Mexico out in

the Yucatan Peninsula

so if you haven't heard of Porto I'm

sure you have heard of Cancun and you'll

easily be able to find us that way I

really enjoy living here I'm gonna go

ahead and jump right in

we're gonna start with a little brief

introduction and then get right into the

material about selling your Mexican

property a little bit about our company

Mayan Riviera properties you can see our

my interviewer properties logo down here

in the bottom left hand corner that's

our company I establish Mayan Riviera

properties in 2006 we are amperi leaders

if you're not familiar with the

organization ampie that's the national

real estate Association in Mexico and

I've included their logo over here in

the top right we'll talk about these

organizations a little bit more in a

moment but we are a member of ampie

we're also an international member of

NAR NAR is this blue are that those of

you in the US are probably familiar with

seeing that's the national the u.s.

national reelers Association and we are

international members of that

organization as well in addition to

those memberships I'm also a federally

certified broker by conocer and conocer

is a Mexican entity that certifies

various professional trades and I am

federally certified in real estate sales

and also real estate sales and tourist

zones through conocer and just so you're

familiar with these logos and the case

that you're looking at different really

offices conocer is logo is this one as I

mentioned and then this one at the

bottom says professional and mobiliario

certificado and that means that I'm a

professional real estate agent that's

been certified and so these these bottom

two are basically referring to the same

thing but I wanted to introduce you to

them in case you came across them in

your search for a realtor we are the

only ampie office in Puerto Morelos and

we specialize in Puerto Morelos

if I receive clients that might be

interested in Cancun or Playa del Carmen

nearby cities I refer them to

specialists in that area and we'll talk

a little bit more in a minute about why

that's important when you're looking for

a realtor we have a really prominent

office location in Puerto Morelos we're

right in the middle of the town square

oceanfront it's a two-story sort of

turquoise colored building please stop

in and say hi and we have an excellent

reputation for being professional

knowledgeable and ethical which is a

good reputation to have if you are a

real estate agency this is me I'm amber

Pearce I am a peer Schultz and I'm

originally from Michigan I graduated

from Michigan State University and I've

been visiting Puerto Morelos since 1998

I made the leap and began living there

full-time in 2004 and I'm the co oak

co-owner and broker at Mayan Riviera

properties this is Kim she's not with us

tonight but I wanted you to be able to

put a face with her name and she should

did contact the office she is an agent

that works at our office in sales so you

might very well be talking with Kim if

you contact us she's originally from

Colorado and a graduate of the

University of Colorado School of Law she

practiced law in Colorado for 20 years

and began visiting Port Morelos in 1999

and like a lot of us port umbrella

sector in and so she bought a family

home in 2005 and finally moved a quarter

miles full-time in 2012 she is also

federally certified in real estate sales

and tourist zones so I just wanted to

give that brief intro in case you

contact us after the workshop which

you're welcome to do I'll have my

contact information at the end you'll be

able to put some faces with names these

are the topics that we're going to cover

tonight what to look for in a real

estate agent the types of real estate

listings that you'll find available to

you and your property in Port or in in

Mexico in general your Realtors

marketing program will talk a little bit

about what you should expect out of that

listing your property what's that

process look like the required paperwork

you're going to need for your property

in order to complete a listing with an

agency the showing process how does that

work the sales process we're going to

walk you through that so you are

comfortable with what's going to be

and while we talk about the sales

process we'll also address some details

in particular those are escrow accounts

how we deal with properties that include

contents houses selling you know full or

fully or partially furnished and then

costs associated with selling part of

the cost associating was associated with

selling is the famous ISR which is the

next point is our as that capital gains

tax that people have lots of questions

about and so we'll be talking at length

about ISR tonight and then I'd like to

wrap up the workshop with just a few

tips that we have for your successful

sale as we get started you know within

some of these topics I'm gonna talk

about how we operate here in our office

and I realized that everybody at joining

us isn't necessarily from our area are

going to be using our agency but I still

think it's relevant information because

the way we operate is pretty much

according to you know industry standard

and best practices and real estate

offices so even if you are going to be

listing with another reality office you

should expect the same concepts to apply

you know similar services to be offered

and you can use what we're covering

tonight to compare and contrast the

offices that you're interested in in

speaking with first up tonight on the

topic is the topic of what to look for

in a real estate agent and frankly

Mexico is evolving in a lot of different

ways its modernizing many many of its

systems and its culture in general one

of the areas that is modernizing is the

profession of real estate agency at this

point not all states require licensing

as a matter of fact our state katana

required no licensing or requirements in

order for a realtor to open an office

anybody was able to hang a shingle that

changed in 2014 this year the state of

Quintana Roo passed a licensing

requirement law and I believe now we're

up to I think 11 states in Mexico that

now have these laws in cantana Roo we're

currently awaiting the requirements

under the law they're establishing the

framework of how US agents can receive

this license so none of us

have it yet but you can expect that if

you're looking to list in canto Naru

that your agency should be licensed in

the near future so if you are operating

in a state that doesn't require

licensing although a lot of states again

are moving toward that model and I think

it's just a matter of time at this point

but if you aren't how do you know you

know that your agents is a real

professional because there's certainly a

lot of people a lot of you know

air-quote agents out there that we

wouldn't necessarily send you to and be

confident that you're in good hands

so here's things that I think you can

look for in an agency in order to know

that you're going to be taken care of

number one is that ampie membership we

talked about EMP just a moment ago

that's the National Association of

realtor's in Mexico and if that realtor

is a member of a MPI you know frankly I

don't know how you could practice real

estate in Mexico and not be a member of

national real estate organization

it just seems sort of logical to me that

if you're serious about selling real

estate yeah you'd be a member there's a

code of ethics that you have to adhere

to you are peer-reviewed you receive

lots of opportunities for continuing

education and regular industry updates

which are important because you know

processes laws and things are changing

and modernizing just like our

professional industry of real estate

real estate laws are also updating

regularly and it's important that your

agent be aware of those changes the

other thing that we have is ampie agents

is we have an MLS that we have access to

which is a Multiple Listing Service it's

a way we promote properties in and

amongst each other and so it also gives

you that advantage of having a property

listed in those in that manner

another thing you know again not a

requirement not an obligation but

certainly something that you could look

for is your agent federally certified I

mentioned the organization conocer

offers federal certifications and some

various areas of real estate I happen to

have two of those certifications you

know a good thing to ask the other thing

that your agent should have is

experience an intimate knowledge of the

area that your property is located in

and we talked a little bit more about

why this is in another workshop that's

about buying living retiring in Mexico

but suffice it to say that there are no

public records of property sales in

Mexico there is no public record that

the MLS system pulls from to give you

comparables and things like that

so if your agent isn't working in the

area that your property is in they're

gonna have absolutely no idea of what

things actually sell for you know the

most recent sales the most recent

comparables with any real numbers and so

that is why we specialize in puerto

morelos i am not capable of knowing what

all these condos are selling for in

Playa del Carmen some of my colleagues

are and so you know if I get interested

in that area I'm gonna refer them to

somebody who specializes in that area

and really knows that area well to be

able to guide them in listing their

property or in buying a property does

that agency have referrals available you

know they should be able to refer you to

happy clients does here's the other

thing kind of gets back to you know are

they professionals and do they do this

you know as a as a career and I kind of

say this tongue-in-cheek in general

companies that offer hair care tire shop

and real estate on their sign probably

aren't who you're looking for okay Wow

Mexico is modernizing and it is a

different country there are some things

that carry over from what you're

familiar with in the real estate

professional but the real estate

professionals and process in your home

countries okay your real estate agent

ought to be able to provide you

competent comprehensive consultation and

we'll talk about that what consultation

sort of entails in the listing process

but they ought to be able to sit down

with you and really be able to lead you

through what's going to happen and

problem-solve with you that's something

you should expect another item that you

should expect from your agent as a

listing contract that contract

autolayout the obligations that that

agency has to you during the term of the

contract in selling the property can

though that agent cite recent sales are

they active in that market you know what

what kind of activity have they had and

the other thing that you should ask and

this is a bit of a throwback to the old

system an old way of working in Mexico

and that is you know ask them do you

work with other real estate

professionals

Mexico has moved on from their old and

inefficient model you know when

real-estate agency started in Mexico

there were little

pop-ups that they had a few listings and

anybody that went to them you had to go

see their listings because they didn't

show other people's and so if you were

buying had to go to all these different

agencies and look at each of their

individual you know listings

individually that's not the way the real

estate profession works anymore we've a

you know Mexico has adopted the same

type of model that you know NAR and the

Canadian realtor's and the European

Realtor associations have in that they

work with other professional agencies if

you walk into my office I not only am

more than willing to show you my

listings but also the listings of all

other professional agents benefits to

sellers sellers you receive a huge

benefit by working with a good

professional number one you know that

part your property is going to be

marketed in appropriate price okay again

that realtor is intimately aware of

sales going on in your area and can

provide you a really good can be a

really good guide on what's an

appropriate market price your property

is going to be promoted through

effective channels that you know that

realtor does this for a living they have

tried various outlets and know what

works in their area and so take

advantage of that marketing that they

have the other thing is you know this

goes along with marketing again

realtor's network and work with each

other and so you benefit from this

maximum networking potential that a

realtor has in that they work with all

other realtor's and all of their

clientele so you really open up your

property to a lot of a lot of buying

power the other thing that's really

important and really you know at the end

of the day affects dollars and cents

that you take home is we have the

ability to work with some of the best

notaries and real estate services to

ensure that your costs are minimized and

that the process works well and

efficiently so you know that experience

and that sort of team that we put behind

us in order to get sales to come

together comes from experience and comes

from

a quantity of sales and we certainly

want to use that to your benefit now

when you go to list a property in Mexico

this might be something that's a little

bit new and again this whole industry of

real estate is transitioning into a more

modern business model but there are

still some some things that are you know

still sort of I'm carrying over from the

old system you're gonna find two types

of listings one is an open listing and

one is an exclusive listing and an open

listing again this is another sort of

what I call a throwback to the old way

this is where because the agencies

didn't work with each other an owner

would go through go to multiple listing

agencies and market they're proud you

know list their property with all these

different agents to market their

property on their behalf and again this

is one that's sort of going by the

wayside because it's not very effective

as we're going to talk about easy in

this situation you know each agency is

really not under under under any

obligation and is at their own

discretion to market your property to

the extent really of their choosing on

you know in those circumstances somebody

might drop off information in my office

and I might be happy to show a buyer if

that happens to be a perfect fit for

them but I'm not obligated in any way to

really promote your property and because

of that I mentioned open listings aren't

always effective because again I don't I

don't really have any obligation

consider it from my perspective as a

broker if I have an exclusive listing I

this owned an owner is contracting to

sell my property or a sorry excuse me

sell their you know an owner's property

and be their designated agent in that

process for a particular period of time

I know as a broker I have a good chance

of selling that property and therefore

I'm gonna invest time and money into

promoting it okay because we know that

we're gonna be involved in the sale in

an open listing I don't really feel very

motivated to put a bunch of money into

promotion and efforts in the promotion

when I'm not necessarily guaranteed to

be a part of the sale process and so

because of that owners end up with very

limited advertising again you know

because nobody's going to invest and pay

for something that they're not

necessarily going to be a part of the

property has multiple listings that gets

put up at multiple prices because the

owner kind of loses control over that

Multiple Listing Service and that

ultimately erodes buyer confidence if I

have a buyer you know one of the biggest

obstacles we overcome sometimes with

buyers in Mexico is you know giving them

confidence in the system doing lots of

education through workshops like these

talking about how the real estate market

really works how ownership really works

and then they go online and they start

looking for properties because they

might be interested in some you know

doing some search and they send me stuff

and go well why is this house in three

different prices and I and you know I've

been in the situation where they've sent

me a house and the owners really asking

three hundred thousand and somebody's

got it listed for two hundred and fifty

thousand and it's very hard to convince

a buyer that the house was never at

turned fifty thousand I have no idea

where that price came from the buyer

really you know it just it just erodes

the confidence and the the really the

quality of the transaction and

oftentimes those properties you know the

spires just aren't interested in

proceeding um the whole situation just

kind of looks flaky or shady you know um

again because you have all these

different agencies advertising it nobody

puts up a particular sign on the

property or the alt the alternate

happens and you've got one property with

ten signs and that looks equally is

ridiculous and ineffective there's a

lack of consultation and market analysis

we'll talk about what we do with

exclusive listings in a moment when we

talk about the listing process but you

know without that a lot of times these

properties get overpriced or you know

the paperwork isn't in order necessarily

to sell quickly and therefore a that

might have a buyer real motivated to to

check out the property so for all of

these reasons I find that most of these

open listenings overall have a minute

diminished credibility and frankly you

know nobody's very successful at selling

them I'm not extremely motivated to sell

them as broker and if I do have a buyer

typically everything's kind of in this

array a lot of times and it just isn't

worth the effort we can find them other

places that are ready to sell so it just

doesn't it just doesn't work out very

often with the exception of

our circumstances in this particular

situation if you do choose to go this

route each agency is gonna register

their clients with you as an owner and

you're responsible to keep all of those

agents informed of you know price

changes or if the property goes off the

market you're you know responsible for

coordinating all your own showings

because there isn't a central agency

doing that for you so you've got twice

as much work you have you know not

nearly the effective marketing program

that you have you're really not doing

yourself any favors and you're making a

lot of work for yourself in the end the

other thing is that you know this

becomes a big component if I if somebody

wants to do an open listing with me and

I'm not completely confident that they

are going to keep me a hundred percent

appraised of any price changes or heaven

forbid I get a buyer interested and they

fly down and we go to look at this

property and I find out property one

under contract two weeks ago and nobody

ever told me that's a huge issue so for

those reasons we just really don't work

with a lot of open listings there's a

rare exception here there but for the

most part it's just not it's not worth

the aggravation and in the end they

don't end up selling anyway so it's a

lot of effort for nothing moving to

exclusive listings this is really what

the model is moving toward in the real

estate industry in Mexico and it's one

that's been adopted by the US and Canada

and Europe and one that you're most

familiar foot with in this case and

owner contracts a particular listing

agent and that agent is gonna represent

you and your interest in the sale

process and these listings are going to

be promoted according to the agency's

marketing program okay now that does not

mean and we'll talk about this more in a

minute that we only sell it within our

office you know we network with other

agencies and we sell their listings and

they sell our listings and so you're

really not cutting out any of the any of

the marketing potential of your property

by doing that you know you still have

all the agents working for you and in

the end they're actually more motivated

because they know that an agent has went

through and you've got your paperwork in

order and they know their clients are

getting registered and they

you know so things are just far more

organized and and user-friendly for an

agent if it's if they're working with

another agency so again we're going to

talk about this in a minute but because

these listings that all go through a

listing process with a professional

agent it means that the buyer agent can

rest assured that you know their

property is you know their buyers are

gonna be taken care of and they're

looking at a property that sort of met

some criteria before it got it got

listed this is our marketing program for

our exclusive listings so if you're

interested in being a client at Mayan

Riviera this is what you can expect

again this is something that you can use

for compare and contrast if you're

looking elsewhere on our exclusive

listings are marketed on our website

they're promoted through our blog our

blog is Puerto Morelos blog com that'll

be at the link will be at the contact at

the very end of this program that blog

is where we send people who are

interested in real estate and foreign

morels subscribe to the blog we post all

new listings price changes sales so

people that want to keep tabs on the

real estate industry subscribe to the

blog if they've expressed interest in

that in Puerto Morelos

we also post articles about living in

Mexico law changes things that affect

expats that live here full-time or

part-time and we also post a little bit

about Puerto Morelos so if you're

interested in the blog for any of those

reasons feel free to just subscribe we

also have a social media marketing

program with Twitter and Facebook and

Google+ and of course it gets put into

that bat mill as well every listing that

we have gets a video that's a show a

virtual showing so you know pictures

only do so much we found a really

effective marketing tool is this virtual

showing video we show the house you know

buyers can sitting there living room and

home in a different country and looking

at a house seeing the neighborhood

seeing the house walking through the

houses if I were giving them a showing

of the house and yard and things like

that see really get a feel for how the

property lays out and the surroundings

and the area etc they've been really

great of course YouTube is another form

of social media it's on our youtube

channel and that video is there and

it's also embedded in your listings page

on our website there are also you know

again that networking you know is pure

marketing that we do with other real

estate agencies we feature your

properties and the promotions that we

send to other Realtors we also have a

very successful referral program with

other Realtors I can refer them them

clientele and vice versa

so that works out and they all work

together to get your property sold its

listed in the national MLS database

because we are members of ampie and it's

also because we're international members

of NAR it also gets listed on

realtor.com

which is the u.s. realtor's associations

website in an International Property

section and that gets a really good

Google search result and so that's a

great way a great marketing tool that we

have of course you're in all of our

inner office promotions the TV screens

and listing sheets and things that

people can pick up in the office your

you know we pay for advertising on other

listing sites when you sell

international property the biggest

source of your initial interest are

either people walking in the door

because they love port or else and they

have to live there or people that find

you online and so we pay to have your

property posted on some sites that we

found to be effective in generating

traffic on online that way we advertise

and our local tourist guides and then we

always are at talent sponsoring towns

events and festivals and setting up

booths and just you know more exposure

that way and we get to meet a lot of

great people that way and answer a lot

of questions a really effective

marketing tool for us has been the

weekly online workshops weekly on well

weekly workshops through our office so

in the high season once a month once a

week we do workshops in our office about

how to buy in Mexico those workshops are

free and lots of people stop in and and

to learn about how that works and then

we do our online workshops similar to

this at least once a year sometimes a

couple of times a year and those

workshops are about how to buy in Mexico

as well and then of course we place our

signage on your property so that anybody

going by knows that it's for sale and

has a way to contact us

okay so we're gonna talk about listing

your property this is how to get started

this is the listing process that you're

gonna go through with an exclusive

listing with a realtor okay

the listing process is an immense amount

of paperwork and like work and effort on

the front end but we want to make sure

that you and your property are prepared

to sell that you understand the process

you know what's going in and you're

prepared to listen to offers to do that

we do a lot of different things the

first thing we do is we're gonna sign a

listing contract our listing contract

happens to be in English and in Spanish

so that our foreign property owners can

read our contracts well our listings you

know of course we're gonna take photos

of that property we're gonna take the

video the virtual walkthrough that we

mentioned there's going to be we're

gonna take extensive property

information from you so that we can try

to answer any questions that we can

foresee buyers asking that also

eliminates us having to bother you a lot

with questions during the showing

process we are going to take a rental

history from you if we're promoting your

property as a vacation rental then you

know clearly people are gonna ask about

its rental history and so we'll go ahead

and get that from you we're also gonna

need an inventory if your property is

being sold partially or fully furnished

what that means what an inventory of

what that includes or excludes from the

sale and of course keys for showing then

what we're gonna do is we're going to

review your paperwork and we're gonna

make sure that our properties are ready

to close we look through paperwork we

look for certain things to make sure

everything is there and then everything

appears to be okay we try to do that to

sort of ward off any issues or delays as

we would go to closing and that's a huge

advantage over some of these for sale by

the you know owner efforts where people

just aren't familiar with their

paperwork and they don't really have a

lot to get it together and then it

becomes a big delay it closed we're

going to talk about this a little bit

more in a moment so I'm not going to get

too much into this now but the review of

paperwork might be more extensive if

you've constructed your home or added on

to your home a lot of times we find that

that is where some of the issues with

paid

work ends up coming up at closing and so

we might have to have an attorney review

your your paperwork and make sure that

you've got everything ready to go the

last big part of what we do and this is

essential in what we do is we provide

you an ISR estimate that's your capital

gains tax okay and for you to be

prepared as a seller to entertain any

kind of offer I don't know how you would

be able to you know respond accepting

declining or countering if you don't

know what you're looking at is a tax

liability so because of that we provide

an estimate so you know and you can go

into any negotiations prepared with what

your bottom line is now we're going to

talk about some of the required

paperwork that we need okay

please note this list is for privately

owned properties so if you have a

privately owned property this list will

be fairly inclusive of what you're going

to need individual circumstances

sometimes dictate that we need other

things but for the most part this is

what we're going to need from you in

order to list your property again this

is for privately held properties if you

own your property in a Mexican

corporation or have you owned your

property in a trust but that trust

primary beneficiary is an LLC or some

type of foreign corporation then there

are additional paperwork requirements

and so this list is not going to be

all-inclusive in those circumstances and

you need to contact us so that we can

get you the full list of everything that

you're going to need because we're going

to need corporate documents and some

things like that and so the list will be

different but this refers to either

properties held in the deed or

properties held via trust where mr.

Smith or mr. and mrs. Smith are the

listed owners or beneficiaries of the

trust okay so first up on the list is

personal documents we need these for

each owner so if mr. and mrs. Smith are

on the deed or mr. and mrs. Smith are

the beneficiaries and the trust we're

gonna need these documents for both

persons first if you're a foreigner we

need a passport okay that's a

requirement if you are Mexican national

then we would take either your Mac

can passport or your Issei have to have

those then if you have of any of the

following documentation we'll also take

that and this might play into the

potential for some tax reduction down

the line we'll talk about that more in a

bit your visa if you have a Mexican visa

be it resident of permament a which is

permanent or temporal temporary we need

copies of that if you have your visa

then you also have your corp it's on

your visa so we'll have that and then

once you have your visa and Kirk you can

also apply for an RFC which is a tax ID

number and so if you have that we'll

also need that here's just an idea of

what these visas look like just in case

you don't know this is mine I'm a

resident they perma meant that you can

see that up in the top and this is my

Corp so if you go to look for your Corp

it's right there on your visa it's a

number similar to a social security

number not quite the same but it's a

national ID number that you have and so

it's right there on your visa now this

gentleman was on the immigration web

site it's not the greatest picture but

it is a picture of a temporary visa you

can see it says resident they temporal

at the top and again here is his Corp

right here they've box

you know blanked it out but that's his

up that's his Curt a quick note about

corpse that I personally ran into and

we've had some other sellers run into at

least in our through our immigration

office each one of these letters in this

Corp number means something and this

letter right here in particular is

either going to be an h4 hombre which

means man or m4 mujer which means woman

it identifies your sex and I never paid

attention to mine and I had a notary

point out that unless I'd had some

serious changes in life I was not a man

and I needed to go have go back to

immigration and have them update my Corp

because immigration issues this Corp

number for foreigners so if yours is not

correct if you haven't looking yours

isn't correct go back to immigration

have them have them fix that because you

should either be an H or an M

accordingly now this is paperwork that's

required for property

okay before I get into the list remember

that this is the list the paperwork

that's gonna be required to list your

property with an agency okay and it

allows us to check out a number of

things to make sure your paperwork's

correct it's complete and it's ready to

send to a notary at the time of sale it

also allows us should there be an offer

accepted to present this basic property

portfolio of information to a notary

without having to track you down and

have delays and scanning and emailing or

FedExing to our office so it's just a

lot more efficient to collect this stuff

all upfront and make sure we're a

hundred percent ago now then what I

don't want you to think is that this is

the entire documentation needed to close

because it's not the notary is gonna

have other documents that he's going to

need to solicit through his offices

generally this is everything that you'll

need to provide in most circumstances

but the notary is going to solicit some

other things like a certificate of no

liens and some other documentation but

that stuff is not time-sensitive for

instance a strip given only is only good

for 30 days so that stuff that those are

items that the notary is going to

solicit at the time of closing but this

is this is probably all that you'll ever

have to provide toward closing on your

property first item on the list is your

deed or your Bank trust deed and that's

called an escritura with bullet though

they were he's thrown okay if you are

not aware of what those two items are

the escritura and the bullet that every

stroke in my next slide I'm gonna show

you what those are okay next thing is

your property tax the current property

tax receipt it's called pretty I'll in

Spanish if your property is beachfront

then we need a copy of your beach tax

payment which is called sofa mat if your

property is beachfront and you happen to

have your beach concession then copies

of your beach concession paperwork we'd

also put in that file because that needs

to be transferred to the new owners a

water bill that needs to go into the the

pile of paperwork electric bill any

other utilities that could transfer this

happens because let's say you have Sky

satellite and your advertising sky

satellite and your house is fully booked

through the high season with vacation

guests well if somebody buys they need

to continue that service

it's not something they're gonna want to

cancel and take out and you know

reinstall they're gonna just transfer

that into their names there's not an

interruption for guess and so any of

those types of things if you have them

will get copies of the bills so that we

can go ahead and get working on those

transfers of services if you know if and

when you sell so rental history if it's

available we're gonna need your rental

history if you're selling a property

that's just raw land it's a lot then

we're gonna need a document called a

constancio that uses a suelo and that

document is the zoning document from

your municipality and it allows a buyer

to know what they can build how many

square meters how tall they can build

what their setbacks are and so if you

have a lot we require this document

because clearly those are questions that

a buyer is going to have and going to

need to know so we request that document

if your property has title insurance if

you bought a title insurance property

when you purchase or since the time of

purchase we'd love to have a copy of

that certificate we can share that with

buyers to let them know the property has

an existing title insurance policy now

the other two items are not the last two

items on this list they're not

necessarily paperwork that we need but

it's more of a heads up we need to know

are your if you were in a condo or in a

homeowner's association of some sort are

your HOA fees paid to date we need to

know that because prior to closing the

notary is going to require a letter from

the condo or HOA admin saying that your

fees have been paid in full the other

question we have is is your fee to come

in so paid to date it needs to be paid

up to date because when we go to start

the closing process we've got an offer

that's been agreed upon the bank is not

going to budge and you're going to move

this process until they have been paid

in full for their back fees so we need

to know those two things right up front

and when you look over this list I

mentioned at the bottom the docs in blue

so any documents that I listed in blue

are required by the notary okay that's

part of the information that we have to

provide the notary to get started in the

due diligence process of closing the

documents in black are required by us

okay and basically any document that has

a name on it

property taxes bills etc you'll notice

those have asterisks and that's because

they all need to be in a

owner's name if it's mr. and mrs. Smith

it you know the water can bill bill be

in mr. Smith's or the electric book can

be in mrs. Smith's doesn't it to be in

both but at least has to be in a listed

owner's name for those of you that don't

know what your escritura with balletto

of a div or hughster looks like this is

this document okay and we're gonna go

through it to back up a little bit and

see that you understand at notre at your

closing when you purchased your property

your notary that day provided you a

provisional copy of this paperwork that

you signed okay and after he submitted

the paperwork after closing day he took

at that paperwork and he submitted it to

the Public Registry in the Public

Registry then recorded the sale so

between 30 to 90 days after closing your

notary got back and should have given to

you or your agent would have given to

you a full copy of your escritura along

the balletto deira Hugh Stroh and we'll

see what those documents look like in

just a moment the bullet today where

Hugh Stroh basically shows that the

property was registered in the public

registry and so if you only have the

provisional copy of what you signed you

are not going to have proof that your

transaction was ever registered in the

public registry okay so you want to have

the full copy the full copy is going to

have your escritura which will see the

boleto de ver Hugh Stroh from your

Public Registry and then also a bunch of

addendums in the back of all of the

documentation that was present at the

time closing all these IDs and papers

that I requested that all gets copied

and put into the back as addendums okay

so it's a huge document all I really

need is the escritura and the bullets

that they were hughster which we'll see

here this is a espera torah okay note

that at the top it says instrument

though número and then there's a yellow

square where that number would go that

is instrument number such-and-such so

every title has a number and that number

is right here that number will come into

play here in just a moment but your deed

is numbered and and the number is listed

at the top this is the first page of an

escritura these escritura can be quite

long it can be you know 10 to 20 pages

long sometimes

but this is the first page you'll see

that that has a seal up at the top

obviously this is a black-and-white copy

but there's a seal up at the top showing

that it was from the notary's office

moving to the very last page of this

deed you'll find the notary signature at

the bottom along with another seal every

every page gets stamped and so if you

have the notary signature down at the

bottom then you have a copy of the of

the actual escritura and not the

necessarily the provisional copy that

was provided to you with just the text

of the document the day of closing now

this is a bullet though they were he's a

bullet that they were hew strong okay

here's the bullet that they were hew

strong and the bullet today registro

again what this shows is that the

documentation was taken from the

notary's office and registered in your

public registry okay now your this

happens to be from the public registry

and benito juarez of the state of

Quintana Roo perhaps in other states

they might look a little different but

they shouldn't contain the same content

remove this over here remember that I

said that there was this yellow box with

your deed number the deed number will

say you know would also be in contained

right here so that you know that this

document corresponds with this document

it basically says that this is the

bullet today for Hugh Stroh for deep

number such-and-such and in our public

registry it has this electronic folio

number which we have in green okay and

that's the information that we're

looking for now if you purchased a

property and then go back if you

purchased a property at least in cantana

Roo probably 12 years ago or more your

bullet today or he Stroh is not a

separate sheet of paper as you see here

your bullet today Riki Stroh is actually

a big stamp underneath the notary

signature with a bunch of public

registry information on it and that's

fine there's an update that needs to be

done because they move to electronic

filing systems and we need to get your

system into that into the electronic

system with an aisle number but it's

fine if you don't have a plethora Hugh

Stroh and you have this

that seal at the bottom that's fine we

can work with that and we just need to

get your paperwork updated at the Public

Registry with the electronic file number

but if you don't have either than what

you're looking at is provisional copy

and that's not the full copy of your

deed

okay required paperwork for new

construction this is where we find at

our office is the is the biggest reason

that people's paperwork isn't complete

and it delays listing properties because

we need to get it completed if you when

you purchased your property in the deed

it recorded the actual size of

construction let's say you had 100

square meters of construction on your

property when you bought then your deed

would say this deed was purchased by mr.

and mrs. Smith and it's that you know

what this in this address etc etc and it

has 100 square meters of construction

then or maybe you bought a lot and it

had nothing okay well if you built new

construction on your property or

enlarged existing construction so in

other words if you added square meters

of construction to your property to the

amount that was originally recorded in

the deed when you purchased and that

construction needs to be registered now

here's where we find the discrepancies

because usually what happens is local

builders typically give you this pile of

paperwork and you guys are really good

about filing it away but you have to

take that paperwork and go get it

registered and and so this is where

sometimes we see a discrepancy okay

ideally it was registered at the time of

construction all right and how we check

your paperwork is this the numbers the

number of square meters of construction

should match first of all the physical

construction that's exists on your

property so if you have 200 square

meters of actual construction sitting on

your property then 200 square meters

should also be the amount listed in your

settler catastro and your settle look at

Estoril we'll see that document in just

a moment I have an example in the next

slide but that's your official tax

certificate from catastro the tax office

and so you know if you have 200 square

meters physically sitting on your land

then you should have 200 square meters

being taxed as taxable construction in

your

certificate okay now the third piece of

the pie is that that also should be the

amount that's listed in your deed if

you've had your deed rectified it's

called a rectification you can go back

and say hey I constructed property and

now I'm mr. and mrs. Smith and we no

longer own you know 100 square meters of

construction we now in 200 you can have

the deed rectified that's something that

if you want your paperwork perfect and

you choose to do that great if not this

is not a deal breaker because at the

point when you go to sell provided that

number one and number two match that can

be amended at the time of sale so the

document that the notary drafts for the

buy/sell can include an act in it that

says mr. Smith mr. and mrs. Smith did

construct on the property they've added

100 square meters therefore the property

is a total of 200 square meters of

construction and then second act now

we're going to sell the 200 meters of

construction and land plus the land to

the following people okay it's fine to

do that as long as you know that your

paperwork the point is is to fix at

least up to point number two as soon as

possible

okay number three can wait till a sale

as long as you're comfortable that

number one and two are correct

okay you do have to pay to have it

rectified and you're either gonna have

to pay to have it adjusted at the time

of sale or if you choose to do the

rectification and you're not listing

your property either way there's a fee

to you know a processing fee but either

way it's okay so this becomes

complicating this is why and this is

certainly outside the scope of what we

do there are attorneys that audit this

stuff and make sure that it's complete

and if it's not can go back in the

process and figure out where sort of the

train left the tracks here's what

happens when you build when you build

you get permits that or you get

blueprints done and those blueprints are

taken to a city and the city has an

engineer that stamps them and approve

them this is yes they meet our

requirements and then you can begin you

get permits for your construction

license okay then you start to build and

you're building what's on your

blueprints and then an inspector comes

out and they make sure that your

building what you said you're gonna do

according to the blueprints that they

they approved and he continues out and

you have to get other things you know

other permits and you have to pay your

workers to grow sociale and all of those

types of things and then at the very end

if you've jumped through all the hoops

correctly you get what's called a

terminus I owned a obrah determinacy

owned a uber literally means the

finishing of construction and so it's

like an occupancy permit and it says

according to the I receive this paper

because I jumped through all the hoops

correctly during the construction

process okay what happens then is that

the terminus a onda obrah at least in

the municipio

benito juarez it may be different in

other places I'm not aware but at least

they're here you have to take that

termination day over from the

municipality construction Licensing

Zoning offices its issued there and take

it over to the tax office and say hey I

have finished my construction and

therefore I need you to add this amount

of construction to the taxable value of

my property okay so if you have a

terminal C on the obrah but your settler

catastro you've missed that step you've

missed taking it in and getting the

construction added okay if you don't

have a terminal C own they Oprah then

that can be a big can of worms because

it just depends on where the train

derailed as to how far you have to go

back and what you're gonna have to do to

fix it and so this is something that an

attorney needs to needs to look at okay

this is a settle look at Estoril alright

a settle a catastro you can see it's

labeled up at the top couple things I

want to point out notice it says

condition in function me info okay that

means it's functioning if it was saying

it was under construction or it was raw

land and you have a house then you have

a problem okay this is a functioning

property if it says it's under

construction that means somebody pulled

a construction permit and they noted

that and then nobody ever went and

closed it out by showing him my terminus

on day obrah okay um it'll give you the

address and you know the name typically

if you are if you own the property in

fee become e so your bank may name may

be here rather than your personal names

now this is a condo so it doesn't have

it but if it were privately owned prior

it would have the meets and bounds

listed here for our purposes is what

we're concerned with meters of

construction okay if I have 200 meters

of construction on my property then I

should have 200 meters of construction

listed in this box and it shows it's

four levels if I only have if it says

four level you know if it says two

levels and I have four levels then we've

got a problem all right so this is a

document that you can use to gauge if

your construction has been registered

properly if it does it'll least show up

here you can then as I said take your

deed and have it rectified if you wish

or do wait and do that when you ever

sell but at least it needs to get to

this point the showing process the

showing process you know we've gotten

through the listing process I told you

it was a lot okay we put a lot of work

into the front end on the listing but we

don't want any surprises when we go to

close for any parties okay so we've

gotten through the listing process

you've signed your listing agreement

we've gotten on your paperwork

everything's good to go we've assigned a

listing price for your Mart you know

your property which is you know

according to market values your you know

your is our liability so you know what

decisions you can make when you receive

an offer

now your property's on the market what

happens next well we start showing it we

show it to you know if buyers come into

the office and they're interested in

property and this sort of fits their

build and we're gonna arrange showings

with our buyers also as I mentioned I

work we work with other Realtors and so

maybe they contact me it's a hamburger

I've got this person I think you know

Casa Del Mar would be great

and um I would like to set up a showing

in those particular circumstances buyer

agents typically have a very definite

preference as to whether they want us as

a listing agent on site or not during a

showing okay and it often depends on

their familiarity with the property if

they've never seen the property before

they might say hey but you might want to

roast me and kind of showing us around

once they've seen it then they can do it

on their own others really like to just

work one-on-one with their with their

clients and that's fine with us those

guys will often call me if they haven't

seen a property before and arrange for

me and them to go through it so that

they're familiar with

and then they can bring their clients

back we're happy to respect whatever

those preferences are either way we'll

give them lots of them you know the

extensive property information about the

property so that they can answer

questions that their buyers might have

and then will either be present if they

wish us there or we'll give them the

keys and they'll return those keys when

they're done and that's exactly how it's

handled in the States remember these are

professional agents and they're walking

through with their clients so just like

in the States or Canada where you've got

a lock box on the door and that's how

the agents with their clients get in

same thing here if your unit is occupied

we're gonna provide notice the day prior

to a showing

so if owners if you're in the house

we're gonna call you the day prior and

say hey we're gonna be showing between

11:00 and 12:00 so that you know what

time to go ahead and leave and what time

you can come back if you're just kind of

walking around the block and killing

time until we're done we're happy to

give you a call and say hey we're out

you're welcome to come on back to that

if you have guests what we do is guess

trying to contact a guest is a bit like

roping the wind when they're on vacation

so what we do is we leave a note under

their door the day prior and it says hi

we've arranged a showing it's between

11:00 noon tomorrow our letter you know

we don't want to put out your guests

their being off the kind of lettuce in

and so our letter does says you know

what don't you don't feel like you have

to leave although money a lot of them

are at home sorry they're at the beach

or they're out on tour or whatever but

don't feel like you have to leave if

they're there a lot of times they hand

or something it also let them know you

know I don't feel like you have to make

any special efforts and cleaning or pick

up you know our clients coming in

understand they're looking for vacation

rentals they understand it's being

rented and don't feel obligated to make

any special effort that works out really

really well

provided that the owners have it are

advising their guests prior to check-in

that they might receive a notice during

their stay the only problems I've ever

had is where you know I show up they

don't know me from Adam and I'm asking

to walk through a house and it's not

their house and if their stuff inside

and then you know something sounds fishy

as long as I'm the you know so clearly

if you're renting your house and it is

for sale you need to be able to include

that in some sort of pre arrival

information or during your book

information or whatever so that they

know that my in Revere properties might

be sticking a note under the door that

all being said we try not to bother

guests you can schedule showings on a

changeover day then we certainly do that

because we try to to not impose on them

if at all possible the sales process the

offer to purchase so let's say you know

we've been showing your property now we

found a buyer who's interested that

buyer is going to present an offer to

purchase that offer to purchase is going

to contain the offer price a deposit

amount and any conditions relating to

the sale if your property is being sold

partially or fully furnished it's also

going to establish a value for contents

that are going to be included in that

sale we will talk about this more in

just a moment so we'll get back to that

point there might be some negotiation

perhaps a counteroffer and acceptance

whatever let's say we get to the point

where both parties are meet and mutual

agreement on the terms and conditions in

the price and so both parties sign

unless there are some contingencies

which typically there aren't unless

there's some contingencies at this point

most offer to purchase will say okay at

this point we've signed the seller has

committed to sell the property to buyers

a and B and buyers a and B are committed

to buy the property from sellers a and B

okay everybody's committed and in

exchange for that commitment there's

going to be some things that happen

there's a good-faith deposit it's gonna

be paid to the seller via escrow we're

gonna talk about escrow accounts in a

minute but that money is gonna be paid

from the buyer to the seller and placed

into an escrow account and in exchange

for that payment the seller you know and

in signing the offer the seller is going

to remove the property from the market

and commit to selling to these people no

more offers are going to be accepted the

house is off the market and and moving

toward closing then once that's happened

then the due diligence period starts the

notary typically takes one to two weeks

for due diligence in the due diligence

period he's ensuring that this the title

is free and cleared to be transferred to

the new party okay once that due

diligence has passed then he gives the

nod to a fee to Kamisha bank if there's

gonna be a fee to camisa bank involved

sometimes that fee to come you so there

are two sometimes it's one cancelling

the existing fee to me so another bang

opening a new one just depends on the

particular circumstances but that's when

the banks get to work now the banks to

open a new feed Iike me so have to

solicit a permit from the Ministry of

foreign investment and that permit has

only been taking anywhere from just a

few days to a couple of weeks now if

you'd asked me this last year it was

taking 30 to 60 days so for someone no

reason they've become much much faster

at processing these permits and I hope

they keep it up it certainly made our

closings go a lot faster but we've seen

turnaround times between a couple of

days to a couple of weeks and also

during this due diligence period your

agent needs to know whether you're gonna

be President closing or whether you need

a power of attorney because if mr. and

mrs. Smith are the sellers mr. and mrs.

Smith both have to be sitting in the

notary's office at the day of closing

unless they're being represented by a

power of attorney and a power of

attorney particularly if you aren't in

Mexico at the time and it can just be a

matter of running down to the notary's

office and signing one which you know

just as a matter of scheduling a day or

two out then it's going to take two or

three weeks to process if you're back in

the States or Canada and so we need to

know your agent needs to know so that

they can arrange it in advance because

it's not something that you can do

last-minute then we're gonna schedule

closing here's the weird things about

trying to schedule closing in this

process it's out of everybody's hands as

to when the permit is going to come back

from the foreign ministry and so all the

due diligence is done ahead of time and

then the permit gets applied for so

literally when the permit comes in the

notary needs a day to get the paperwork

together and you guys have closed the

following day but realistically and a

lot of these transactions either the

buyers the sellers or both parties live

in a foreign country and so those

parties need time to be able to make

travel arrangements and I can't say for

a hundred percent that we can close on

Tuesday the 15th at noon until the banks

holding the permit so it's wait wait

wait and then okay we can close now all

right so closings usually take between

30 and 60 days or is there stipulate

stipulated in the terms of the agreement

and again the closing dates can

you know speculative closing date can be

proposed but nothing can be concrete

until that that permit is back and we

know that we can everybody can buy plane

tickets safely without having to worry

about changing plans on closing day

again all parties on the trust or in the

deed have to be physically present or

represented by a power of attorney and

that's buyers and sellers both the new

deed is going to be gone through and

explained to the buyer and seller that's

either done by the notary's office or by

your agent depends on the the notary

office what they prefer party sign and

then your monies are distributed from

escrow and depending on the receiving

bank that fund those funds can take one

to three days to actually hit your bank

account so on the day of closing once

things are signed we notified the escrow

agency they release the funds and when

they release the funds that give us an

FDIC confirmation number so that's a

solid confirmation number that says your

funds have been sent and then it's just

a matter of time depending on where your

bank is and if it's gotten any

intermediary banks your bank requires

that go through before it get to you it

can be very quick or sometimes it can be

a couple of days but your money is on

its way then at the very end we're going

to remit an official receipt now

remember an official receipt in Mexico

is called a factura for our services

which you can use as a possible is our

deduction okay we'll talk about is our

in just a minute

but our our Commission's are deductible

so in the sales process we talked about

escrow accounts escrow accounts are

important because they protect both

parties they protect both the seller and

the buyer the buyer can confidently put

money in and show their good faith and

have their funds available and ready

prior to closing you know full funds

available and and ready for closing

without risk of paying the seller

directly before the transactions

actually occurred and the seller is

protected because the buyer is

committing funds that aren't refundable

unless it's according to the terms in

the offer to purchase which typically

says that those funds aren't refundable

unless for some reason title can't be

transferred so both parties get

protected

you've taken your property off the

market and this buyer has made a

commitment that they can't back out on

these accounts this is really important

there are no licensed bonded escrow

agencies in Mexico at this time okay so

our escrow accounts that we open are in

the United States our properties are

light are listed in US dollars anyway

they get opened in the States by

licensed insured bonded escrow agencies

if you place your money in with a notary

or with an attorney in Mexico the legal

framework doesn't exist with the

insurance policies attached to that

money as it would if you're placing it

in an escrow account um with an escrow

attorney you know escrow with an

attorney in the States or in canvas it

just doesn't work that way and so be

aware and make sure that your agent is

using a licensed bonded escrow agency

let's see-oh and then I guess I just

forgot that last point letter of

disbursement basically sellers are gonna

sign a letter of disbursement just prior

to closing and it says okay I've got

full funds in escrow for this purchase

and I you know I'm gonna end up

receiving this amount but you know we

can be paid out of escrow so my real

estate agent receives this amount and

here's a good point we happen to work

with notaries who will some notaries who

will take payment out of escrow escrow

is not a Mexican deal a lot of notaries

aren't familiar with it some are and so

some will agree to be paid out of escrow

most however want fees paid in advance

and if that's the case remember if you

have is our or something pending then

you need you might need to pay that

prior to closing so that's something

that you need to know and go over with

your agent just to see if that's

feasible okay

another point about the sales process

are you selling a property that includes

contents

the biggest point of this slide is

actually the second point is that the

registered sale price of the property

will be the actual sale price of the

property the days of underreporting sale

values in Mexico are gone if you aren't

aware it used to be sort of a common

thing it never was legal it was always

tax fraud though it was sort of a common

thing where maybe you only paid you paid

three hundred thousand dollars for

property but showing listed at a hundred

thousand that is no longer possible anti

money laundering laws require notaries

and agencies to report what's being paid

even documented with the bank transfers

so this is no longer possible okay so if

you pay three hundred thousand dollars

for a property it's going to get

recorded at three hundred thousand

dollars in the deed this exception for

to this is these properties that are

being sold with a bunch of furniture

maybe you've got a house full of

furniture in it and it's being sold

fully furnished well neither the buyer

nor the seller have any fiscal

obligation legal and physical obligation

to pay capital gains and acquisition

taxes by each party respectively on used

furniture okay

so typically what will happen is we

mentioned in the offer to purchase it

might say I'm paying three hundred

thousand I'm paying three hundred and

ten thousand dollars for mr. amethyst

mrs. Smith's condo ten thousand dollars

is to be appointed toward the existing

furnishings which are the following in

the inventory comes in and three hundred

thousand dollars goes for the actual

purchase of the condo and that is the

price to be registered in the new deed

and so it ends up becoming two separate

transactions and that is just fine and

completely legal but that's the only

exception to that rule okay you as a

seller what are you looking at as far as

costs associated with selling well

typically in most transactions a buyer

is responsible for all closing costs

with the exception of the following

which I'm gonna list below okay buyer

since they pay at the closing cost they

pay the notary fees typically they

select the notary and we have several

notaries that we recommend and depending

on certain circumstances you might go

one route or another

if the property is held in a trust and

the fee túcume so then the buyer has the

option to assume your trust or have you

cancelled that trust and they're gonna

open it another bank so that might also

dictate what fees you have it closing

here are the list of fees that are

typically paid by sellers at closing one

is the is our tax again this is the

capital gains tax we work to minimize

your eye your is our exposure this is a

huge benefit to working with a real

estate professional I'm going to talk

about is our in a minute trust

cancellation fee if applicable if you

own your property in the trust and again

the biosuit is going to put that

property into a new trust or they're a

Mexican buyer or Mexican corporation and

they need to cancel it cuz they don't

need it then you might have a trust

cancellation fee from your bank things

typically charge those and they vary

depending on the bank the other the next

point is a change of address fee this

doesn't happen very often but what this

is is when the municipality has changed

the address system from the time you

purchase so maybe your deed says you

look at one two three Nino seroius and

now this happened in Puerto Morelos a

long time ago and now the the

municipality came in and changed our

address system to super Manzano

such-and-such Manzana to lot five well

if that happened then you have a deed

sitting there that says to address this

then you have all these property tax

bills and things being presented this is

address Y and the notary needs some type

of paper to square that this is the same

property that's being referenced and all

this paperwork and there is a paper from

catastro that they can issue that says

properly formally known as one two three

and you know seroius is now data data

it's a very nominal fee but it's

something that um it's basically an

expense for you to rectify your

paperwork so it's sale ready and that's

something that we check for when we do

our due diligence at the very beginning

and something that you'll be aware of

needing to correct if that should happen

at the time of sale and then if for some

reason due diligence turns up any other

expense related to you cleaning up your

paperwork a construction registration

issue or something like that then that

those would obviously be your expenses

because your duty as the seller is to

bring clean transferrable paperwork to

the sale

so the notary might have a little bit of

cleanup work to do if he does then that

would be at your expense and then real

estate commission obviously your your

agency is going to be paid to at the

time of closing we don't get paid unless

your deal closes what is is our okay as

we start to talk about is our I am

limiting the scope of this conversation

to privately held residential properties

so if you have a Mexican corporation and

you own on property then your property

is assessed is are in a completely

different manner and you still pay it

but basically you know for corporations

you're selling a corporate asset and

that just is one more line of income in

your whole profit loss picture that

you're taxed upon okay is our when it's

a privately held residential property

then in that case the ISR is due at

closing and what's a residential

property well Mexican law defines

residential properties as privately held

property where the land does not exceed

three times the amount of construction

for most people this is not an issue we

live on small Lots in Puerto Morelos or

wherever you're from if you happen to be

on a big spread like a Hacienda and this

might be an issue for you what they do

in those circumstances is they take the

land the proportional amount of land

allowed and the house and they call that

the residence and that's taxed under the

ISR laws that we're going to talk about

the rest of it is taxed outside of that

of that residential tax law so if you're

sitting on a big piece of land it's

something to consider for most of us I

don't think it's gonna be an issue is

our is our actually means in puesto

sublet sobre la Renta and that is the

name of the income tax in Mexico and

that's important to realize because if

you're an employee and you earn an

income you pay is are your income tax

and this is why I hesitate to call it a

capital gains tax because it's really

misleading the profits from your sale of

a property are not governed by a

separate capital gains tax law or taxed

a different capital gains tax rate okay

as they are often are another country

and it also can't be deferred at least

as it can in the US I don't know about

the Canada Canadian tax law but in the

u.s. we can reinvest that money within a

short period of time after a sale and

defer the taxes on it well in Mexico

that's not possible so because of all of

those things I hesitate to call it a

capital gains tax law because it implies

a lot of things that aren't necessarily

true in the circumstance it is an income

and it is taxed on the game okay so it

is based on gain which is why they call

it a capital gains tax lot but I I

prefer to use is are because I don't

want the two concepts mixed the game

that's realized when you sell your

property is treated as personal income

and subject to income tax law okay so

same rates same law same tax it's not a

different tax it's not a different rate

and it can't be rolled into something

else

so that is what the ISR is well what's

the rates the rates can go anywhere up

to 35% depending on that amount of gain

which is considered income in the

transaction most property sales you know

are gonna fall anywhere between usually

the tour you know the 21 to 35 percent

range well how is this calculated this

is not necessarily intended to be a

walkthrough so that you can calculate

this I'm going to tell you that notaries

use a computer to do this very

complicated calculation if you are

interested in a deep in the woods sort

of walk through step by step calculation

of ISR and go to my blog go to puerto

morelos blog comm there's a search box

and you in that search box type in ISR

there's just a couple articles that come

up and one of those is a article where i

and i call it deep in the woods article

where I and I think the first paragraph

walk you through a couple of examples

really it's just an academic exercise

because the notary you know your your

realtor is going to get you an ISR

estimate when you list but I think it's

it's helpful to understand how at least

that

estimate is is done and that's what this

intends to do so the income that you

realize from your sale is based on the

gain okay and so how do they how do they

determine your gain well they take the

new recorded new sale price and they had

they subtract it from the adjusted

original purchase price and that's your

your gain or your income as the result

of the sale so what's a new recorded

sale price well remember that's the

value that's going to be recorded in the

deed at the time your property is sold

so if your mr. and mrs. Smith and you're

selling that $300,000 condominium maybe

the sellers are paying 3/10 because

they're paying ten thousand for contents

but we're recording the property at

three hundred thousand because that is

the recorded value of the property we're

not recording it under recording it

remember we can't do that so it's being

recorded at three hundred thousand

dollars that's your new recorded sale

price this new sale price for the

property your original purchase price

gets adjusted and that's why it's called

the adjusted original purchase price

maybe when you bought that condo you

paid two hundred thousand dollars for it

okay well it depends on how long ago you

bought it but let's say I paid two

hundred thousand dollars for something

in 1980 certainly two hundred thousand

dollars in 1980 was worth a lot more

money than two hundred thousand dollars

in 2014 and that's because of inflation

so Mexico is very fair about this they

have a scheduled rate of inflation that

every notary uses and depending on when

you bought they're gonna adjust that

value up for inflation so you're

comparing the new recorded sales price

in 2014 dollars to the original purchase

price in 2014 dollars that's a really

fair thing to do because it was worth a

lot you know that money was worth a lot

more back then now if you've recently

purchased your condo then this is gonna

make a very marginal difference because

there hasn't really been that much time

for a big difference in inflation but if

you own a property for a long time

that makes a difference now note they

use the value that was recorded in your

escrow Torah when you bought so if you

under recorded the value that you

purchased let's say you paid three

hundred thousand for something you only

recorded a hundred thousand you can't go

back and tap on the notary store and say

hey notary you know I messed up I

committed tax fraud and now I need to

fix it that there's no going back they

have to use that recorded value which is

another reason why under reporting the

value of property is not

good idea okay because it's set you up

for a big capital gain um the other

thing that happens after it's adjusted

for inflation is that your original

purchase price is split into a lamp

split into something for land and

something for construction typically its

20% land 80 percent construction unless

it was structure to otherwise its time

of sale and the construction is value is

depreciated so it gets it gets increased

for inflation and then decreased the

construction portion gets decreased for

depreciation because Mexican law says

that you know what brand-new

construction is worth more than the

construction that's 30 years old because

construction only has a 15 you know

80-year lifespan fit to your life span

whatever it is they consider it and so

if it's 50 or 60 years old it's

basically almost at the end of its life

and it's not worth the same as brand-new

construction so it gets depreciated so

those get worked into the equation and

that becomes your adjusted original

purchase price and that is subtracted

from the new recorded sale price and

that gives you your gain now there are

some deductions that can be worked into

that equation to you can deduct capital

improvements that are made to your

property now capital improvements are

something that actually improves the

value of your property if you fix a

leaky sink that's maintenance that's not

a capital improvement but if you do you

know add an addition if you put in

granite countertops if you do things

that actually improve the value of your

your property then save those factors

and those can be used as tax deductions

against any gain your notary fees rights

which are called the red shows and taxes

that you paid at the time of purchase

can be deducted as well as any realtor

fees that you paid at the time of

purchase or at the time of sale of your

property so again remember that minor of

your properties is going to give you a

factor of and we can do that because

we're professional sales agents you can

give you a factor ax and our our fees

are tax-deductible now that all being

said remember that according to Mexican

law or for an expense to be deductible

it has to be in effect Torah and that

factor needs to be in your name and RFC

what does that mean that means property

owners get your visas so

you can get your RFC's so that your

capital improvements and your property

can be can be done or can be justified

for the factory and your name and you'll

be able to use those items as a tax

deduction okay if I I still have to give

you a factor ax but it's not going to be

with your RFC because you don't have one

at the time of sale and then you don't

get to deduct to my commission so go

ahead and get that done your your RFC

can be solicited online it's free just

get your visa and get it done so that is

how it works when we talk about is our

it's a big complicated topic and I try

to simplify it the other thing I want to

tell you is this don't stress about it

go into an agency get it get it assessed

and work with a professional that's

going to make it as you know we're gonna

try to maximize your deductions and get

you the best deal possible okay um we

are not magicians we can't make it

disappear but we can try to make it in

the best scenario possible people ask

well can I can I

exempt because the primary residence or

something like that the answer is maybe

okay um it it doesn't necessarily have

to be a primary residence in the sense

of well actually for a foreigner it ends

up being a primary residence but for a

Mexican national it doesn't necessarily

have to be we're gonna walk through this

flowchart and at the end I think it'll

make more sense as to whether you might

qualify for some sort of exemption again

this is something that you can go over

with your agent when you list okay first

thing to know is are remember it's an

individual income tax so every seller is

assessed through this flowchart

individually so if mr. and mrs. Smith

are selling a condo and they're getting

three hundred thousand the law seems

that one hundred and fifty thousand is

going to mr. Smith and a hundred and

fifty thousand is going to mrs. Smith

and now we've got mr. Smith over here on

the Left one hundred fifty thousand this

is Smith over here on the right with

another 150 thousand and each one of

them have two

walk themselves through this flow chart

to see if as individuals not together as

individuals they meet the qualifications

for their individual tax exemptions okay

so let's take mr. Smith all right mr.

Smith are you a citizen of Mexico and if

he says yes and he's gonna jump right

over here all right for our purposes I

think most of us are foreigners that are

in on this workshop so we're gonna say

no then he has to answer the question do

you have physical residency in Mexico

now if you don't know what the physical

residency I'm not sorry not physical its

fiscal if you don't know what fiscal

residency requirements are in Mexico

we're going to talk about them in the

next slide

okay but if no you don't need physical

residency requirements then you have no

exemption okay if you do meet physical

residency requirements then you can move

over here and you can ask yourself have

I exempted any other property in the

last five calendar years okay if the

answer is yes then you don't get to

qualify for any kind of exemption but

you've already gotten one per five

calendar years and that's all you're

allowed if your answer is no that you

haven't exempted then you move down to

this box and it says does the income

received from the sale of this owner

exceeds seven hundred thousand you tease

you tease nobody's ever heard of them I

hadn't either until I started studying

real estate in Mexico it's a way it's a

it's a it's not really a currency but it

is a monetary value

long story short let's stick to what

we're familiar with seven hundred

thousand you DS is about three and a

half million pesos okay so mr. Smith

says well according to this sale I'm

receiving a hundred and fifty thousand

dollars in income because I have

received half of the total proceeds and

that is less than 750 earth sorry it is

less than three point five million pesos

so let me answer the question for myself

does the income I received one hundred

and fifty thousand dollars from the sale

by myself you know me exceed 3.5 million

pesos no it doesn't okay it doesn't

exceed so I do qualify for a partial

exemption now note that the is are

exempt

change in September of 2013 so you can

no longer prior to do September through

that 2013 you could exempt an entire

sale there was no threshold of three and

a half million pesos okay now there is

so it's a partial exemption but um so

the partial exemption is applied okay

it is applied and in this case no is our

is due he doesn't know anything because

it's under the 700,000 or the three and

a half million peso threshold okay now

if mr. Smith had been receiving four

million pesos in this sale that was his

portion of the proceeds then it does

exceed this threshold and he would be up

here and yes and the partial exemption

is still applied and the portion that

exceeds that three and a half million

pesos is subject to the is our tax the

portion that's under that the first

three to half million pesos are not so

basically you'd only be taxed on the

five hundred thousand pesos if you were

earning four million pesos the five

hundred thousand pesos that exceed the

threshold that is what the is our tax

would be assessed on and it's also you

can still use deductions they get

prorated as well and you can use that

prorated portion of deductions toward

any amount that you have that exceeds

that threshold okay that's how the is

our exemption works now the big question

for a lot of fizzes well Amaya fiscal

resident of Mexico so here's what I'm

going to tell you about fiscal residency

in Mexico the first thing I'm going to

tell you in this slide is what the law

says and then I'm going to tell you how

notaries apply that law because there's

what the law says and then there's the

portion of what how it's practically

applied okay um fiscal residency first

of all it's listed in law see ff9 if you

you know want to go see the original

translation this is a translation of it

here fiscal residency is when persons

have established their primary residence

in Mexico alright so if you are a

foreigner and you have established your

primary residence in Mexico than you

have fiscal residency and the spirit of

that sentence says that you own one

house

and it's in Mexico and you live there

full-time okay um if you're a person if

you're a foreigner when this is persons

because it's under foreign foreigners

law so it's talking about foreigners if

you're a foreigner that has residences

in multiple countries okay let's say you

have one in Mexico and one in Canada

Mexico is considered your primary

residence when your vital center of

interests are located in Mexico what's

vital center of interests it says it's

one of two things

when 50% or more of total income is

attained by you within a calendar year

from Mexican sources or when Mexico is

the principal center of your

professional activities okay so if you

live in multiple places then they decide

that you're Mexico's your vital center

of interest when you meet one of those

two criteria if you live here full-time

the law says that Mexico is your your

primary residence okay

now this is where the rubber meets the

road this is how sat which is the tax

authority in Mexico tells notaries that

they can qualify people under two

methods for physical residency method

one is that you as an individual declare

in front of the notary that you meet the

conditions of physical residency I

hereby declare that I meet the resident

you know requirements of physical

residency you provide an address where

you can receive notifications other than

the home that you're selling that's

because if saat wants to review your

file and they decide that you don't meet

those requirements they're going to

notify you and say hey you might owe

some taxes in this particular situation

and then it says you can provide your

corp or our RFC notice doesn't say RFC

and corp okay this is interesting

because most notaries require the RFC

it's kind of an interesting point but

the the website actually says they

require the RFC at work hurt okay

that's method one method two is you can

skip all of that if you apply for

there's a certificate you can get a

physical residency with sats and so if

you have that certificate you could also

present that most people don't have that

certificate so they end up using method

one and when notaries are using method

one typically they want you to present

your

at residency visa utility bills in your

name as well as another address and then

your RFC okay so remember it's

ultimately the notary who's going to say

what is required in the transaction for

him to apply the law and it doesn't

always mean that it's going to he might

he might supersede the requirements of

the law okay and in this case if you

request your RFC then you know it's free

and you can get it but technically you

could have just done it with your court

but but that ends up being what most

notaries require in order for you to

meet that for them to feel comfortable

to go ahead and apply any partial

exemption that might exist under method

one okay to wrap up I want to provide

some tip some tips for successful

selling for successfully selling okay

number one our market is doing better

okay it's recovering well it's not

gangbusters it's not what I would call

fantastic but it's doing well we still

have a huge backlog of inventory to work

through and because of that your

property is probably competing with lots

of other properties on the market and

because of that you need to price is

still you know it's still a buyers

market and you need to price your

property the most aggressive price prop

possible even if that leaves little room

for negotiation if you have twenty

thirty forty thousand dollars of wiggle

room in your sale price lower it okay

I would much rather I can much more

easily sell and would rather sell a

property where the people are pretty

firm on the sale price maybe a few

thousand dollars for the sake of

negotiation then try to sell one that

there's a bunch of wiggle room on okay

timing timing in our market now I don't

know about other areas it's a good thing

to ask your Realtor if you're interested

in other areas timing is helpful in our

area we have a high season it goes from

Christmas through Easter so ideally the

time to list is right now in November

remember the listing process takes a

little while to get through all that I'm

that information in that review process

okay before your property gets on the

market so doing it now is a good thing

it gets your property on the market you

want it up and on

but you know by mid-december and by

doing that you're gonna have the maximum

exposure for your property okay there

are there is some activity during the

off season but it's quite often not

always but quite often buyers that saw

things in the high season went back got

their ducks in a row and came back to

purchase something so clearly there

isn't a bad time to list

there's buyers all year round but for

maximum exposure it's great to get it on

the market before high season that third

point if you have an item or a piece of

furniture that you cannot part with

particularly if it makes the house if

the key piece in the house then remove

it the buyer will never know it wasn't

there okay it was ever there um remove

it before you put the property on the

market because if you have some key you

know like maybe you had a table

custom-made for your dining room that

fits perfectly or you have some key art

piece that just defines the entire

downstairs of your home and a buyer sees

it they can't imagine that house without

that really custom piece it really

leaves a big hole in their mind as to

the ambiance that's created in that

house without it and you can bet they're

gonna put it in the offer okay and now

you are at jeopardy of not selling your

place because you don't want to part

with something that you could have taken

off the wall and you know and replaced

it with something on that the buyer

would have never seen so don't make it

an issue if it's something particularly

if it's a statement piece take it down

keep it enjoy it and and let's not make

it an issue with the sale another thing

particularly in our area is to maintain

your property in good condition keep it

sparkling clean and move-in ready

okay people do look for fixer uppers

here but they look for them at a big

discount because remember the majority

of buyers are foreign buyers and they

don't have the expertise they're just

moving down they're trying to get things

started they don't want a headache with

a bunch of fixes fix it up earth a

fixer-upper um they might not speak the

language very well at first and so

they're not looking for something that's

gonna need a whole bunch of work okay

and if they are then the prices

deeply discounted because they know

they're in a you know in a small full of

buyers that are willing and able to take

the time that it takes to remodel

something so with unless you want to

take a big hit on price really get what

you have looking its best

okay next a final point declutter if

necessary this is hits home for me

because I'm a Mexican folk art collector

declutter it it makes rooms feel cramped

and small in our area we have tropic you

know where you live in a tropical

climate with a lot of humid humidity and

if you have a lot of overstuffed

furniture and heavy curtains all that

type of stuff it can make it smell kind

of musty inside which isn't a good thing

either clean it up to personalize it

there's lots of articles you excuse me

there's lots of articles you can read

about staging um go ahead and get that

house ready to sell and the last thing

is is that if you want a lot if you own

an empty land and there's not there's

not a way for owners to or buyers to

easily define your property boundaries

then keep the Lots trimmed okay that

always helps regardless of it you can

see the boundary lines or not and do

something to clearly demarcate your

property boundaries if you need to you

can call catastro and they'll come in

and they'll they'll actually do a survey

and put in corner posts at each of your

corners but there needs to be a way for

a buyer to see the size of your lot with

that I want to thank you very much for

joining us if you have any questions I'm

happy to answer them this is our contact

information our website is mine review

our properties calm my blog is Puerto

Morelos blog calm email my direct email

is amber at my interview our properties

calm or you can send it to the general

sales email either one will get a hold

of us sales I interview properties calm

and then we have two phone numbers that

ring us at the office one is the United

States number the other is a Mexican

number and we're happy to talk to you so

with that I certainly hope you enjoyed

the workshop I hope that you learn

something I wish you the very best of

luck in selling your Mexican property

and if you have any questions please

feel free to contact me through any of

the

mediums and I'm happy to to either

assist you in listing or to refer you to

a realtor if I'm able to in your area

that I've worked with and can recommend

so thank you so much have a great night

and and enjoy enjoy the selling process

best of luck to you bye-bye