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