• S pecial F eature •
Hot Properties in Banderas Bay
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Buying
Real Estate in Banderas Bay
Buyers in Banderas Spill the Beans By Madeline Milne
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he change in the real estate market in Banderas Bay is palpable. From lamenting the loss of ‘authenticity’ in Old Town on Facebook forums to the hushed conversations of how much their neighbors place really sold for at cocktail parties, everyone is talking about the real estate market. In a recent, very informal survey, the Vallarta Tribune asked buyers of homes throughout Banderas Bay to answer a few questions. The takeaway from their responses was for anyone thinking of buying to not only take their time but to understand that the process itself takes time. While aspects of buying real estate in Banderas Bay are similar to purchasing north of the border, there are some marked differences including using a bank trust or Fideiocomiso and use of a notario publico. (See the Ask a Realtor section for more details on these two processes.) One reader wrote when asked, “What is the one thing they’d share with prospective buyers?” responded with “Patience! Expect the unexpected. The process and
timing of purchasing real estate in Mexico are not the same as in the US. Not inherently better or worse, just different! Be prepared to pay a greater percentage of closing costs as a buyer.” Of the responses received 66.7% had purchased in the last year, 20% in the past two years. 60% bought condos, 20% purchases villas and 20% purchased townhomes, most with a budget of USD 300,000 or under (73.3%) but 20% had budgets over $500,000. Important to note here is that closing fees are nearly entirely borne by the buyer in Mexico and are roughly 8-10% of the property value whereas in Canada that amount is on average 1-2.5% and in the US closer to 2-5%. For those that downsize into a condo, you need to weight the benefits and challenges. Security and less maintenance are cited as benefits, but you also give up a few freedoms when you become beholden to your condo association. “If you’re considering a condo after having owned your own house, think long and hard about how much privacy and control you are willing to give up for ease
of maintenance… There are days when we still wonder if we made the right decision, but our wonderful neighbors usually convince us that we did.” When asked, “Where did you buy your property?” the responses went from Amapas to La Cruz. 33% of respondents said they bought in Bucerias. This community is increasing. Where before there were limited condo towers and mostly long established family estates, these sizeable oceanfront land parcels have been bought up and are now undergoing rapid development. It’s understandable; it’s the best beach in the bay and a sweet little town. Hopefully, it stays that way. A close second was Old Town (20%), with its massive influx of new condos at a variety of price points, and proximity to all that Old Town offers including year-round entertainment, restaurants, and shops. From a vacation rental standpoint, Old Town makes considerable sense for investors as much as year-round residents. When weighing all the options, sometimes choosing to be out of the hustle and bustle is the best
option and the Cinco de Diciembre neighborhood is popular for just that reason, plus put yourself on the hillside, and you’ll have endless sunset views. Says one respondent, “We wanted to be relatively close to Centro and the Malecon but to be in a more traditional Mexican neighborhood… Having a view of the bay was important, and five de Diciembre’s elevation provided that.” Perhaps most interesting is how respondents viewed the ‘state of the market.’ When asked if they felt it was a buyers market and the seller was eager and flexible to sell, 40% responded with a no, and 40% responded with a yes. I suspect barring any major market downshifts the answers to this question are going to become more skewed. Ultimately what is most important is working with a team that has your best interests at heart and that you do not feel pressured to buy something - anything. Trust your gut and work with people that are professional in all that they do - from timely responses to transparent negotiations. For the full results of the survey – visit vallartatribune.com
ith dozens of new developments across the bay, it can be overwhelming to know which ones are the best. We asked local realtors to give us their top picks. In no particular order, here are the most recommended: V Marina Two new 8-storey towers across from the entrance to Marina Vallarta. This neighbourhood is booming. New restaurants, shops and the excellent Thursday Evening Market make this a great vacation rental investment. Amenities include underground parking, gym. Views of Marina Vallarta Golf course and the Marina. Prices starting at $160,000 Avida In the heart of Old Town, Avida purports to be a unque concept with shared spaces and a focus on environmental certification and smart technologies. Amenities include gym, library, roof top pool. Communal spaces and a number of the units have been designed to accommodate people with limited mobility, which is rare in Mexico. D’residences Local developer D’ Group and designer Octavio Lopez are offering exclusivity with only 12 three bedroom units. Each unit enjoys a heated dipping pool and private elevator access. Master Suites have stand alone tubs – that alone should sell the place out! Boracay by Sayan Located in Bucerias, this building knows its market with an inhouse sports bar with LED screens and draft beer on tap. Boracay is located on one of the best strips of beach in the bay, just south of the popular Karen’s Place restaurant. Prime location for vacation rental income. 3 and 4 bedroom units from $579,000. INDAH by Sayan Located in lower Amapas, INDAH features 2-4 bedroom units up to 3,500 sq.ft on the beach, steps from Old Town, in fact their website says only 330m to Los Muertos Beach. The private in house kitchen offers 24 hour room service and the units are designed with modern luxury in mind. Prices from $440,000 to $1.4 Mil Maritima Two towers of 10 storeys located on Flamingos beach in Nuevo Vallarta, Maritima is uniquely designed to provide ocean views from the living room and master bedrooms of most units. If you’re looking for a sure thing when it comes to an investment property, Maritima is located in one of the hottest tourism corridors in Mexico.
real estate
La Cocina
James Nash
Twitter @JamesNashPV
A believer that a simple, flavourful meal shared with friends is one of our life’s true joys, a local resident of Vallarta, James (aka Jimmy) shares his knowledge and passion for the culinary arts, local architecture and real estate.
New buyers bring new vibrancy to Vallarta
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ith all the recent activity around town and real estate sales once again feeling like everyone is looking for a piece of paradise we thought it would be a good time to stop and do a market update. Recent reports written and published focus a great deal on statistics, which are important, but also can be a bit dry. So let’s focus instead on the outcomes behind all the numbers. That is not to say that the average price for a condominium last year being in the low three hundred thousand dollar range is not interesting, but it is only one piece of the puzzle in our current market. Our current market in Puerto Vallarta has approx.. one hundred and eighty-five homes currently listed for sale, keeping in mind around 30 of these are either at the very top range over one million or are smaller fixer upper type properties in areas that primarily appeal to long-term expats and locals. If you broaden the search to the entire bay the number of the home goes up to just under four hundred and fifty. However, given so many buyers are focusing in on small subregions for their purchase it is no wonder we are seeing a much more competitive market than in the past five to seven years. So, what does the market look like in the most popular areas of the Vallarta? You may be surprised to know that in areas most popular with foreign buyers like Emiliano Zapata there are only around ten homes on the market. The number climbs to around thirty-five when you take in all of the central areas of town up to the stadium. However, the reality is that the price point on the majority of these properties is well above the budget
that many clients arrive in town expecting to pay. What does all this say about our market? In my personal experience I can tell you that buyers are arriving in great numbers with a similar story. They are planning to retire in approximately two years and have either been coming to Vallarta for many years or have been reading about Vallarta and the value it offers. Several wellknown publications have recently listed Vallarta as one of the top destinations to invest in and people have taken notice. These buyers have been planning, have cash in hand and are ready to offer on a property once they see the right fit for them. Our other type of buyer is currently exploring the market and what they will be able to secure. Interestingly we are showing a broader range of areas to these buyers as they are less focused on just the central areas and beachfront or ocean view properties. Vallarta offers people a level of comfort that many tropical destinations simply can not compete with, both due to our infrastructure as well as the physical area. The beauty of the area combined with amenities for living that people need on a day to day
April 26 - May 02, 2018 www.vallartatribune.com
basis, shopping, movies, entertainment and of course dining are all within a few hours of most peoples families back in the USA or Canada. When you combine this with many options for new and resale condominium steps away from all of the amenities, you create a market that after many years of moderate growth has exploded into what we now see today. Prices are rising, and the average sale price is much closer to the listing prices as agents and clients are working together to offer properties at comparable market values. I know that for many people all the new development and building is distressing, to say the least, the noise, dust and just the change of the overall look and feel of the city is not welcome by all. However many of the buyers we are currently working with a plan to spend the majority of the year in Vallarta and this combined with their love for the city they are moving to is sure to bring a new vibrancy to the area. The amenities that everyone loves so much need clients to stay in business year round and this changing market is creating that here in Vallarta. For more detailed statistics on the market, please reach out to myself or any member of AMPI our local and national real estate association and they will be pleased to share with you our full market report. The numbers can be a bit confusing, so it is best to set up a meeting, and your realtor can walk you what the numbers mean to you as a buyer. In today’s market, it is important to be informed, and the best way to do that is to work with an AMPI members office and agents to help guide you and ensure your purchase is the perfect fit for your short and long-term goals.
Banco_VallartaCredito_IntercamDOBLEPLANA.pdf
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The Zippers! Featured Property
EL NOGALITO
STATE OF JALISCO
BUENAS ARIES
CONCHAS CHINAS
PUERTO VALLARTA
GRINGO GULTCH CASA KIMBERLY HACIENDA SAN ANGEL 12 13
5+ bedroom, 5 bath,5,500 sq.ft $525,000 usd
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POINTS OF INTEREST 9. 5 DE DEC. CEMETARY 16. HIDALGO PARK 1. TURTLE RESCUE CAMP 10. MIRADOR CERRO DE LA CRUZ 17. THREE HENS MARKET 2. WHALE OF A TALE HOLE 11. MALECON 18. MARSOL MARKET 3. PLAYA ESCONDIDO 9. BRIDGE 5 DE DEC. CEMETARY HIDALGO PARK MARKET 12. VIRGIN DE LA GUADALUPE16. CHURCH 19. MUNICIPAL 4. KISSING 13. LOS EMILIANO ZAPATA MARKET 5. EL CORA SANCTUARY 10.CROCODILE MIRADOR CERRO DE LA ARCOS CRUZAMPITHEATRE17. THREE20.HENS MARKET 14. ISLA CUALE 21. CUALE CULTRAL CENTER 6. PUERTO VALLARTA SIGN 11. MALECON 18. MARSOL MARKET 15. LAZARO CARDENAS PARK 22. 5 DE DEC MARKET 7. ESTERO EL SALADO 12.PLAZA VIRGIN DE LA GUADALUPE CHURCH 19. MUNICIPAL MARKET 15. OLAS ALTAS FARMERS MARKET 23. HUANACAXLE MERCADO 8. PITILLAL
ORA CROCODILE SANCTUARY RTO VALLARTA SIGN RO EL SALADO LAL PLAZA
13. LOS ARCOS AMPITHEATRE 14. ISLA CUALE 15. LAZARO CARDENAS PARK 15. OLAS ALTAS FARMERS MARKET
20. EMILIANO ZAPATA MARKET 21. CUALE CULTRAL CENTER 22. 5 DE DEC MARKET 23. HUANACAXLE MERCADO
24. FOREVER SPRING MARKET 25. BUCERIAS ARTWALK 26. RIVIERA FARMERS MARKET 27.24. MARINA ARTISAN SPRING MARKET MARKET FOREVER 28.25. MOVIE + PICNIC ARTWALK BUCERIAS 29. RED CROSS 26. RIVIERA FARMERS MARKET 30. LOS ARCOS NATIONAL PARK
27. MARINA ARTISAN MARKET 28. MOVIE + PICNIC 29. RED CROSS 30. LOS ARCOS NATIONAL PARK
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his wonderfully spacious and private Colonial Style Villa features a lovely indoor swimming pool and enormous shaded rear terrace and entertainment area. The serene and elegant living room open to the spectacular outdoor terrace and fantastic entertainment area surrounded by tropical gardens. Upstairs are three spacious and restful bedrooms suites overlooking the gardens; the master featuring beamed vaulted ceilings. Another small bedroom
is plus seating area and large artist workshop could also be easily converted to additional bedrooms or offices. Some other features of this lovely and spacious property include: Lighted niches, arched entryways, spiral staircase and air conditioning. Just one block from a main thoroughfare and zoned for residential or commercial use, this home is a true tropical oasis in the heart of the city! https://www.boardwalkrealtypv. com/properties/villa-colorida/
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April 26 - May 02, 2018 www.vallartatribune.com
Elements Realty Group Combines Community and Technology to Help You Find Your Home in Mexico! Voted 2018’s “Best Real Estate Brokerage in Banderas Bay North,” in the Tribune’s Reader’s Choice Awards, Elements Realty Group has been uniting buyers with their dream homes for over a decade
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lements Realty Group was founded by John and Christie Forget in 2007. For eleven years they have been fine-tuning the “elements” necessary to deliver top-notch real estate services in Mexico. Embarking on a new adventure, the husband and wife team were welcomed to Bucerias with their four young children. A move from Canada across country fifteen years ago in their van, possessions in tow, with a dream of a place they had never been before, but would soon call home. The amazing experiences that awaited this family painted the canvas of a lifetime only Mexico could offer. Today, they are expecting their first grandchild by their eldest son and his wife, pastors at a local church. They have a daughter who is a Red Seal Chef; their youngest daughter is studying to be a veterinarian, and the youngest son is a journeyman plumber. Before leaving Canada, John got his real estate license with the vision of creating a new kind of realty experience in Mexico. He wanted to provide the level of expertise foreigners had come to expect. So far, they’ve helped hundreds of people buy and sell homes in a secure and comprehensive way. What are the essential ingredients to their success? For starters, bringing a sense of community to their work. Elements Realty Group takes their international clientele, multilingual agents, and helpful administrative staff and welcomes them into their expansive family. Establishing community through their faith, enacting their values with extensive charity work in the area, and running an honest real estate business proved a solid foundation for Elements… add to that their incredible legal and accounting team, who has helped countless buyers save tens of thousands of dollars on fees and capital gains, and they’ve found the perfect recipe for success. Elements Realty Group has always been technology-forward. While Mexico was still analog, Elements was introducing innovative digital real estate tools. Elements is the first real estate
“Because of our caring community, we’ve enjoyed living out our greatest adventure. It’s an honor to help others take the leap into living theirs.” company in the area to provide quality HDR imagery. They are also the first to use 360° HD photography and employ drones to capture stunning aerial footage. Last year they became the first real estate company to use Matterport 3D cameras. Their visitors can now experience a property in 3D and virtual reality (VR). Using any Internet-connected device, international buyers can now tour homes from the comfort of their own living rooms. With the 2018-2019 season shaping up to be their best yet, Elements has already sold multiple properties this year “sight-unseen.” As liberating as their digital office was, they noticed a disconnect. They wanted to continue serving their growing online clientele while building the face-to-face
local community they were known for. They also saw the need to introduce clients to such cutting-edge 3D technology directly. In response, Elements is thrilled to announce the opening of their new state-ofthe-art office in Bucerias. Thanks to the support of local residents and their winning strategy of building community while introducing innovative technology, Elements is here to push the real estate landscape into the future. They will be the first real estate company in the Bay to power their offices with solar energy. Elements is adding yet another “element” of technology to improve the community. Visit Element Realty Group’s new office in Bucerias Centro. It boasts beautiful spaces to sit and
enjoy a cappuccino on a shady bench and relax. Elements Realty Group is setting the bar high for the 2018-2019 season. John and Christie envision expanding their community through recurring events like “VR Happy Hours.” Folks can connect, have a glass of wine or a beer, and “see fifteen properties in about fifteen minutes,” while Elements continues to pioneer technological advances in Mexico and make real estate so accessible! Stop by the office and take a virtual tour of some properties. Grab a copy of their new Bucerias Map. (Even the local fire and police services use them!) Begin your next adventure today. If you’re buying or selling anywhere in the Bay, look no further. With over a decade of satis-
fied customers, Elements is your best choice. Their entire staff wishes to extend a warm thank you to all the Vallarta Tribune readers who voted them #1 Brokerage in the North Bay. That was even before opening their fancy new office! John and Christie are enormously grateful to the clients who’ve entrusted them with their real estate needs for a solid decade. To all who consider Elements Realty Group family, thank you! Elements continues to look to the future as they imagine the next ten years and all that it will bring. As John so poignantly summed up, “Because of our caring community, we’ve enjoyed living out our greatest adventure. It’s an honor to help others take the leap into living theirs.”
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Ask a Realtor
tions must be made before a notary public in order to be valid. If the document is not notarized by a Mexican notary public it is not legal! You should think of the Notario Publico here along the same lines as a Judge in the United States. As part of the closing process, the Notario Publico will verify the following official documents, which are required by law for any transfer: A no-lien certificate from the public property registry, based on a complete title search; A statement from the treasury or municipality regarding property assessments, water bills and other pertinent taxes that might be due; An appraisal of the property for tax purposes. The Notario Publico is also authorized to calculate and collect any Capital Gains taxes generated by the sale. The Notario will also issue an electronic invoice after the sale. Although this may look like “gobbledegook” to you, this electronic file is a VERY important document; it is used to verify your purchase
price and set a basis for your capital gain tax should you ever sell your property. Any sales since January 2014 are required to have this invoice or CFDI; otherwise your basis will be zero. So if you purchased a property since 2014 and do not have this electronic invoice, call your Notario now, request it and keep it in a safe place! The Notario Publico also is in charge of registering your new deed with the public registry, and issuing a preventative notice of the sale with the Registry. Customarily, the Notario fee is paid by the buyer of a property as part of their closing costs. It is important to remember that the Notario Publico is an independent third party to your transaction. He will not be able to advise you on details in your contract such as: price, location, financing, and terms of sale. For that reason, I hope you have already sought the advice and counsel of an AMPI Realtor, who can act as your advocate. Many AMPI Realtors have formed strategic alliances with a Notario Publico liaison. These bilingual attorneys can assist with many of the above tasks at no additional expense to the buyer. Best of all, they live or die by the concept of “Customer Service”, making them an invaluable part of your closing process! Thanks to Jessica Riedesser at Riedesser y Asociados for help with this answer.
your instructions. The property is NOT an asset of the bank, it is your asset. As Beneficiary, you have the same rights, use and enjoyment as a Mexican National, and can sell or rent your property without restriction, and keep the proceeds. You may also transfer your rights to a third party or pass it on to named heirs. The bank charges the person desiring the Fideicomiso an initial fee of approximately $500 USD for signing the agreement and establishing the Trust and a yearly fee of approximately $464 USD for administering the trust. You are free to choose which bank you prefer to hold your bank trust. Your local AMPI Realtor will be able to coordinate all the paperwork involved in
this process. You will just need to provide photo identification, and fill out a very basic bank form with your personal information and instructions on how you wish to hold the property and who you want to pass it to in the event of your death. I recommend using a bank that will lock in the administration fee, and has a local English speaking representative. You can also request a clause be added to your trust allowing you to attend and vote at the Homeowners meetings without getting a proxy every year from the bank. Some people complain about the trust process, but there are benefits: As part of the closing process, the bank’s attorneys review the deed and are able to sign on your behalf. It is always nice to have another set of trained eyes review your deed before signature. Also, the trust separates the asset legally, much in the way a “living trust” does in the United States. Finally, in the event of the death of the buyer (beneficiary), the property automatically reverts to the substitute beneficiaries, avoiding lengthy and costly probate procedures.
Michael Green, Boardwalk Realty Michael@boardwalkrealtypv.com
Michael Green is the Broker of Boardwalk Realty. Active in local and national Real Estate boards; published author and acknowledged expert on Puerto Vallarta Real Estate, Mike moved here in 1997 to take advantage of the unsurpassed lifestyle PV offers. E mail Mike at: Michael@ boardwalkrealtypv.com
Q
: I just bought a condo in Nuevo Vallarta and the seller says we need to go to a Notary public. Why is this? We already have a signed contract of sale; does this have to be notarized? John R. New York A: There are profound differences between a Notary public in the US and the Notario Publico in Mexico. In the US, the public Notary might be a bank clerk, secretary at the office, or practice any other occupation. In Mexico, the Notario Publico must have a law degree, verifiable experience, pass a rigorous exam and is appointed for a lifetime term by the governor of the state. Typically there is a Notario Publico for approximately every 30,000 in population. In Mexico, all legal documents, such as deeds, wills, powers of attorney, constitution of corporations, establishment of trusts and other legal transac-
Fideiocomiso
Q
: Can a USA or Canadian citizen own real estate in Puerto Vallarta? Peter H.
Seattle A: Hi Peter, you sure can, by placing the property in a bank trust, or “Fideicomiso”. Title of the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. There are three parties to the trust: The seller of the property is the Trustor, the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary (Fideicomisario.) The buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public. The Trust is currently for a term of 50 years and can be renewed for additional 50 year terms. Many people have the mistaken belief that the trust is similar to renting, or a lease, this is NOT the case! The bank holds the property in trust and follows
April 26 - May 02, 2018 www.vallartatribune.com
real estate
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Welcome Home
Sheryl Novak
sa.novak@solutionsmexico.com
Sheryl Novak is an expat Canadian who has owned a home in Mexico for over ten years. She is the owner of SOLutions Mexico and The Furniture Store by SOLutions Mexico. She is an expert on sourcing all styles of furniture for all sizes of budgets, in Mexico.
Easily furnish your home in Riviera Nayarit
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ears ago, there were not a lot of options here when it came to furniture and décor stores. Luckily, you no longer need to drive the four or five hours each way to Guadalajara, nor try to navigate the traffic on the four-lane roads in Mexico’s second largest city. For those who want to leave the job to others, Riviera Nayarit offers a plethora of interior designers. Interior designers generally charge a flat rate for their design consulting services. There is also a mark
up added to items you purchase through them. This option appeals mostly to discerning clients and those who have little time. Interior designers own many of the furniture specialty shops in the bay. In addition to having someone with a design eye create your look, they also coordinate shipping and delivery. Department stores here now offer some furniture and décor. Their offerings gear more towards the styles and budgets of Mexican
buyers – either higher end European ultra-modern or low priced ultra-basic. Ultra-basic pieces are focused on price point, not on comfort or quality of manufacture or materials. Although the prices are low, you will most likely need to replace it in short order. If purchasing higher end European styled items, wait for semi-annual sales to get the best price. Department stores coordinate shipping and delivery often free of charge. Big box stores are a great place to get your household goods such as linens, kitchenware, small appliances, and electronics. Most of their furniture is made from lower quality materials and processes. Fake leather (tacto piel) sofas, low-grade particle board dining sets, and PVC outdoor furniture do not last in this climate. They will need to be replaced within one to two seasons. Most stores have on-site delivery companies with reasonable prices. Carpenters offer the do-it-yourself option for furnishing your home. For some, it can be a great experience. For others, it is frustrating especially when they need to chase to get updates and the work completed. Provide them a detailed drawing along with precise measurements. The most significant downside is you may not get what you envision. The upside is you could end up with a one-of-akind piece. Always get recommendations and referrals for carpenters. Be cautious of side-of-the-road carpenters who use pine wood and old car oil to stain it. Most carpenters deliver right to your home. Online furniture stores are the newest option available. The easiest way to shop, you can buy from the comfort of your home north of the border and have everything delivered before you set foot in Mexico. The downside is you may not be able to try out or see your items before you order them. Some online stores are setting up show stores where you can see sample pieces, covers, and finishes. Make sure the company offers a good return policy and check for referrals and references from previous customers. Online furniture stores handle shipping, generally to the ground floor of your condo or casa. Today, there is a lot more to look at when it comes to furniture and the prices are pretty much the same as in Guadalajara. On behalf of all of the furniture retailers here, thank you for your support of local businesses. For a map of furniture retailers or info on furniture tours, email me at furniture@solutionsmexico.com
April 26 - May 02, 2018 www.vallartatribune.com
The Big Chalupa
Orlando Gotay, Tax Attorney tax@orlandogotay.com
Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the federal and state tax matters of U.S. expats in Mexico. He can be reached at tax@orlandogotay.com or Facebook: GotayTaxLawyer. This is just a most general outline, and is of course, informational only and not meant as legal advice.
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henever something major happens in life, the taxman is never far behind. Buying property is one of those “somethings”. It’s slightly more special when outside the U.S. Here’s a non-exclusive primer on some U.S. tax aspects you may wish to consider when purchasing a dwelling for your use in Mexico. If you rely on Home Equity Loans or second mortgages to fund Mexico home purchases, know the new tax law curtailed deductibility of those. But the IRS clarifies the law: independent of what the loan is called, it could be deductible if used to buy, build or substantially improve the taxpayer’s home securing the loan. If your Mexico home is not loan security, the interest is not deductible. Mexican mortgages: your interest could be deductible. We just lost the foreign property tax “predial” personal deduction for individuals. Now, predial is only deductible if the property is used for a business or for the production of income-- rent. Those who purchase and later rent out must depreciate (it’s an allowance for wear and tear) the property and take annual deductions for it (later “paying it back” when the property is sold). The new law changed the time period for foreign residential property from 40
to 30 years, leading to higher deductions. Don’t forget to depreciate if you must. Documenting your purchase price is a critical. U.S. taxes are paid in dollars; make sure you document the Peso exchange rate. As back home, improvements call for an adjustment of “basis” in the property. It should be documented during the life of the property. You would be amazed at how many people try to reconstruct these numbers, years after the fact. Did you inherit the property instead of buying it? Get it appraised. You may need to report the inheritance if it came from a non-U.S. person. It may not be taxable, but reportable. If your Mexico property meets the test as your “principal residence” the federal gain on its eventual sale can be excluded from your tax, just like a U.S. home. The same limits and rules apply. If you are wiring money from the U.S. to buy, remember Foreign Bank Account Reports. And do yourself a huge favor: unless you have a really, really, very good reason, stay away from setting up foreign corporations to hold real estate. A well-structured fideicomiso (land trust) would be a far better way to go. Now, welcome! Enjoy your Chalupa!