Buying property in Mérida and Yucatán is different than what you may have experienced in your home country. There are laws specific to Mexico, procedures that you may not be used to and terms that are unfamiliar to you.
To help you sort things out, here are a few things you should be aware of if your considering buying in our part of the country:
Rectificación de Medidas (Rectifying Property Measurements)
When and if a rectification of the property is necessary, it can be time consuming and will most likely delay the planned closing. Essentially, the escrituras on file with the Catastro and the seller’s copy of escrituras often have a smal difference in the meets and bounds measurements stated in the documentation. If the property is to be held in a fideicomiso, the bank requires that the escrituras of the seller and the escrituras filed with the Catastro be the same. If they are not, the Catastro will need to send an engineer to the property to re-measure the property and record it properly.
After the engineer re-measures and issues the new measurements, the owners of all the properties that bound the re-measured property, must, literally, “sign off” on the new measurements. This can be a long and arduous process, especially if the property has numerous neighbors that adjoin the property.
Annual property taxes in the state of Yucatán – and Mexico in general – are inexpensive. Here is an example: A property with an appraised value of $1,000,000 pesos will be assessed annual property taxes of less than $5,000 pesos per year.
It is important to remember that property taxes are based upon the Catastral appraised value of the property. The homeowner should receive a predial (tax bill) every year that shows the property tax that has been assessed. Usually, if you pay the tax early, you receive a discount.
Capital gains taxes (called ISR or Impuesto Sobre la Renta) are assessed when you sell a property. The current rate is 31 percent of the gain. The calculation used to arrive at the amount of tax owed will depend upon these factors:
1. Years of ownership
2. Citizenship or immigrant status
3. Title held in fideicomiso or corporation
4. Square meters of property
5. Square meters of construction
6. Electrical or telephone receipts in the owner’s name that reflects the address of the property
7. Proper ID of the seller that reflects the property address
8. CURP, RFC or tax ID number
If the property qualifies as your primary residence you can usually avoid a substantial amount of the ISR. To qualify for this exemption, as a foreigner, you will need to have the following:
1. A current resident visa that reflects your name and address as it appears on your escrituras/fideicomiso.
2. Electrical (CFE) and/or telephone receipts that also reflect the name and address recorded in the escrituras.
3. The property must be held in a fideicomiso (corporations do not qualify to avoid the ISR tax).
Currently, a homeowner who qualifies to avoid a percentage or all of the ISR is allowed to exercise that privilege once every four years.
Corporation capital gains taxes are more complicated. If you are holding title by utilizing a FOMC (Foreign Owned Mexican Corporation) you are going to definitely want to employ a good accountant. They will be able to help you reduce your ISR debt when you sell.
Typically the buyer will be paying the closing costs. One exception to this general rule is when a foreign person is selling their home to a Mexican National or someone who holds Mexican citizenship. If the seller is holding title with a fideicomiso, they will need to pay a fee to the bank to cancel the fideicomiso when the property is transferred to the buyer.
Here is a list of closing items the buyer must pay:
- Avalúo Bancario
- Derecho de inscripción
- Aviso de Relaciones Exteriores.
- Impuesto Sobre la Renta. (plusvalía-vendedor)
- Impuesto Sobre la Adquisición de Inmuebles. (2 percent Municipio)
- Impuesto al Valor Agregado.
- Derecho sobre Escrituras Públicas.
- Certificado de Libertad de Gravamen.
- Certificado de no adeudar Impuesto Predial.
- Certificado de no adeudar Cooperación Municipal.
- Oficio Catastral (división, unión, otro).
- Avalúo Bancario.
- Registro Público: derechos. Grat.
- Catastro F-2.
- Otros: Constancia Agua Potable
- Notario y Abagado
Generally speaking, closing costs will run as low as 4 percent of the purchase price, but can run higher depending upon the vehicle used to hold title and the “valor” value of the property.
These are unfamiliar terms and procedures to most of you. If you have any questions, please contact me directly at firstname.lastname@example.org.