The first four-and-a-half months of 2018 have been good for Puerto Vallarta real estate. Through May 13th, US$123,946,641 worth of inventory has been sold at an average sales price of US$327,901. Homes were sold at 94.6 percent of list price after an average of 298 days on the market.
Our Bay of Banderas real estate market experienced more sales volume and a higher average sales price than last year for the same time period. Condos accounted for more than US$82,000,000 of all sales and homes over US$33,000,000.
Geographically, Centro South, South Shore and Hotel Zone areas are leading our sales volume with mainly pre- and new construction projects.
If you are thinking about purchasing a home in Puerto Vallarta or anywhere else in Mexico, here are purchasing guidelines to keep in mind:
- AMPI (our professional real estate association) has ethical and business rules requiring that all offers must be in writing, every offer must be presented to the seller and answered in writing whether the response is an acceptance, counter or rejection of the offer. THE ANSWER TO ANY WRITTEN OFFER MUST BE IN WRITING FROM THE SELLER, NOT THE SELLER´S AGENT. Obviously, the seller’s answer will be sent to the buyer agent/buyer through the seller’s agent. You, as the buyer or seller, need to insist on this procedure if you are not experiencing this transparency from your agent.
- In Mexican law, a verbal agreement may be recognized as legal, but real estate agents working with buyers and sellers on offers and negotiations have to conduct offers and sales in writing.
- Buyers and sellers must initial the pages they are agreeing to be part of the offer or agreement. If changes are written in, they need to be initialed also by seller and buyer in order to be recognized as binding.
- All names of the principals to the offer or the agreement must be printed or typed separately from their signatures, which are not always legible.
- At closing or shortly after closing, the notary must furnish the seller with a formal receipt (factura) of the amount of capital gains paid to the Mexican government by the notary. With a factura comes an xml encrypted code. You must keep this code for proof of your payment. As seller, you should also receive an informal receipt of the cost you have paid for a fiscal strategy to lessen the amount of tax you owe. You are owed two receipts.
- As the buyer, you must be sure you receive from the notary or condominium developer a pdf file and xml encrypted file stating the exact amount of money you paid as the purchase price. You must save these files. If you do not, you will not be able to use your purchase price as your basis when you sell. If you have little or no basis, you will pay capital gains tax on the original price you paid plus any gain in equity. This rule became law in 2014.
- You need to realize your purchase and sales price are recorded in Mexican pesos and the differences in these amounts creates for you a gain or loss, which in turn creates what amount of tax you owe the Mexican government, or if you owe no tax.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his/her own due diligence and review.
