The Bay of Banderas real estate market is coming back from the major downturn we experienced over the last decade. Puerto Vallarta and the rest of the Bay just finished the best year for volume of sales transactions since the great recession began in 2008.
The most popular properties are new condominium projects throughout the Bay, but the hottest sales areas have been Puerto Vallarta’s Zona Romantica and the south shore.
We also are seeing more buyers looking for homes in higher price ranges than in prior years. Previously, we have seen increases in luxury rentals in place of a large demand for the purchase of luxury villas. We continue to have buildings that, because of location and amenities, enjoy their own comps and perform much better than the averages.
We are optimistic about 2018 and believe this year can be a great one for sales of all properties. We should have more tourists enjoying our Bay of Banderas towns from Chacala in the north to Boca de Tomatlan in the south. An additional incentive will be currency exchange. The peso is a great value against stronger currencies like the U.S. and Canadian dollars.
As with all good times, though, you should continue to be careful and thoughtful before making serious purchase decisions and spending a lot of money on real estate in Puerto Vallarta, or anywhere else in Mexico. Common sense should prevail. There are seriously good reasons to buy property in Mexico, and for North Americans, investments have specific benefits.
For example, there are some attractive incentives when owners report their rental income. There is an option for a small business to phase-in payment of taxes, with the first year none being due, second year 10 percent due and so on for the first 10 years. Room tax or IVA may be due, but income tax can be phased in. Deductions are important to know and use and registering with the tax authority and immigration is required. Reporting income is required each month, whether in zeros or amounts. Some persons do this themselves, but most use local accountants, which we highly recommend.
It also is important to know what deductions are allowed in Mexico. Your primary deductions for expenses are travel, utilities, maintenance and repairs. All deductions should be taken. You may also be able to take deductions in your home country as well as Mexico for the rental of your property here.
For rentals, transparency versus privacy is an issue. The use of Internet-based platforms, such as Facebook, Airbnb and VRBO, has enabled the government to see who is earning money and what taxes will be owed.
We were told recently by accountant Pedro Covarrubias that Mexico is negotiating with Airbnb to have the 3 percent room tax paid. Knowing the percent of income to collect the 3 percent will enable the government to also know what amount of rent is charged per night, week and month. All countries can monitor this because of public rental sites. You cannot be invisible when you are renting your property.
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.
