Capital Gain Laws, For Sale By Owner and Unlisted Properties in Mexico

1. 

   
   The upward trend in the real estate market in Rosarito-Ensenada and more stringent capital gains laws put a damper on “For Sale by Owner” and Unlisted Properties
2. Changes in capital gains laws warrant the use of a knowledgeable real estate agent when conducting transactions in México
3. Changes in capital gains laws in México make for a more robust real estate market in Rosarito-Ensenada
4. “Unlisted Properties” and “For-Sale by Owner” are not the way to go when you go to Rosarito

As Mexico´s´ real estate market continues to recover, real estate laws have changed, making operations such as “For Sale by Owner” and “Unlisted Properties” not the best strategy for buying and selling properties in this country.

The real estate market in the Rosarito-Ensenada Coast is still moving steadily up and gaining momentum. HGTV recently aired two episodes portraying American buyers as they acquire their dream properties in Rosarito; there is talk about new developments coming and inventory under $200,000 is becoming scarcer every day.

There is a growing trend of Americans packing up and moving to Mexico, looking for a better lifestyle at a lower price. All in all, Rosarito is proving to be a good investment for retirement and second homes.

All this has come with more regulation, which only makes for a more trustworthy buying and selling environment. The old days when “For Sale by Owner” and “pocket listing” were thought to be a quick way to save a buck (or to earn a buck, in the agent´s case), may soon be over. Capital gains laws have recently changed in Mexico. Not knowing what this means can end up being the more costly option for buyers and sellers.

“Sellers need to be very informed about their capital gains, immigration status, and tax liability,” says Max Katz, CEO and owner of the Baja Real Estate Group. “And buyers, on their end, need to make sure that these issues have been addressed before making an offer and sitting at the closing table. If someone tells you to under-record your purchase, run away! You don’t want to take on the burden of someone else’s capital gains”.

“Pocket listing are in the same category, the only difference is these sellers are not out there to sell at market value. Rather, they are looking to make top dollar, and again, no one has checked the title”, says Katz. “This does not mean that anyone is trying to be dishonest or trying to cheat you as a buyer, they are just unaware of the real estate laws in Mexico”.

But this lack of awareness can put you in a difficult situation: “We got to the closing and right then and there, the seller is told they have $30,000 in capital gains”, says Mary (not her real name). “So he refuses to pay. What do you do: Do you walk away? Do you under record?”

The answer: NEVER UNDER RECORD YOUR SALE PRICE to save someone else´s money.

Another situation you might encounter when dealing directly with the seller or on a pocket list transaction is that many sellers who bought land and built a home afterward, never record the house to their title, thus triggering unnecessary gains.

To avoid all of these uncomfortable situations, it is recommended that buyers get assisted by a professional and experienced broker: Someone who knows your needs knows the inventory, and understands the “comps”. The same works for sellers: List your home at a sellable price -if you want it to sell. Make sure your paperwork is in order, and know your capital gains – if any, upfront, so you know how to budget.

Buying property in Mexico is not difficult: just different. Thousands of successful home-buying operations and investments are made every year. These buyers and sellers have made sure to use an agent with years of experience, a strong Broker with a good honest track record, and the ability to research properties before you enter into a contract.

The Baja Real Estate Group has come up with a form for prospective home sellers that makes it easy for sellers to start the process. It is easy to use, and you can do it online: Just fill it out and an Agent will meet with you to discuss the marketing techniques that will be used to promote your property, give you sales data of the area, and address any concerns.