Any real estate investment can prove to be a little complicated or complex, even for the most experienced investor. When you take that investment international, you wind up with a whole new set of rules, laws, and regulations regarding real estate investing, buying, and selling. When you want to invest in something as wonderful and gorgeous as Mexico Real Estate, you need a company that is on your side. At Realty Executives Costa Vallarta, we have a dynamic team of Mexico real estate agents so that you can trust that your investment transaction goes smoothly and is a secure investment.

When you work with a Mexico real estate agent or company, you’re not getting everything that you need to make the most of your investment.

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Many foreigners have the dream of coming to Mexico, buying a piece of land, designing a home built to their tastes, and living their dream along the ocean or on a majestic mountain side….at half of the price it would cost in their home country.
Is this a fairy tale? NO, not completely. Below is a story on how one Canadian couple chose to buy land in Tulum Mexico and are taking on the challenge of constructing their Mexico dream home. “Many people from my home town said we were crazy, but we surrounded ourselves with qualified help, we did our homework and we discovered great investment return potential in the Tulum real estate market, a project in an ideal neighborhood, and data that helped us make our decision to build versus buy.” stated Craig a proud new Canadian owner of land in downtown Tulum, Mexico. With the current low quantity of services and infrastructure available in this fishing village and projected new jobs coming to the region these factors are catching the attention of many buyers and investors. The number one factor which entices hundreds of Mexican foreigners to purchase land in Tulum is the investment potential of the region.

In Tulum Mexico, real estate has been a hot topic, given the quick growth being experienced and with the history of the booming towns of Cancun and Playa del Carmen, odds are that this fishing village will have the same success and demand witnessed in the past 15 years in these two nearby northern neighbors. “We did our due diligence, and researched hard on the internet till we found a good, experienced Mexico real estate agent of the area. With our criteria in hand, the agent led us away from where we had initially started our search in developed and established municipalities up north and he took us to this small village called Tulum” explained the couple. Existing condos and home properties in Tulum are still very scarce. At the same time, there have been increases in the constructions of hotels and resorts along the southern half of the Riviera Maya where Tulum is located. In the past couple of years, the quantity of hotel rooms in the Riviera Maya surpassed the number of units located in Cancun making this zone one of the highest growth potential areas in the state of Quintana Roo. A new double lane highway has been under construction and is projected to be completed in the summer of 2009 which will connect Playa del Carmen with their southern neighbor. “All of these factors gave us the confidence that our investment into Tulum land should create great appreciation returns” added Craig. The decision of where to choose along the Mexican Caribbean was their first task and led to their second important question; where should I buy land in Tulum?

As suggested by many experts in purchasing residential properties, a comparison of the neighborhood’s pros and cons was prepared and evaluated. The criteria were jotted out along with reviewing a list of those items the buyers thought would be required to make their lives comfortable and happy while living in Tulum, Mexico. Craig shared his thought process “We began evaluating the different locations around town ideal for our needs and we ended up investing into a rather large planned community that had an existing building restrictions code.”. Tulum is a new municipality and there still exists many properties with unclear legal deeds. There have been instances of transfers of physical possession, yet the legal transfers are unable to be completed given the lack of proper transfer rights. There also exits several projects, where developers have gone through the process to privatize larger sections of land, subdivide, develop the infrastructure, and begin selling the smaller individual parcels. “I wanted to focus my attention to the designing and the building, I did not want to go in having to worry about my title, I am hundreds of miles away and the last thing I wanted was a legal obstacle, so we decided to purchase a higher priced property compared to other land for sale in Tulum” Although Craig bought within a planned community, many other foreigners have elected to purchase properties in the downtown zone and direct from individual owners. There are parcels of land with and without structures that are located in the downtown area that already have existing electric and water services. Other areas in the southern half of town are within the planned zoned areas of the municipality but the area has yet to develop paved roads, no water nor electricity services exists. A large concentration of foreign buyers has built in this area. “They are betting on the future and the odds are in their favor” states Hector Moreno a real estate broker with many years experience of working in the Tulum region. “The city has to grow, and the city will need to begin paving the roads and adding the basic services, when this happens, the property values will go in one direction and that is up”. Many people are predicting a strong growth in the Tulum real estate market, so what type of properties are the most appealing to the foreigners coming for these purchases and investments?

One of the difficult questions that Americans and Canadians contemplate when buying into the new Tulum market is which type of property will best meet their expectations and dreams. Oceanfront property is usually the number one choice and if this is not in the budget a common response is “find me the closest possible real estate to the Tulum beaches.” With a population of only 15,000, this new municipality is still a quiet little village. There are only a hand full of Tulum condo projects available for sale and several of these are in pre construction stages. “Single family homes for sale in Tulum? I can only think of 3 or 4 and these are in the Region 9 area.” Was the response from Andy Welbourne an agent whose job is to find properties and represent buyers in the Riviera Maya region “These homes are good quality, new constructions and very unique designs with strong Mayan culture influence. A lot of the non-Mexicans like that style for this area.” When buyers choose the option to build, it allows the owner the flexibility to create a living dwelling specifically to his habits and likes. Owners can choose the location and size of the window that looks upon the back yard or pool for example. Changing the layout of the patio or the location of the columns in the last minute are options that can occur, and such adjustments can give your retirement home those special personal touches that will return hours of future living comfort and enjoyment. “We also felt much more at ease with the idea that we are going to know the quality of materials that will be inserted into our winter home” said the Canadian couple. Craig added the fact “I had a special two and a half car garage designed in our home. The half car slot is where I plan to park my little golf cart with electric outlets and other special features that I asked the architect to add” These issues were the decisive points that led Craig and his wife in their decision to build in Tulum and have their Mexico home constructed to their particular tastes and needs.

There is a growing quantity of Americans and Canadians who are buying Mexico homes and making the move to the warmer climates of this southern country. Tulum is one of those regions experiencing the first stages of a population boom with a large amount of those being Mexican foreigners. Many of these buyers are betting that with Tulum’s favorable future expected increase in prices, the municipalities limited existing neighborhood options, and the personal benefits of designing their own home has led to an increasing amount of foreign real estate investors to choose “buying a lot and build” rather than “buying a finished residential home”.

Linda Neil is a broker/owner of a real estate agency in the La Paz Mexico real estate region, she shares some valuable insight on how to administer your taxes south of the border.
There is a lot of misinformation on this subject, such as:
“If you become a Mexican citizen you have no tax to pay when you sell your Mexico real estate”……
or “With a FM-3 and some receipts, you will be exempt from paying capital gains on the sale of your house in Mexico”
Neither scenario is completely correct!
Mexican citizens must pay exactly the same tax as any foreigner, whether the property is located in the La Paz Mexico real estate region or whether it is located in Oaxaca, Oaxaca. No exemption is permitted for the sale of a vacation home, no matter what immigration status the seller has. As of January 1, 2007 an exemption is granted on the sale of a primary residence. This exemption applies to Mexican citizens and any foreigner whose TAX RESIDENCE is Mexico.
The Law of Tax on Rents (Impuesto Sobre La Renta), Article 109, Fraction XV provides for exemption for the sale of a personal residence. An exemption of 1,500,000 UDIS is permitted, provided other requirements are met.
UDIS….. And what is a UDI???
A UDI (Unidad de Inversion) is, in English, an investment unit. This is based upon a price-level adjustment established by the Bank of Mexico in 1995 to assure that loans denominated in UDIs maintain their purchasing power and provide a real rate of return in the local currency of pesos. Because the peso has been quite stable over the past years, the UDI value does not change significantly now. The rate is published daily by the Bank of Mexico. In 2007 the rate went from 3.789867 in January to 3.926066 in December, a change of less than 1%
In other words the deduction of 1,500,000. UDIS in December, 2007 is 5,889,099 pesos, or about $555,000. US dollars.
Full Exemption: per Article 109, Fracc. XV (Art. 129 RL ISR)
When the sales price of the property does not exceed 555,000. USD dollars, the property can be exempt from the capital gain, or income tax, provided all conditions are met.
Partial Exemption: (example when the sale price exceeds the deduction) A house sells for 700,000. USD
Less 1,500,000 UDIS 555,000 USD
Taxable 145,000. USD, less any permitted deductions such as capital improvements. The tax rate is based upon a sliding scale ranging from 3% to 28%.
In order to qualify for the deduction, the seller must prove this is his/her principal residence with utility bills, bank account and credit card accounts with the same address, electoral card or immigration document showing permanent residence in the country. Title must be in seller’s name or in spouse’s name. Seller must also sign an affidavit that this is his/her principal residence and the transfer must be made before a notary public.
A small house on a large piece of land will take into consideration only the construction (supported by building permits) and the adjoining outbuildings, not the excess of the land.
Only one property per annum will be exempt and seller must manifest that this is the first transfer of a personal residence in the calendar year.
Please remember, and don’t be misled: an exemption allowing exclusion of capital gains is provided to residents who have lived in a home in Mexico as a primary residence. This exclusion is intended to benefit residents, whether nationals or foreigners, of Mexico, not those who own second homes in the country.
In Mexico, the owner’s basis in a property is the value declared in the deed. In the past it was common to declare the appraisal value which could be much lower than the amount actually paid. This is the very important reason to have the price you paid for the property declared in the deed. Be sure, however, that this is a condition of your offer to purchase and is accepted by the seller when you make the offer.
By law the amount declared in the deed must be written in Mexican pesos. It should also be declared in US dollars, if that is the currency used in the transaction, at the rate of exchange on the date payment is made.
If this important point is overlooked when the property is sold, the capital gain tax can be enormous!

Mexico makes a good retirement state for many senior citizens, who prefer to stay at warm place. With illnesses like arthritis kicking in, elderly people like to think of places, where they can relax under the sun. So, those who are planning to invest in Mexican Real Estate, particularly retirement houses, the time is ripe. At this juncture prices of retirement properties in Mexico have gone down tremendously increasingly the Return on Investment.

Not all Mexico Real Estate can be considered to be a good investment for seniors; you can find many retirement homes and properties that are not well maintained. Besides, homes that require a low down payment may interest you, but in reality these homes may have several problems like pest infestation, leaky roof etc. So, first thing that you should consider while buying any sort of home is the location instead of price. You should seek answers to such questions, like the senior community that you are planning to invest in near to city downtown or other recreational centers? The means of transportation are easily accessible or not?

Apart from location, property also needs to checked properly, to see how the community is operated. There are good bargains in Mexico properties, but it may lead to situation where you are spending dollars but the house may not in livable condition or large amount of money will have to be spent on repairs and renovation. Do check the premises personally and ensure that there are plenty of activities for seniors. And again look-out for someone who has knowledge of architecture and some home improvement techniques to check the condition of the roofs, walls, electricity, water, drains and other important matters. Always remember that there are many homes for selection, so do not even settle for something that is not in good and proper condition.

There is considerable rise in the development of new retirement communities in Mexico. So, if you are not interested in old Mexico Real Estate, you can always check new ones being built. And since decline in the prices of home, you can find a better home in new communities in good bargain. But if you are not a senior with no plans of retiring, you can think of retirement homes a valuable investment. And with many Americans reaching their retirement age, you can always resell your property sooner or later. Regardless of the recent economic downturn, any property investment in Mexico should be seen in context of long term scenario. Do check the premises personally and ensure that there are plenty of activities for seniors. And again look-out for someone who has knowledge of architecture and some home improvement techniques to check the condition of the roofs, walls, electricity, water, drains and other important matters The prices may be low right now but will surely rebound in couple of years when the US economy comes out of recession. So make an intelligent choice and buy a Mexico Property for your secure future.

MexicoSummer.com offers personalized assistance with Cancun Real Estate, Playa del Carmen Real Estate- in Mexico. The #1 Mexico Real Estate site offers a full range of Real Estate sevices for luxury vacation Villas, Condominiums in Mexico. If you are looking for any property in Mexico, just contact us. We will find it for you!