[headline h=”1″]Frequently Asked Questions about Purchasing Real Estate in Puerto Vallarta[/headline]
Purchasing real estate in Puerto Vallarta is really not too different than purchasing anywhere apart from some logistical issues such as arranging bank trusts and the use of public notaries. Below are questions frequently asked (or should be!) For more purchasing information, be sure to read the Concise Guide to Purchasing Real Estate.
Click the questions to reveal the answers.
[toggle_content title=”Can foreigners buy property in Puerto Vallarta?”]Yes. Puerto Vallarta, being a coastal community, rests within what is known as the restricted zone, an area extending 50 km (30 miles) inland from the ocean. This “restriction” means the purchase must be done via a Mexican entity.
There are two legal ways one can make a purchase. The most common and preferred method is through a bank trust, known as a fideicomiso, that provides the buyer with the same rights, privileges and responsibilities that come with direct ownership. As the bank is a Mexican entity, it circumvents the constitutionally-placed restriction. A bank trust enables a purchaser to potentially claim the property as a primary residence and therefore qualify them to not have to pay any capital gains taxes whenever the property may be later sold.
A second option is to form a Mexican corporation and to have the corporation purchase the property. While this option will lessen ongoing bank trust fees it won’t help in eliminating capital gains taxes later for a corporation is not a person and therefore could not have the property qualify as a primary residence.[/toggle_content]
[toggle_content title=”Are there any restrictions placed upon me when using a bank trust?”]The bank trust is a legal substitute for fee simple ownership with the Trustee as the legal holder of the property. As beneficiary, you have the right to sell your property at anytime without restriction. You may dissolve the trust upon sale or transfer your rights to a third party or pass it on to named heirs.[/toggle_content]
[toggle_content title=”For how long does a bank trust last and can it be renewed?”]The bank trust is available through various banks and they are initially set up in 50 year increments and can be renewed for successive 50 year periods, running in perpetuity. As they are not an asset of the bank, the Beneficiary can at anytime transfer the trust from one bank to another or even transfer the remaining balance of time to a new buyer.[/toggle_content]
[toggle_content title=”What are the costs associated with a bank trust?”]Setting up the bank trust is part of the closing costs and the ongoing annual charges vary from bank to bank with the typical charge being about $500 a year.[/toggle_content]
[toggle_content title=”How much are the closing costs?”]Closing costs will vary from property to property and from notary to notary, among other considerations. Some costs are fixed regardless of property price while most costs are a reflection of property value. It is fair to estimate them at 5% of the purchase price in general terms; however, the greater the purchase price the less of a percentage are those costs. A very inexpensive property would have a greater percentage of closing costs.
Before making an offer to purchase, it’s best to obtain an estimate to see what the actual closing costs will be on a particular property, something I would arrange as your representative.[/toggle_content]
[toggle_content title=”Are you licensed to sell real estate?”]There is no licensing of real estate agents in Mexico; however, I was fully trained and licensed in Canada prior to moving here in 1993. Over the years, I have attended many training courses through AMPI (the Associación Mexicana de Profesionales Inmobiliarios — the Mexican Association of Real Estate Professionals).[/toggle_content]
[toggle_content title=”Are properties cheaper in the summer?”]While there is a correlation between Puerto Vallarta tourism and local real estate sales, as the two do feed each other, and while economic forces drop hotel rooms in half during the summer season in reflection of the lesser number of tourists visiting, property prices are not affected from high season to low season. They trend up or down from year to year. I find summers a good selling time, though. Often enough, buyers are more on a mission then compared to those in the winter months when their priorities are more into getting a cursory look while not intruding too much on beach time.[/toggle_content]
[toggle_content title=”Isn’t it true that I’d get a better deal if I call the agent listed on the For Sale sign?”]You might, but don’t count on it. The agent representing the seller is contractually bound to get that seller the best deal possible. It’s not to say the selling agent cannot work with you in a fair and professional manner, as long as you realize where his loyalties lie.[/toggle_content]
[toggle_content title=”The agent with the most listings in town must be the best agent to work with, right?”]Think about it. Being a listing agent is not an easy job and the more listings one has to deal with the greater its collective burden. How much time do you think listing agents have for buyers when they have so many listings? Do you think they’ll be more motivated to show their own listings or those of others?[/toggle_content]
[toggle_content title=”Won’t I get a better deal if I go from shop to shop to see which realtor will give me a cut on the commission?”]The commission is already set at an agreed amount and is paid by the seller as detailed in the exclusive listing agreement between the seller and their agent. You might get a percent or two off the commission on a specific property in the process of making a deal but it’s highly unlikely an agent will offer a blanket deduction across the board. As most properties for sale are listed on local Multiple Listing Services, it means all agents essentially have access to the same inventory and therefore you don’t need to go door to door. Because the time to research and show properties is time-consuming, you’re best to find an agent you like and stick with that agent. Give them your loyalty and they’ll likely give you the same in return, knowing you’re not going down the street shop to shop in some false hope of cutting a deal.[/toggle_content]
[toggle_content title=”Do you have any listings of your own?”]I do, but just a few. I’m much more a buyer’s agent than a listing agent. Both jobs take a great deal of effort and there are listing agents here who do a great service to their clients. While my ethic is to work hard for whoever I represent, buyer or seller, my primary focus is on buyers, particularly first time buyers.[/toggle_content]
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[headline h=”3″]The Concise Guide to Buying Property in Mexico[/headline]
1. Introduction
2. Before the Purchase
3. Upon an Accepted Offer
4. After the Sale
5. FAQ
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