We make choices every day. They need to be informed ones.
President Kennedy said: “We choose to stay with the comfort of opinion rather than the discomfort of thought”.
A recent discussion with a seller made me realize she needed to become aware of misunderstandings which could happen by her not understanding Mexican immigration and tax requirements.
In this local real estate market, nationals and foreigners should be registered to do business and pay taxes to Hacienda or the Mexican IRS. However, there are people who choose not to be registered and illegally earn income they do not report.
You want the real estate agent who lists your property to be legal and professional.
You need to know if he/she has the knowledge and experience to assist you. The only way you will know is to ask questions and do your own investigation.
Selling real estate is a job which all nationals can do, regardless if they have any expertise in the area or not. A foreigner should have written permission from Immigration to sell real estate here. His visa should verify he is legally able to work in this business activity.
If a national or foreigner is not registered with a Mexican ID or immigration visa, there is a good chance they are not registered in the tax system. If their income is not reported here and they cannot give you a factura, you as a seller cannot use the expense of a commission as a deduction against your capital gains tax.
These unregistered aliens (foreigners) and nationals may be called “coyotes”.
When an agent from the US or Canada sends us a referral, we explain that we can pay a certain percentage and must withhold tax. (It is rare but possible that a referring real estate agent outside of Mexico is able to give a Mexican tax receipt.) The professional referring agent usually understands and accepts a deduction for tax before receiving his net amount. These professional agents are aware of real estate rules and ethics. We are very appreciative of their referrals and professional understanding of the cost of doing business.
A coyote may be your neighbor who lives here part time or is retired. He may expect a commission if he sends you or your agent a buyer. Why should the person who can’t get a referral fee in the US or Canada because he is not a real estate agent there, charge a fee in Mexico and pocket it without paying any tax? He is working illegally and can be deported.
Ultimately it is your choice whether to work with this type of person.
This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.Harriet Murray