Everything you need to know about buying and selling real estate in Mexico, Puerto Vallarta, and the Banderas Bay region

Buying or Selling Property in a Multi-currency Environment

Living with Multiple Currencies

Here, in Mexico we live within a multi-currency environment.

Our US dollars or other foreign currencies are most often converted into the peso rate when conducting commerce and business. If we are going to appreciate and benefit from this situation, we need to know the basics.

For example, even though we frequently pay for real estate properties in US dollars, the sales price and future calculations for the property will always be recorded in pesos. The exchange rate and the source establishing the rate are decided and used to record the purchase price in pesos in your escritura on the day you purchase the property.

Knowing that the peso will prevail in legal transactions should help you realize that your property taxes and as well as acquisition tax (when you purchase) and ISR or capital gains tax (when you sell) will be based on the peso value of your property when you purchased it.

Peso Value When You Sell Property

When you sell, your sales price will be recorded in the peso value of the day, and any gain or loss will be figured from this sales price in pesos. None of this tax gain or loss will be computed in US dollars.

If you bought the real estate when the peso was 10 and you sell when it is 13, you will have a gain or profit on paper. This is what is taken into account when your capital gains tax is computed.

The New Mexican Peso is the formal, legal currency which runs the country. Acquisition tax and other closing costs for the buyer are charged in pesos. The notary fee, tax appraisal, foreign permit and bank trust set-up and one year in advance are all in pesos. Even if the annual administration fee is in US dollars, your payment may be made in equivalent pesos.

Peso Value When You Buy Property

When purchasing, you will receive an estimated closing cost statement from the notary to pay the deposit to start the closing process. Your balance due will be the balance recomputed at the accepted peso rate the day before closing if your make your closing cost payment in US dollars. A typical situation is the day of closing the purchase price will be in US dollars and closing costs in pesos.

If you want to pay the closing costs in pesos which you buy yourself and wire to the notary, you can do this. Or you may wire US dollars and the conversion will be at the rate the wiring bank uses. In the last case, the receiving bank will make a conversion into pesos, and you cannot negotiate that rate. You should be able to negotiate the rate at your home bank or financial institution, so you may want to consider this option.

Condominium expenses are paid in pesos, even if the owners establish a budget in a foreign currency. Beware of this in HOA meetings. You cannot be forced to make condo dues payments in US dollars. You can convert your money into pesos when the rate is in your favor and wire the funds or write a peso check if you have a Mexican bank account.

Services such as TV cable and all utilities are in pesos; so, it makes sense to think about a plan to use the best exchange rates for your foreign dollars.

Important Points to Consider

You want to appreciate and understand that another country doesn’t have to follow your rules or expectations.

You want to lose the smallest amount or make the most you can on a currency conversion.

Putting some effort and time into how you change currencies will make a difference.

You have to change money, so why not be as intelligent about it as you can?



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



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