It is hard to know what you need in the way of documents when you decide to sell.
Your paperwork trail needs to satisfy the notary. He has to have everything he needs to establish a clear picture of you as the owner. And if you are a foreigner buying in a trust, the trustee will be very particular about all documents.
Documents You Will Need:
- Your original escritura deed from the notary or the closing coordinator. You would be surprised to find out how many owners never pick up their original escritura.
- (Optional) Your original receipt (factura) for expenses from the notary. This receipt shows all the expenses you paid the notary as part of your closing costs. Some of these expenses can be deductible when you sell. Keep it with the escritura in a safe place.
- CFDI or encrypted factura or receipt showing your purchase price. Beginning in 2014, you will have received the electronic encrypted file which shows the purchase price you paid for the property. This factura is sent via internet by the notary.There will also be a pdf with the encrypted file, so you can read what the xmls file says. This file will be used by the government when you sell to enable you to claim this price as your basis before capital gains is computed. Without this file, you will not be able to claim your entire purchase price.
- Your current original or copy of your predial: property tax statement.
- Your passport and another photo/signature ID.
- A utility bill or bank statement with your name and address matching your driver´s license.
- You need to have an estimate of your capital gains before you sell the property.
Your gain or loss will be the difference in the Mexico peso value when you purchase and when you sell. If the pesos are stronger when you sell, your tax will be less against the US dollar. Now, the peso is weaker and the gain in pesos is higher, so you most likely have a gain.
Deductions to estimate when you are preparing to sell:
- Real estate commission (less IVA)
- % of value of permanent improvements or reappraisal by the notary (he will charge extra for this service).
- If you have a Constancia of Fiscal value, you may have a deduction against your gain. Your eligibility to have a partial deduction with a CF will be based on where you declare your obligation to pay taxes on your world-wide income. SAT (Mexican Tax Authority), is very strict about this.
If you are a fiscal resident of Mexico, it means you are creating some type of business to receive income, so you are also paying income tax, besides property tax, etc.
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