When you decide to sell your Los Cabos Real Estate Investment
It’s important for sellers to know up front before entering into a Real Estate listing contract what the fees will be that will affect the net of the sale that you are going to put into your pocket. Don’t wait until you receive a buyer’s contract or get surprised at the closing table when you receive your seller’s settlement statement.
Just like when you purchased your property the buyer will be paying the closing costs and transfer fees for transferring your title into their name.
As the seller you will be responsible to have your Mexican Property Taxes, Home Owners / Strata Dues paid to the date of close. You can request to have your utilities pro-rated if they have been pre-paid or have your electricity and water meters read on the date of close so that from that date forward it becomes the responsibility of the buyer. Your annual trust fee for your title is one fee that cannot be pro-rated. If your annual trust fee is due in November and you close your sale in December you will still be responsible to pay the annual fee for one year regardless. The buyer will also be paying one year of trust fee’s up front in their closing costs.
Capital Gains tax also applies in Mexico. It will be calculated on any gain you make on the sale of your property. It will be calculated in pesos at the exchange rate of the day when you purchased your property and at the exchange rate of the day when you sell your property. There are deductions that can be calculated to bring the gain down. Such as your Real Estate Commission, you also will receive an inflationary credit for each year of ownership of your property, original Factura’s for improvements can also be submitted for consideration. It may be possible to have a tax strategy prepared in Mexico to further reduce your capital gain tax obligation. US and Canadian Citizens receive a tax credit for Capital Gains Tax paid in Mexico. Talk to your account before you list and sell as it’s possible you may also owe in your home country.
Lastly you will be paying the Real Estate commission that you agree to in the listing contract with your Realtor and Broker in Mexico plus IVA Tax. The Real Estate commission is a capital gains deduction for you and the Real Estate brokers involved will provide a facture to be submitted for the purpose of the deduction off the gain.
The closing time frame once you have an accepted sales contract typically is averaging 90 days. Throw in some financing on the part of the buyer and the time frame may be longer.
If your title is held by a trust bank such as HSBC your closing time frame may average 3 to 7 months or up to 1 year to process the cancellation of your trust and the transfer of the property to the buyer under a new trust bank. There are also additional fees to the seller related to the cancellation of the HSBC trust, expect to pay additional sellers fees in the range of about $3600.00 USD for this process. *Note fees quoted may change
If your buyer is obtaining an Escritua for their title and not transferring your fideicomiso beneficial rights your trust will need to be cancelled and each Trust Bank fee is different.
