Transcript Document
Chapter 4: In This Chapter • • • • Introduction Foreign ownership Financing Commercial real estate • Residential real estate • Rental property • Licensing and brokerage Page 73 • • • • Government Legal system Taxes and fees Economy and business • What you need to know • Beyond the basics • Key contacts Map of Mexico Source: CIA World Factbook Page 74 Introduction to Mexico • Federal republic divided into 31 states and one federal district (Mexico City) – Estados Unidos Mexicanos • Largest Spanish-speaking country in the world – Indigenous languages spoken in the south Page 74-76 Mexico—The Rich Tapestry Page 77 Source: Wikipedia Mexico—The Rich Tapestry Source: Wikipedia Page 77 Mexico—The Rich Tapestry Source: Wikipedia Page 78 Mexico—The Rich Tapestry Source: Wikipedia Page 78 Foreign Ownership of Real Estate • • • • • Fideicomisos Ejidos Co-propiedad ownership Timeshares Fractional ownership Page 79-83 Financing • Mortgages by Mexican banks have increased since 1997 bank reforms • Cash transactions still common • Cross-border mortgages Page 83-84 Source: Asociación de Bancos de México, with data from Banco de México Commercial Real Estate • Maquiladoras • Resorts and hotels • Medical facilities – Access to health care for second-home buyers, retirees, and medical tourists – Other developments and housing Page 84-87 Residential Real Estate • Second-home market – – – – – – – Cancún Los Cabos Puerto Vallarta Ixtapa Acapulco Manzanillo Mazatlan • Non-resident Mexicans • Residential trends Page 87-89 Space Measurement Balconies and patios included Page 90 Rental Property • Pro-tenant • Provisions differ by civil law in each Mexican state • Leases – Mexico City example Page 90-91 Licensing and Brokerage • No registration required – Sonora, Sinaloa, and Guanajuato require registration – Nonresidents must obtain immigration status permitting them to work • • • • Listings Transaction process Appraisals Responsibilities of notario Page 91-92 Realtor.com/international Page 92-95 What You Should Know About Government • Check-and-balance system with executive, legislative, and judicial branches • Pro-market policies to seek investment • Government struggles to balance promarket policies with corrections to economic inequity Page 95 Legal System • Civil law system • Notarios and attorneys can quickly access written codes to offer opinions and guide transactions • Litigation infrequent due to costs, lack of punitive awards, and length of proceedings • Legal system highly evolved, but always engage a competent local attorney Page 96 Real Estate Taxes and Fees Real Estate Taxes and Fees Tax or Fee Page 97 Acquisition Tax Notario Fee Amount 0.18-4.57% 0.08-3.6% Buyer Buyer Registration Fee 0.02-1.82% Buyer Certificate of No Liens/No Tax Debt US $50-100 Buyer Bank Trust Initiation Fee US $450-1000 Buyer Bank Trust Annual Fee US $400-800 Owner (Buyer) Foreign Affairs Permit $1500 Buyer Title Insurance 0.5-0.7% Buyer Land or Building Survey Fee* Varies Buyer Appraisal Permit Fee 0.3% Buyer Escrow Fee 0.1-0.8% Buyer Agent Commission 3-6% Seller Property Tax (annual payable to state) 0.05-1.2% of value Owner (Buyer) Source: Global Property Guide Paid by Business and Income Taxes • Individual income tax – Progressive up to 30% – Nonresidents taxed on Mexico-sourced income • Business income tax – Generally 30% – Nonresident corporations taxed on Mexico-sourced income • Withholding tax – Interest paid to non-residents: 4.9-40% – Royalties paid to non-residents: 25-30% • Capital gains – Generally 30% • Value-added tax – Generally 16% • Other taxes Page 98 Economy and Business • Exports to USA – 25% of GDP – 80% of total exports • Oil and gas – Largest source of foreign currency • Remittances – Second largest source of foreign currency • Transportation and communication Page 99-101 What You Need to Know • Opportunities • Foreign ownership restrictions • Transactions with fideicomiso system – Roles of other professionals • Availability of mortgages – Cash transactions common • Mexican economy – – – – Trade with USA Oil and gas Remittances Transportation and communication • Pro-market policies to facilitate trade Page 101-102 Beyond the Basics • • • • • Greetings Physical contact Business cards Business style Company hierarchy Page 102-105 • • • • • The softened “no” Punctuality Business dining Tipping Gifts Key Contacts • • • • • • AMPI US-Mexico Chamber of Commerce USA Embassy in Mexico City USA Consulate in Monterrey Mexico Tourism Board FONATUR Page 106-107