chapter 4: in this chapter introduction foreign ownership financing commercial real estate...
TRANSCRIPT
Chapter 4: In This Chapter
• Introduction• Foreign ownership• Financing• Commercial real
estate• Residential real
estate• Rental property• Licensing and
brokerage
• Government• Legal system• Taxes and fees• Economy and
business• What you need to
know• Beyond the basics• Key contacts
Page 73
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
Source: WikipediaPage 77
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
Source: Asociación de Bancos de México, with data from Banco de México
Page 83-84
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 pro-
market 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 FeesTax or Fee Amount Paid by
Acquisition Tax 0.18-4.57% BuyerNotario Fee 0.08-3.6% 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 GuidePage 97
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 taxesPage 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
• The softened “no”• Punctuality• Business dining• Tipping • Gifts
Page 102-105
Key Contacts
• AMPI• US-Mexico Chamber of Commerce• USA Embassy in Mexico City• USA Consulate in Monterrey• Mexico Tourism Board• FONATUR
Page 106-107