Perhaps you are considering retiring
in a few years and owning a vacation home. Or maybe you
are among the younger set, with children and see this
city as a family investment that will render strong dividends.
Puerto Vallarta offers all the necessary services and
needs of health, security and entertainment that we all
require for our loved ones and ourselves.
There are outstanding developers
in the present day real estate market of Puerto Vallarta
who are creating a wide range of offerings for investors,
who not only seek a vacation option, but also an investment
choice supported by attractions of beautiful natural landscapes
and activities such as sport fishing, golf, and all types
of navigation. There are many choices in terms of investment
and Puerto Vallarta possesses the greatest potential of
the Pacific coast with its unlimited attractions that
allow travelers to find something new ever time they return.
You will be enchanted by the bay
that is a paradise of intense colors and exuberant –beaches.
Explore the natural land and submarine wonders.
The new real estate market not only
offers residential alternatives for personal reasons,
but as a short and medium term investment as well.
Acquiring real estate isn’t
just buying a house of a certain style anymore; it is
an important decision from a financial and investment
To acquire real estate not only implies
making a decision about the style of home we wish to purchase
but also means making a crucial decision from an investment
and financial point of view.
The real estate industry in Puerto
Vallarta is one of the most prosperous on the national
and international level; it is growing year by year and
had very good results in 2004. The similarity between
the real estate professional development in Mexico and
in the United States gives us an idea of the importance
of this sector in Mexico. The Mexican Association of Professional
Realtors (AMPI) is the only real estate association similar
to the National Association of Realtors (NAR) in the United
The real estate market stands out
for being a safe and patrimonial investment, and offers
very good dividends to investors. The best opportunities
for making money in a country like Mexico exist when the
investment instruments offer low yield rates and the stock
market is unstable, because Mexico is known for having
extensive guarantees to satisfy the required security
of investors. The present governmental administration
is giving all its support to facilitate the bureaucratic
procedures. Sometimes it is easier to purchase a property
in Mexico than in the United States or Canada, since the
buying-selling process is carried out through specialized
real estate agencies and a notary public who validates
and certifies all the transactions.
Buying property in Vallarta
We all dream of someday owning a
piece of beach property for vacations, or for the day
we retire from long years of work. In the past, the only
way one could acquire property was with cash payment.
Now, the possibility exists to acquire property with banking
credit or direct financing on the part of the developers.
Nonetheless, it is important to
define what you are going to buy (house, villa, land,
or an apartment). It is important to know what your budget
is, if financing exists, who will counsel you, in short,
there are a series of relevant aspects which should be
reviewed by experts in their corresponding field. It is
necessary to know and understand Mexican laws to be able
to protect your investment. For foreigners, in any case,
the purchase must be made through a Fideicomiso (Trust
What is a Trust Contract?
The objective of the trust contract
is to preserve the rights of the buyer who acquires guaranteed
rights and administration of property. In the case of
foreigners, the trust contract is made because there are
restrictions regarding direct ownership of land. The trust
contract also guarantees legal security with regards to
possession of the property. This contract must be registered
in the presence of a notary public and with the respective
permission from the Secretary of Foreign Relations here
To initiate a trust contract, you
start with a minimum payment to form the trust association
with a bank and also a payment based on a percentage of
the property’s value. The bank will charge an annual
fee (which depends on the estimated value of the property),
which pays for the expenses of their services. A trust
contract lasts 50 years, and it can be extended.
Important aspects in the
buying and selling of real estate
It is essential that a notary public
is involved in the process. He is a go’
Governmental representative who certifies
and carries out the all sales contracts processes, which
happen upon the transferal of deed ownership from one
person to another. It is also a guarantee that the notary
public be the responsible agent of the property, since
this protects the interests of the buyer as well as the
seller. The following documents must be given to the notary
public so he may be able to process any transaction; a
complete appraisal of the property to as to calculate
the amount of taxes to pay, a letter from the municipal
treasury stipulating that water bills and property tax
payments have been paid up to date, and a certificate
of no existing liens from the Public Registry of Property.
Presently, Mexican laws impose a
33% tax payment on the difference between the registered
purchase price and sale price (less authorized deductions
and inflation compensation). Nonetheless, there is the
option that the seller pays a 25% tax on the total value
of the transaction, without deductions.
Beginning in 2004, the only way a
foreign seller can be exempt from the capital gains tax
payment is by proving that he or she is a resident in
Mexico. In the case of another residence outside of Mexico,
he or she must show that their main economic activity
takes place in Mexico. There must be proof that 50% of
their annual income originates in Mexico or that their
main professional activity is in this country.
A guide to acquiring property
1- The first step
is to retain the services of a specialized real estate
company who will charge a 6 to 8% commission based on
the property’s value. You must also choose a trusted
2- Look for the
abbreviations AMPI in the real estate company’s
description, so that there will be a guaranteed in depth
legal review. This will facilitate the transaction since
the closing period is fundamental.
3- Make clear that
the seller is in charge of all closing costs, including
expenses, taxes and fees.
4- Analyze all financing
possibilities. There is now direct financing on short
and medium terms for Mexican and foreigners. Foreigners
also have mortgage credits to buy or build their vacation
home in Mexico. This type of financing is available from
firms such as Collateral Mortgage LTD, which grants credits
of up to 50% of the value of the property, starting at
$400.000.00 USD and for 20 years, to American citizens
who wish to build, remodel or purchase vacation property
Another way in which foreigners obtain funds to purchase
real estate in our country is by obtaining financing using
properties or assets in their home country as collateral.
The minimum down payment is 30%, and the annual interests
start at 8.75%. The minimum credit is for the amount of
$100.000.00 USD and the maximum is for $800.000.00 USD.
5- The notary public
acts as the responsible agent of the real estate property.
It is not generally common to have title insurance but
there are Mexican and foreign companies which do offer
this service. Stewart Title Insurance is the most important
company of this kind in Puerto Vallarta.
Having title insurance guarantees validity and priority
of their rights on the property to the insured party (owner,
trust holder, or mortagee). It is also an indemnification
contract between the insured and the company that issues
the policy. An insurance title is also a detailed analysis
and evaluation of the public and private documents and
plans relating to the property’s deed.
In the case of loss or adverse complaint to the title
insurance policy issued by a company, that company is