April 2014 ● Some Thoughts on the Future of the US Dollar and Pricing of Mexican Properties Throughout in Mexican Pesos

By Harriet Murray ● Cochran Real Estate ● April 2014

Puerto Vallarta Real Estate

Puerto Vallarta Real Estate

Most of the time, foreign sellers of Mexican real estate do not realize that for purposes of a sale and establishment of capital gains tax, the property will be evaluated totally in Mexican national currency. Why wouldn’t this be the case? Buying in US dollars has been for the benefit of the buyer and seller. The property is Mexican and the government and all national entities will record the transaction in the peso’s value of the exchange with US Dollars on the date of the sales transaction.

What this means is that if you bought when the pesos was 10 and you are selling when it is 13 to the US dollar, there is a gain, at least on paper. Gains usually mean you owe tax. The value of the property at purchase and upon sale is computed by the notary using special software programs. The report you receive is what the tax will be at a certain sales price. The report will be in pesos and you can pay the tax at closing from your sales proceeds.

Normally the purchase funds are in US dollars in an escrow account and the disbursement is in US Dollars for all the expenses, such as commission, taxes, and bank cancellation fees and seller proceeds. But the taxes and notary expenses are really going to be paid in pesos, and they will be converted by the receiver.

Puerto Vallarta Real Estate

Puerto Vallarta Real Estate

Events world -wide which are of concern right now are related to the future of the US economy and the value of the US dollar.
In Mexico and our market here in the Bay of Banderas, we will then go back to selling properties in Mexican pesos and the conversions can be made with the other currency agreed upon by the buyer and seller. The Canadian dollar to Mexican peso will mean there is not necessary to make a conversion into US dollars.
It goes without saying that the US economy will be different, if the US Dollar is not the international currency standard it has been. Even oil will not be bought and sold in US dollars.

There may be more American Citizens moving to countries which do not use US dollars. These people will look for places to live which have a stable local currency in regard to devaluation and inflation. They will exchange their US dollars into these currencies, and live and thrive in another economy and currency.

Harriet Murray
E-mail: harriet@casasandvillas.com
Website: http://www.casasandvillas.com

This article is based upon 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.

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