How the Notary System Works for Home Buyers in Mexico

By Harriet Murray - April 26, 2022

If you plan to purchase property here, you will need to know how the notary system works for home buyers in Mexico, and also be knowledgeable about the Know Your Customer form.

Notaries

Notaries are appointed attorneys with special education in notario law to transfer real estate from a seller to a buyer.

Notaries doing the closing are in a similar position as an escrow title company in the U.S. I believe attorneys perform closings and transfer property in Canada.

How we close here in Mexico is with a notary. Unlike the U.S. notary who witnesses signatures, in contrast Canada, South America, Europe and parts of Asia all have the kind of notary who is on the same level as a judge who is appointed to transfer ownership of property from one entity to another.

Notary closing costs are in the currency of the country where the property exists and under the laws and currency of said country.

This means here, Mexican pesos are charged for the notario work. Historically, the buyer’s currency goes further with the conversion of their money into Mexican pesos from U.S., Canadian or European currency.

What are the notario-related costs?

• Tax appraisal
• No lien certificates
• Transfer tax
• Bank trust
• Foreign permit, if there will be a new trust
• Registration in the public registry
• Notary fees
• IVA taxes, which are a sales tax
• Others as per the location of the property.

Bank fees, for example, are charged to a foreigner buying inside the restricted zone, which is a set-back from oceans, rivers, and lagoons that can never be owned by foreigners. For foreigners to acquire property within this zone, they will need to apply for a trust, which in Mexico is 50-year renewable with a Mexican bank that has a trust department.

The notary works with the bank trustee to create the legal document, which makes the bank trustee the holder of the title, and the buyer the primary beneficiary of the trust. A beneficiary has the rights to buy, sell, remodel, build new and designate his/her heirs, as secondary beneficiaries.

Upon the primary beneficiary’s death, the secondary beneficiaries can assume the primary position by paying the notary for a current tax appraisal, transfer tax, notary fees and registration fees.

So, closing costs to set up the trust for the primary beneficiary is on average US$575, paid in advance. These trusts are only available in specific Mexican banks.

Currently, closing costs in the restricted zone in the Bay of Banderas area are 5-7 percent of the purchase price.

Your purchase price will be recorded in the escritura at the number of pesos from the conversion of the other currency. The notary is to use the Bank of Mexico exchange rate for the day or day before the closing.

You can read the rest of the article by going here. Used with permission from Expats in Mexico.

Give Yourself a Big Fat Raise!

By Dawn Fleming

How can you lower your taxes as a W-2 employee, without quitting your job? EASY! Start a side gig. By starting a business while still working, you may be able to allocate a portion of your personal expenses, such as your phone bill, internet, or automobile, that you are paying now - to operate your side gig business which converts them to tax deductible business expenses. That savings goes straight to your bottom line - directly increasing your income. I share several examples of how significant this can be in Claim Your Dream Life.

Essentially, the government will subsidize you to start a small business. Of course, you will need to understand and follow IRS guidelines and the advice of your accountant.

There is a lot of talk about the number of jobs that have been created and how low the unemployment rate is. That said, I can’t help but wonder how many good jobs have been created?

Many are low paying, service sector jobs that quite frankly - no one wants! I personally have met very few people who have both a job and a lifestyle I’d want. 

Perhaps more importantly, it is unlikely you can get ahead - much less acquire significant wealth unless you learn how to get your tax obligations down to the bare legal minimum.

The first step is understanding that there are two very different tax systems in the US. There is one system for employees and a completely different system for business owners. 

The former pays their taxes first, before ever receiving any proceeds of a paycheck. The latter pays their taxes last, after they deduct a long list of legally available business expenses.

Business owners, unlike employees, are only taxed on the portion of their “income” that’s "left over" after all of these marvelous, perfectly legal tax deductions. It is astounding to me how few people bother to learn and really understand this important distinction. 

Why wouldn’t everyone have a home-based business? You can even deduct a portion of your living expenses if your home is your primary business location - of course if you follow the rules!

The wealthy also use a strategy called “income shifting”, and there is no reason you can’t too. Properly documented, you can deduct travel, lodging, meals, cruises (by taking courses), conventions, seminars, medical expenses and premiums. You can legally hire your spouse, kids or other relatives.

There are even sale and lease-back strategies that can essentially give you a double tax deduction for some expense. The wealthy understand the significance of using the tax code to build wealth That’s why I often say my favorite bill to pay is the one for our accountant. 

How do you find a good one? (That’s VITAL) For many years I’ve recommended a great book you can get on Amazon - worth its weight in gold! It has a list of "must ask" questions for anyone you considering relying on for tax advice. It's awesome, and I use it to interview potential accountants.

The author, Sandy Botkin, is a former IRS Attorney and he not only shares many of these strategies - he explains exactly what you need to document the deductions to become audit proof. His writing is very easy to read and entertaining - he’s actually quite funny!  You can grab a copy of it by going here. 

MINDSET–Think and Prepare Like a Warrior–Revisited!

By Gail Minogue

In 2021 I wrote about this topic. We were still in pandemic mode but better able to work with it than 2020. I sent out this piece about thinking and preparing like a warrior as it seemed it could be helpful in light of all that was going on with jobs, vaccinations, masks, etc.

Now I find this information is even more important as the world has become a giant battlefield of real war, global economic problems, food shortages, inflation, supply chain challenges and life and death decisions. The world is shaping up as allies and non-allies and sometimes depending on a non-ally for your survival. You hear about good versus evil now and horrific photos of humankind’s destruction of itself. We weep at what we have done to ourselves and yet many of us turn a blind eye to what is going on in the world. We can’t seem to understand that we are all connected. We equate everything to a competition–even our houses of worship. They can be some of the worst offenders. Our leaders continue to focus on staying in power and represent themselves as actors playing to cameras, soundbites and disingenuous promises. We are in the last and final stage of sickness–arrogance.

This actual war is going into a new phase. It will probably get worse. All countries who want and love democratic freedom must realize that Ukraine represents an invigoration of democracy and an enhancement of European security. A strong democratic Ukraine can thwart Russian expansionism because its borders would be secure. Unfortunately, the West seems blind to this historic chance. It is shortsighted. It does not assist in Ukraine in taking a more offensive mode but keeping it always on defense. Ukraine has won the first phase just by surviving. It now needs to advance and the West would make a terrible mistake if what stood between a bad peace and good one was a failure of imagination in the capitals of Europe.

Dear reader, you will now see how relevant this Mindset piece is. As you read it, see how important the mindset is being played out in Ukraine. Pay attention to how Zelensky thinks and acts. Compare it to the delay and discussions of Europe and the United States. Sanctions take a long, long time to work, if they do. Meanwhile, Zelensky lives in the chaos and the destruction.

These 9 points are from an article by John Perkins a judo and black belt instructor. He worked with rooky cops coming out of police academies back East. Although they had police training, they had to learn how to think in the chaos of the streets. The 9 points can apply to all areas of one’s life. Whenever under stress, return to these 9 points and manage yourself. I am not sure I titled it “Think and Prepare Like a Warrior” or John did. It is definitely a MINDSET.

Go here to read the rest of the article.