What's new in Real Estate?

August 8, 2016 Edition

A few good banks... bailing on the fidecomiso biz! HSBC, Banamex and Bancomer are just not in the mood to deal with all of the fidecomiso fuss anymore.  The fidecomiso, also referred to as the bank trust, is the document that allows foreigners to hold title to property in the restricted zone in Mexico which is pretty much all of Baja.  No need for worry, lucky us we have more banks ready willing and able to keep us foreigners in the real estate market.  Scotia, Interacciones, Banco de Bajio, Intercam and Santander are still in the game and doing a great job of providing excellent service. If you currently have a trust managed by one of the banks throwing in the towel there is no need for worry.  It is still business as usual at least until you want to make any changes like selling or renewing trusts.  In the past, banks would allow new buyers to assume existing trusts rather than creating new ones.  HSBC and Banamex are no longer providing this option.  Should you sell a property held in trust by either of these banks the seller must pay to have the trust extinguished and the buyer must create a new trust using one of the banks still in the fide business.  As of now, Bancomer is still allowing the transfer rights of an existing trust but we are not sure how much longer they will continue.  As many of you have heard, there has been a movement to get rid of the fidecomiso requirement entirely.  The bill even passed the first legislative branch only to die while waiting to be heard at the next level.  Talk is the bill is being reintroduced however, we are not truly optimistic the fide will ever go away. Not only does it take an act of congress, it takes the vote of all of our 32 states.  Seems someone wrote this into our constitution.  Changing the constitution is a bit more difficult than just changing our minds.  (Thanks to Keith Williams of Baja Realty and Investment (624-125-3043) for providing the info necessary to keep all of you readers up to speed)

Beware!  The ugly capital gains monster is on the lose! Don't let him catch you with your pants down or rather pen in hand at the signing table.  Here's how it goes!  You bought your dream house for let's say $200,000 USD back in 2008.  The peso was at 10 to 1.  Your sales price is recorded in your deed but it is recorded in pesos.  The government now is aware you spent 2,000,000 pesos for your little piece of paradise.  Things change and you decide to sell.   Considering a slow recovery from our economic crisis your property has not really seen much in the way of appreciation.  You list it at $250,000 and sell it at $230,000 after your commission deduction you are close to a break even on the purchase price.  Phew, no capital gains.  One would think anyway.  Two days before closing the sellers are notified that they owe $630,000 pesos in capital gains (something like $34K USD).  Not a happy moment. How can anyone owe capital gains when they are at a break even?  Simple.  The government does not recognize the dollar as the purchase price they recognize the peso only.  The sales price is converted to pesos at the exchange rate at the time of closing.  Right now somewhere between 18 and 19.  Now do the math.  You are really selling at somewhere around $3,800,000 pesos.  $1,800,000 gain at 35%.  It is really just this simple.  Fair!  Not a chance, but it is this simple and it’s the law.  Realtors request the calculations as soon as they open escrow but for some reason sellers do not receive them until a day or two before the closing.  What now?  Time to close. Oh, well you have to pay them as stated in your contract.  More unhappy sellers.  Ok, now for the good news!  If you insist on these calculations early on you can reduce your gains significantly with the help of tax strategizers.  Many companies offer these services.  I have seen my tax strategist lower gains by 70% they just needs a little time to do it. How they do it or what they do I am not sure anyone really knows but, they do it legally, so why care how?  Moral of this story is you can slay your ugly capital gains monster with a little help from our professional strategist friends.  Yes, happy sellers again.

Big, Big, Big News for the Los Cabos Country Club! This one is exciting! Finally after years of anticipation, the Country Club is coming together. The development is off and running.  Lot sales have begun in one of the best locations in Cabo San Lucas.  This master planned community is a must see. Golf and resort living with a price tag that will not break the bank.  They have already broken ground on the spectacular 33,000 square foot club house which will house a pro shop, spa, gym, ballroom/event center, the 19th hole bar, a restaurant, pool bar and infinity pool with endless unobstructed views of the Sea of Cortez and land's end. 

 In case you missed the golf part, they also have an 18 hole golf course that is a favorite of locals and visitors especially with the lighted driving range.  Phase 1 consists of 630 single family residential lots and 30 sites slated for condo development.  Lots range from 4,000 square feet up the 43,000 (that's a whole acre).  Wait for this... prices start at only $100,000 and if you are really nice they might include the golf membership.  Condo sites range from 60,000 to 100,000 square feet.  Small builders really want to take a look at this project, as not only is this an affordable project, but they are offering bulk sales for blocks of lots.  Talk about location it does not get any better than this.  Walking distance to Medano Beach, Walmart and all the action of downtown Cabo.  Conveniently located for easy accessibility by car from any direction. We have seen the plans for this development and all we can say is this project is going to give the other projects around here a big run for the money.  Location, value and golf; it doesn't get any better than this.  A bunch of thumbs up on this beauty!

Cabo Premiere gets new digs....... We guess with all of the other companies moving around they did not want to be left out.  Funny, they didn't go very far... just a couple of doors down from the old digs.   A great landlord and a bright cheery space with a view of the fountain was a big motivator.  They are close to getting settled in so stop by and say hello if you are in the Tesoro neighborhood.  Unit C9.