Capital Gains is not a new concept to most of our readers, however, the impact of the Peso Valuation on “your” capital gains calculation will come as a surprise to many of you. The Puerto Peñasco, aka Rocky Point, Real Estate market has many positive influences from the Real Estate infrastructure north of the border. Contracts, Inspections, Property Disclosures, and complete Multiple Listing Services, so it could be said that the Rocky Point Market is easier than most for a new Foreign investor to come in and get involved.
One issue A.M. P.I. (Mexico’s sister organization to the Nation Association of Realtors Up North) is focused on is educating the public on how Capital Gains are calculated. Now we are not going to dive deep into the calculations, we will dip our toes so that you can, after reading this article, consider yourself more educated than most and find an A.M.P.I. member to learn more.
Our market is advertised in United States Dollars (USD) due to the proximity with the United States. The tricky part is that, upon purchasing, Mexico converts that USD amount into Pesos to be recorded at the Public Registry, thus your “Recorded Price” is in Pesos. This means some are surprised to find they owe Capital Gains upon selling their property for the same USD amount or maybe even less. Here is why…
Buyer Purchases a condo for $100,000 USD when peso was 10 Pesos to $1 USD. This property was recorded in the Public Registry at 1,000,000 Pesos (100,000 x 10 = 1,000,000)
This same buyer sells today for $100,000 USD while the peso is 18 pesos to $1 USD. This means the sales price when converted to pesos is 1,800,000 pesos (100,000 x 18 = 1,800,000). Showing an 800,000-peso Gain. This has caught many people by surprise since in US dollars there is no gain. Be sure to ask your A.M.P.I. agent to assist in understanding your unique situation so you are not caught off guard.
To find an A.M.P.I. agent please go to http://puertopenascoampi.com/