Sorting out the complexities of foreign eligibility of mortgages, and capital gains taxes, in Tulum.

Hello Everyone.

Today I would like to talk about two major topics; mortgages, and capital gains tax. There seems to be confusion among some buyers in regards to mortgages in The Riviera Maya and Mexico. Here is what I know as of today, but keep in mind things are rapidly changing here to accommodate the booming real estate market.

Mortgages:  In many cases the consumer is hearing, that you can acquire a loan to purchase property here in Mexico and this is where the confusion starts. It is such a different market here, which comes with many different challenges that a buyer may face in getting a loan here in Mexico. Now don’t get me wrong, there are some great loan brokers out there who will do everything they can to help you, but getting the loan might only be part of the challenge. After your approval you have to find an acceptable property with a flexible seller. Also please be aware financing may be easier and more established in other areas of Mexico out side of Playa del Carmen.

First let’s be clear on what properties you can get a loan on. This is an ever changing part of the puzzle. I am sure in the near future more options will be available, but as of today it is unlikely that you will be able to get a loan for commercial investment, rental property (apartment Building) or raw land. I know some lenders are very close to having construction loans available and are working on options as we speak. However, if you want to buy a family vacation home, or a condominium, then you have a better chance to get approved for financing. Take note you are going to need to pick a property that has all the city paperwork ready. What does that mean? Well, it means that new construction or pre-construction will not have all the final paper work registered with the city including individual title. So you need to choose a condominium or a house that is not new, and has all the title work in place already. Sometimes we find people selling houses that they have had for years and they never went through the title process! This is not so unusual here but it will be a problem for your finance company. Also most lenders do not want to hear that you intend to rent this property out. The challenge here is that it now sounds like a rental investment and they want it to be your second home. Most are okay if you say you may have some incidental rental when your family and friends are not using it, that’s easy!

Capital Gains: Let’s talk about sellers. Suppose you find just the right property. Well you may still have some challenges with the seller. Why is that? Well the government is getting stronger on collecting capital gains tax. The seller may not want to put the full selling price on the paperwork otherwise he will get hit with a substantial capital gains tax. Unfortunately everyone seems to have their own point of view on this, and I have seen first hand where sellers will wait for the cash buyer so they can make their own deal.

Now let’s say you make your purchase. How will you set yourself up so you don’t pay any more capital gains tax than you have to?  At the time of this writing here’s what you as a foreigner have to do. When you purchase your property you apply for an FM3 as a retiree or an investor. On the FM3 you have your new property address as your residence here in Mexico. You have your contract of sale, your trust, your FM3, and all your bills with your name and the property address on them. Then, as of the law today, when you sell (a minimum of two years later) you can show all of this information and you will not have to pay capital gains. I know it sounds like a lot, but like anywhere, investment property pays capital gains taxes, and your resident may not if you qualify for an exemption. So take the time to set it up properly in the beginning; it is worth the time and the effort.

Shawn Bandick is originally from Canada, a published author, and owns One Stop Real Estate He can be reached by e-mail at This email address is being protected from spam bots, you need Javascript enabled to view it This e-mail address is being protected from spam bots, you need Javascript enabled to view it or reach him by phone at +52(984)100-5016 mobile (984) 803-3739 office