If you have been looking at real estate in Mexico, but you are not quite sure which currency you must use to pay for the real estate, then you may be glad to know that paying with US dollars for real estate in Mexico can be done. The official currency in Mexico is the peso, but in top tourist destinations such as Puerto Vallarta and Cabo San Lucas, you can pay with US dollars. Are there advantages or disadvantages with paying with US dollars for real estate in Mexico? You can find out by reading below:
Is using US dollars the best choice for Mexico real estate?
Paying with Mexican Pesos for Mexico Real Estate
You can pay for good in Mexico with foreign currency and in areas where there is a large expat community usually pays for goods with US dollars and the real estate is always quoted in US dollars. You don’t have to pay for real estate with US dollars, but it is generally preferred. The real estate market in Mexico allows their buyers to pay for the property with US dollars, but both parties will have to agree with it. One important thing that you should remember if you purchase real estate in Mexico and you pay with US dollars is that the title deed with the property will be calculated, then the taxes will be in Mexican pesos.
Every real estate property’s value in Mexico will always be recorded in pesos and this is important to know when you plan on selling the property. Within the past few years, the Mexican pesos have devalued against the US dollar and the capital gains taxes on the property may be higher for you to pay even if the sale price of the property was done in US dollars.
For example, if you purchased real estate in Mexico approximately three years ago, then the US dollar was equal to 16 pesos back then. The property may be sold for 100,000 US dollars when you purchased it, which would be equal to 1,600,000 pesos. Currently, the US dollar is worth 18 to 19 pesos, and this means that if you sold your property for 100,000 US dollars, then it would be equal to 1,800,000 pesos and the capital gains tax would be 200,000, even though the real estate property is not worth that in US dollars. You will be responsible for paying taxes on the profit that you may have earned in Mexican pesos.
Paying for Mexican Real Estate with US Dollars
If you advertise your property in Mexico for sale in US dollars that is located in popular tourist locations, then you will see many advantages to it. It doesn’t matter if the buyer of the property pays with Mexican pesos or US dollars. Historically, the US dollar has been very strong and stable than the Mexican pesos and it is least likely to fluctuate while the selling process was occurring.
Real estate in Mexico is more attractive to foreign investors if the property is being offered in US dollars. Advertising the property in US dollars may deter Mexican nationals from even making a bid on the property, especially if they are depending on a Mexican mortgage, and the price of the property will be granted to the seller in Mexican pesos. Local buyers will not understand what the property price is if you insist that the property is paid in US dollars. This could cause you to lose an important sell for your property in Mexico. The best way to list your real estate in Mexico is to advertise if in US dollars, but you will accept payment with Mexican pesos too.
One of the most important factors that you should take with you from this article is the real estate market in Mexico will have the title deed quoted in Mexican pesos and it doesn’t matter if you paid for the property with Mexican pesos or US dollars. Paying with US dollars for real estate in Mexico has pros and cons.