Steps In Forming A 50 Year Mexican Bank Real Property Trust
By Peter Thompson, Attorney-At-Law
CATEGORY ESTIMATED TIME TO COMPLETE 1. APPLY FOR TRUST PERMIT 30-60 Days THROUGH A MEXICAN BANK, PAYING FEE FOR TRUST PERMIT, ACCEPTANCE FEE AND FIRST YEAR'S FEES IN ADVANCE 2. OBTAIN PROPERTY APPRAISAL 30-60 Days 3. OBTAIN CERTIFICATES 30 Days (NO LIEN, NO TAX LIEN, WATER)FROM MUNICIPAL AUTHORITIES 4. DELIVER TRUST PERMIT, APPRAISAL AND 1 week CERTIFICATES TO MEXICAN NOTARY PUBLIC 5. MEXICAN NOTARY PUBLIC PREPARES TRUST 2 weeks 6. SELLER, BUYER AND TRUSTEE BANK SIGN TRUST AT NOTARY'S OFICE 7. BUYER PAYS 2% TRANSFER TAX AT CLOSING At trust signing 8. SELLER PAYS MEXICAN CAPITAL GAINS INCOME TAX At trust signing 9. TRUST IS RECORDED AT RECORDERIS OFFICE 30-90 days 10. AFTER RECORDING, PARTIES MAY OBTAIN 1 week CERTIFIED COPIES FROM NOTARY ll. TRUSTEE BANK SENDS TRUST FOR REGISTRATION 30 days WITH THE FEDERAL "NATIONAL REGISTRY OF FOREIGN INVESTMENT" NOTES AND COMMENTS 1. Appraisals and Transfer Taxes: Traditionally, Mexican tax appraisals were much lower than actual value. Under Mexican federal tax reforms which have gradually lowered the transfer tax rate from 10% to the current 2-., appraised values have been increasing to 50-100% of actual value. 2. Capital Gains Taxes: A Seller pays a capital gains income tax which is either 400-, of the "gain" or a flat 200-. of the "price.11 To calculate gain, the Notario Publico must determine the Seller's "basis" in the land and constructions, as adjusted for inflation. No tax if Seller proves he lived in house for the past 2 years (with a resident visa if the Seller is not Mexican). 3. Closing Costs: Except for the capital gains income tax, the custom is that the Buyer pays all other closing costs
