A HOUSE IN PUERTO ESCONDIDO
Living in Puerto Escondido is heavenly, and owning your own house
here is divine. Whether you buy a house or land to build on, your
chances of being satisfied are greatly increased if you take your
time and are well informed (ask lots of questions). There are no multiple
listings in Mexico, so you may want to consult more than one realtor.
A good realtor will help you through the buying process, including
everything you need for closing.
As the proud owner of 353 square meters in Puerto, on which I built
my dream house - within budget - I offer the following advice: know
what you want. Do you want a swimming pool? A unit to rent out? A
condo? There are so many options. I designed my house before I bought
my property, so I knew what kind of property I wanted. Some people
find the perfect property first and go from there.
Foreigners are not permitted, under the Mexican Constitution, to own
land within 50 km of the coast. They are, however, allowed to set
up a 50-year, renewable, bank trust (fideicomiso) which gives them
all the rights and responsibilities of ownership. But bank trusts
can only be made on private land; i.e. land that has a deed (escritura).
In Mexico, what isn't designated as private land is communal. Large
parts of Puerto Escondido, specifically parts that belong to Santa
Mar'a Colotepec, are communal. Communal land can only be bought and
sold by Mexicans; title on this land is through an Act of Possession.
Thus it behooves the foreign buyer to make sure that the property
has a deed. If not, it may be possible to buy it by forming a Mexican
If you are considering buying or selling real estate here, be advised
that Oaxaca law changed in June. Now the property being sold must
be assessed for tax purposes by a licensed assessor. In the past,
it was common practice to understate the price of a property on the
deed, so that the seller could avoid paying the full amount of the
capital gains tax. (It's 28% for foreigners and 15% for Mexican nationals
- unless the house was the primary residence of a Mexican citizen
for at least five years, in which case there is no tax.) Under the
new system, the assessed amount is closer to real market value.
House warming July 2007
If you are selling a property, you can deduct the cost of improvements
- such as building a house or adding a pool - from your capital gains
tax. Speaking of taxes, if you rent out some or all of your property,
you must pay a 25% tax on your rental income with no deductions permitted.
You need as accountant to get you through all this.
A little bit of history:
Back in 1970, when there were only a few thousand families living
in Puerto, all the land from what is now the airport to the Hotel
del Magisterio on Zicatela beach was expropriated by the federal government
for the purpose of privatizing the property for tourist development.
Over 1,500 hectares were affected, including what are now Bacocho,
Rinconada and Carrazalillo to the west, parts of Lazaro Cárdenas
to the north and Los Tamarindos to the east.
However, for reasons much too murky and complicated to go into here,
there was a land dispute between the counties of San Pedro Mixtepec
and Santa María Colotopec over ownership and jurisdiction. The conflict
has still not been resolved. This explains why one property in Lázaro
Cárdenas, for example, may having a deed from Mixtepec and its
neighbor an act of possession from Colotepec. On the other hand, the
conflict has helped keep real estate prices relatively low, and it
is probably the main reason that Puerto did not become a mega resort.
Sol de la Costa, December 2008