Selling a Home in Ajijic, Lake Chapala, Mexico
An article describing the things to consider before selling a home in the Ajijic, Lake Chapala area
Even in the gorgeous mountains of Ajijic, Lake Chapala, nothing lasts forever. At some point, you might run into a situation that involves the sale of your home - perhaps you want to move back to the United States to be closer to your family, or maybe you inherited a home that overlooks Lake Chapala but you don’t want to maintain ownership - there are plenty of reasons that you might have to sell your home, but regardless, the process can be long, arduous, and challenging. But if you do choose to sell your Ajijic home, there are a series of steps that you can follow to help speed the whole home-sale process up.
A specific Marketing Strategy
One of the most difficult parts of selling a home, or anything for that matter, is properly marketing it. If you don’t expose your home in the right way to the right people, your chances of quickly getting an offer start to shrink. If your goal is speed, that does not have to be a problem, you just have to sit down and examine your personal situation. There is no one strategy that fits all homes - it has to be personal and it has to be specific. The more personalized your marketing is, the more your home will stand out as uniquely attractive to potential buyers. To meet with the best success, you should hire a real estate professional at the very beginning of your sale-process. Now, because you are selling a home in Ajijic, Lake Chapala, part of your marketing has to highlight the area. You can accomplish this through high-definition pictures in addition to aerial pictures of your property. But don’t forget to include photographs of the area you live in - the views you wake up to every morning, the lush mountainside, the rippling glass of the lake - Lake Chapala is beautiful, show it off - your home will become even more attractive.
We all want to get as much money as possible from a home sale, and I do admire any effort to increase profit margins. However, in the world of real estate, you must value your home as accurately as possible. In terms of getting the right idea for an accurate pricing, your real estate professionals should be incredibly helpful. If you want a second opinion to verify, don’t hesitate to call and get one. You can also do some Google-led canvassing of your area - what are the approximate values of the homes around you, what are they selling for, etc. etc. Just keep in mind location. If your neighbor has a direct lake-side view and you don’t, your two homes will not value at the same price. The quantity of land you own, as well as the age, size, and quality of your home are all considered in the pricing - again, just be sure to be accurate.
Definitely don’t skip out on the staging process. Again, working with your real estate agent will be incredibly helpful in this process. You could try to stage your home yourself, but professional staging is always well-worth the money. It is certainly a strange process if you are living in the home while it is being staged, as the house will become somewhat unfamiliar to you. However, it is a key component to increasing the attractiveness of your home, which turns buyers into potential buyers - your goal is to get an offer and make a sale, this will get you one step closer. It is not an overly complicated process either - staging is basically interior decorating for the purpose of selling your home. A professional staging team might repaint certain areas, rip up the carpeting, change the curtains, reorganize your living arrangements (move a couch or a table), and in general shift the look of your home to one that will sell. Here, listen to your staging professional, they do know what they are doing.
Unfortunately, the word taxes’ is an integral part of the home-selling process. Specifically, capital gains taxes, which Mexico applies to all residential property. This tax is applied at a rate of 25% of the gross cost of the sale, without deductions, or between 2% and 35% of the gain of the sale. For those of you who don’t know, a gain would be the difference between money spent and money earned on the property. For example, if you bought a property for $250,000, and invested a further $50,000 into the property over your time living there, the approximate property value would be $300,000. If you sell this home for $400,000, your capital gain would be $100,000. You would either be taxed 25% of the $400,000, or you would be taxed at a rate between 2% and 35% of the gain, which would be $100,000 in this example. Obviously, this is an unrealistically straightforward example, but it should lay out the general taxation process for you. If your capital gains exceed $250,000 pesos (the equivalent of $13,000 USD), you will be subject to the highest rate of taxation (35% of the capital gain).
There is, however, one exemption to this capital gains tax that begs understanding, in case you qualify. There is an article in the Mexican Income Tax Code that reduces your tax liability - it does not abolish it completely. However, a small reduction is better than nothing. To qualify, you must be a Mexican resident, with a Mexican tax ID, which is also known as an RFC or Registro Federal de Contribuyentes. The property you are selling must be your primary residence, and the quantity of land included in this sale must not be greater than 3x the size of construction on that land. (Your home must be the rough equivalent of a third of your total property). This exemption can also only be used once every three years.
The rate of this exemption is approximately $4.3 million pesos if you qualify. If you want to double your exemption, there is a way - if your home is co-titled with another family member or spouse who meets those same above qualifications, you stand to experience another $4.3 million peso tax reduction. The only thing to keep in mind here is that it is not automatic - you have to prove (with documentation) to the Mexican government that you qualify, and then you must be approved.
The most important thing you can do when selling a home in Mexico is to talk with your Notary Public. The Notary Public will be aware of all legal nuances, and can properly asses your individual situation so that you can reap the most benefits. Even if you have a team of real estate professionals, you’re going to want to speak to the Notary Public directly, if possible.
Brace yourself for a lengthy process characterized by equal amounts of stress and excitement. But if you do it right, you make your process easy and quick, and before you know it, you’ll be signing papers and handing over the key, passing your beautiful stake of prime Lake Chapala property to its next owner.
Director of Sales at Collins Real Estate
+52 (33) 2969 2068 / email@example.com
Conner Collins is a 20 year resident and trusted realtor in the Lake Chapala area.
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