Chill Out While Learning of Investment Opportunities
Southwest Mexico’s SIMCA Development offers those possibly interested in investing or retiring in Mexico a fun and eye-opening opportunity—The Simca Chill Out Weekend. You’ll visit the Simca corporate office, where you meet the expert Simcateam and business associates that can answer all your questions about the buying process in Mexico and their property rental management program. You’ll also hear ROI projections for current projects based on theproven results of Simca’s many completed projects in the area.
A Simca property advisor will escort you on a private session to visit some of Simca’s projects in the Riviera Maya’s cities with fastest growth in the real estate market.These include Playa del Carmen, attracting tourists who visit this area in search of experiencing the best of culture, shops, and restaurants along Playa’s excitingFifth Avenue. In Playa, Simca has 11 developments, ranging from luxury real estate to second home and investment properties. Simca has one property ready for delivery and two others soon breaking ground in Tulum, a beach town that got its name from the ancient Mayan city of Tulum with one of the most beautiful beaches in the Riviera Maya, and consistently ranking among the world’s top beaches. And, Simca is currently marketing three properties Merida, the capital of Yucatan, a city full of history and culture.
Whether you choose to invest in a real estate opportunity in Riviera Maya or not, a Chill Out Weekend will be just that—plenty of time to visit the beach clubs and enjoy the culture and nightlife.Playa del Carmen, Tulum, Puerto Morelos, Puerto Aventuras, Akumal, and Coba are some of the top tourist destinations located in the Riviera Maya. With crystal-clear water, white sand, coral reefs, and the Mayan jungle, beautiful scenery is everywhere and there are many available activities to take part in.
Safely Purchasing Residential Property in Mexico
Your first question for the Simca team will probably be about how secure your investment is.
Simca will introduce you to a legal expert that helps their buyers set up the required Real Estate Bank Trust, also known in Spanish as “Fideicomiso” is a trust agreement, that they establish with a Mexican bank in order to hold title to a property. Both the buyer and the bank are named in the title documents. It works similar to Family Trust or Living Trust entities. This trust deed assures foreign property buyers of all the rights and privileges of ownership while acquiring an extra protection from Federal government (Ministry of Foreign Affairs Office and the Secretary of Economy). Your property cannot be taken from you for any reason as long as you use it for residential purposes. The bank trust will act as a safeguard for your property ownership. Renting out your property and generating profit is 100% authorized.
Purchasing through the bank trust (Fideicomiso) or a Mexican LLC also gets around the statute in the Mexican Constitution that prohibits foreigners from purchasing property within 50 km (31 miles) from the shore, or 100 km (62 miles) from any border. Since 1973, foreigners have been able to purchase property within this restricted zone using the bank trust.
The 50-year trust agreement is renewable every 50 years by you or your heirs by simple request. The renewal procedure is an automatic administrative task. The Bank Trust can be held by one or more individuals of foreign citizenship or by an entity such as an LLC, Living Trust or a Family Trust. The trust can be inherited by your family or any person by simply naming them in the Bylaws of your contract as secondary beneficiaries in the event of your death. The beneficiary chapter will substitute the need of drafting a Mexican will; no need of passing probate before any Mexican Court would be required.
Using your IRA to invest in Real Estate
American citizens can increase returns on their pension savings, thereby securing their retirement, by purchasing Mexican real estate with a self-directed IRA (Individual Retirement Account). Since the IRA was established in 1974, investing in alternative assets has been permitted by the IRS. Despite this fact, few Americans realize that they can use their self-directed IRAs to invest in assets other than stocks, bonds, and CDs. Many of these pension funds are managed by banks or brokers, earning less than 2% annually and some even generating losses. It is important to know that all types of IRAs, including traditional, Roth, SEP, and SIMPLE IRAs, as well as Coverdell Education Savings Accounts (CESAs) and Health Savings Accounts (HSAs), can be self-directed.
In most cases, the first step in investing your IRA in Mexican real estate is to move it from your current custodian to one that allows for international transactions. You can make as many transfers (from custodian to custodian) as you like with no tax consequences.
Since the IRS prohibits using an investment property for your personal use, you will want to invest in properties with the most likely ROI. You will be making an offer “on behalf of a Mexican legal entity to be formed and not personally” with the deposit coming from your IRA LLC in the U.S. The balance of the funds for the acquisition at the closing can come from the Mexican corporation or an escrow account. You’re essentially using a self-directed IRA to purchase the real estate through an American LLC, as a shareholder of a Mexican LLC. At the closing, you will be signing as the official representative of the Mexican LLC and take possession of the property on its behalf.
The big deal in Mexico is that, you would be able to claim a 100% Capital Gains exemptionwithout paying double taxes in the U.S. This means that, once you sell the property and if you are eligible to exempt capital gains, you can collect 100% all your profit without paying capital gains in Mexico or in the U.S. You can enjoy, use, rent out, improve upon the property, expand, build and sell the Mexico Real Estate and reap 100% of the profit.
Retiring in Mexico
While you can stay home and keep growing your investment, you may decide to buy a property that you can semi-retire or permanently retire to with an option to rent out your property when you’re not there. It’s estimated that you could spend 30% of each year at your property and still break even on your annual carrying costs including carrying a mortgage on the property.
Mexico is ranked among the top five countries to retire in for Americans, Canadians, and Europeans. The fact that healthcare for a senior couple in the US costs a mere $600 USD a year and the fact that property taxes and HOA fees are a fraction of what they are at home, are compelling reasons, not to mention the sheer opportunity to live in paradise with near-perfect weather year-round. As long as an expat resident in Mexico has reached the age of 60, and is either a permanent resident with an Inmigrado card or a temporary resident required to renew an FM visa on an annual basis, he or she is entitled to virtually all the perks and benefits of Mexican citizens of like age, including the already-low realty taxes being reduced by 50% on one’s principal residence.As long as you are eligible for U.S. Social Security payments, you will still be eligible to receive payments while living in Mexico.
If you are interested in joining a group from Dallas for a Chill Out Weekend that your Estate Life publishers are planning or if you would like for us to help you arrange your own Chill Out Weekend, please contact Steve Smirnis (817) 975-7235.