How to Avoid Getting Ripped Off by Fake Landlords and Other Scammers
REAL ESTATE NEWS (Los Angeles, CA) — Fraud, fraud and more fraud!!! Scams and sheisters galore! They’re calling every day, emailing, texting and posting online all over the place, seemingly without any enforcement or consequences for their illegal actions. Fraud is so in right now. The topic has been the most read on the Loft Blog lately.
Even with a healthier economy a few years ago, fraud was already taking over. Then, with pathetic politicians running the show, overhyped pandemics, lame lockdowns, riot looters, soaring street crime, helicopter money grab, sketchy vaccines, sliding stock markets, irritating interest rates, jerky job market and a crashing, collapsing economy, the perfect storm has formed. It’s is taking fraud to a whole new level. Today, we’re living in a universal torrent of international super fraud culture. Even licensed real estate professional get scammed by skilled con artists.
A slumping economy creates more dangers. When the chips are down, the chickens run — and the wolves go hunting. Here’s how to make a move confidently without falling prey to the bad guys. Here are some tips to avoid getting ripped off by fake applications, fake landlords and other scammers:
Do your research: Before agreeing to anything, research the property and the landlord. Check if the landlord has a legitimate business address and phone number, and if the property is actually for rent. Use reliable sources to verify the information. Loft Blog premium subscribers get access to free Person Report and many other included verification and authentication tools and services.
Don’t wire rent money: If a landlord or property manager asks you to wire money, it’s likely a scam. Legitimate landlords usually accept checks, credit cards, or other traceable forms of payment. Wiring money is like sending cash, and once it’s gone, it’s difficult to recover. Before wiring money to an escrow company, call the escrow officer on the phone to confirm their wiring instructions.
Inspect the property: Make sure to inspect the property in person before signing a lease, sending any money or personal information. If the landlord or property manager refuses to let you see the property, it’s a red flag.
Be wary of deals that seem too good to be true: If the rent is significantly lower than comparable properties in the area, and the owner is out of town, it’s likely a scam. Scammers use low prices to lure in unsuspecting victims, and scammers usually don’t want to be seen in person unless they are super skilled con artists.
Trust your instincts: If something feels off, trust your instincts and walk away. Scammers use high-pressure tactics to get you to act quickly, but taking the time to do your due diligence can save you from getting ripped off.
The current environment has created an opportunity for scammers to take advantage of vulnerable individuals, including those looking for real estate. Remember, if you do fall victim to a real estate scam, report it to the authorities immediately, then send details to our fraud prevention team protect@laloftblog.com
Home buyers and sellers: Get a free report on which buildings have issues, including litigation and lawsuits. Fill out the online form.
REAL ESTATE NEWS (Los Angeles, CA) — Many americans own real estate in mexico. Today, more retirees and wealthy Americans are moving to Mexico to preserve wealth, freedom and privacy. Buying real estate in Mexico as an American can be an attractive option due to its proximity, affordable prices, and diverse landscapes. However, it is essential to understand the laws, customs, benefits, and drawbacks involved in such a purchase.
Laws and Customs:
Restricted Zone: Foreigners are not allowed to directly own land within 50 km of the coastline or 100 km of international borders. To purchase property in these areas, buyers must use a bank trust (fideicomiso) or establish a Mexican corporation. Bank Trust (Fideicomiso): A Mexican bank holds the property in trust for the foreign buyer, who retains full control over it. The trust has a term of 50 years, renewable indefinitely. Mexican Corporation: For commercial purposes, foreigners can establish a Mexican corporation to buy real estate. This is a common practice for investors looking to develop businesses or rental properties.
Benefits:
Climate: Mexico has a diverse climate with various regions offering warm and tropical weather, making it an attractive destination for those looking to escape harsh winters or enjoy year-round sunshine. Cultural Richness: Mexico has a vibrant culture and rich history that many find appealing. The mix of indigenous, Spanish, and other influences offers a unique and engaging environment for both visitors and residents. Expatriate Communities: As more Americans move to Mexico, expatriate communities have grown, providing social networks and support for newcomers. These communities make it easier for individuals to adapt to their new surroundings and make connections with like-minded people. Healthcare: Mexico offers quality healthcare at a fraction of the cost compared to the United States. Many doctors and dentists are trained in the US or other international institutions, ensuring high standards of care. Additionally, Mexico’s public healthcare system is available to residents who meet certain criteria, providing another affordable option. Affordable Prices: Real estate in Mexico is generally more affordable than in the US, making it an attractive option for those seeking a vacation home or investment property. Mexico offers a lower cost of living compared to the United States, allowing retirees and wealthy individuals to stretch their savings and maintain a comfortable lifestyle. Housing, healthcare, utilities, and other essential services are generally more affordable. Diverse Landscapes: Mexico offers various landscapes, from coastal properties to mountainous regions, providing many options for buyers. Proximity: Mexico is geographically close to the United States, making it convenient for travel and maintaining connections with friends and family. Regular flights and accessible roadways make it easy for retirees and other individuals to visit the US when needed. Real Estate Investment Opportunities: Mexican real estate can be an attractive investment, as property prices are generally lower than in the US, and there is potential for appreciation in popular areas. In some cases, property owners can also generate rental income from their properties. Rental Income: Investment properties can generate rental income, particularly in popular tourist destinations. Residency Options: Mexico offers various residency options for foreigners, including temporary and permanent resident visas. These visas allow individuals to live, work, and invest in Mexico, facilitating a smoother transition for those looking to relocate.
Drawbacks:
However, it’s essential to understand that living or investing in Mexico also comes with challenges, such as navigating legal requirements for property ownership, language barriers, and potential safety concerns. It’s crucial to research and plan carefully before making any decisions about moving to or investing in Mexican real estate. Complex Legal Process: Purchasing property in Mexico can involve a complex legal process, which may require the assistance of a qualified attorney, such as Omar Zambrano, or real estate agent. Maintenance and Management: Foreign property owners may face challenges related to property management, including maintenance and finding reliable tenants. Capital Gains Taxes: When selling a property in Mexico, foreigners may be subject to capital gains taxes, which can be relatively high. It’s important to research the local real estate market, consult with professionals, and consider potential risks before purchasing property in Mexico. Additionally, understanding local customs and building relationships with local professionals can help to ensure a smoother process.
The Restricted Zone, also known as the “Zona Restringida” in Spanish, is an area in Mexico where the Mexican government has placed restrictions on foreign ownership of land. The Restricted Zone was established to protect Mexico’s sovereignty, maintain control over its borders, and preserve the nation’s coastal and border areas.
The Restricted Zone extends:
50 kilometers (about 31 miles) inland from Mexico’s coastlines, including the Gulf of Mexico, the Pacific Ocean, and the Caribbean Sea. 100 kilometers (about 62 miles) inland from Mexico’s international borders, which includes the border with the United States, Belize, and Guatemala. Within the Restricted Zone, foreigners are not allowed to own land directly. However, there are two legal ways for non-Mexican citizens to acquire property in this area:
Bank Trust (Fideicomiso): A Mexican bank can act as a trustee, holding the title to the property on behalf of the foreign buyer. The buyer retains the right to use, lease, improve, or sell the property. The fideicomiso is established for a term of 50 years and is renewable indefinitely. The foreigner has the same rights as a Mexican citizen in terms of property control, except that they cannot vote in local elections. Mexican Corporation: Another option for foreigners, particularly those interested in commercial ventures, is to establish a Mexican corporation to own the property. The corporation must be legally registered in Mexico and have a majority of Mexican shareholders, but the foreign investor can maintain control through the corporate structure. This is often used for purchasing commercial property, rental properties, or developing real estate projects. It is important to consult with a knowledgeable attorney and real estate professional to ensure that you follow the correct legal procedures when purchasing property in the Restricted Zone.
Purchasing property in Mexico as a foreigner can involve a complex legal process due to differences in property laws, ownership regulations, and bureaucratic procedures compared to the United States or other countries. Here are some aspects of the process that can contribute to its complexity:
Restricted Zone: As mentioned earlier, foreigners cannot directly own property within the Restricted Zone (50 km from the coast and 100 km from international borders). To acquire property in this area, foreigners must either use a bank trust (fideicomiso) or establish a Mexican corporation. This adds an extra layer of complexity to the transaction. Due diligence: Thorough due diligence is crucial when purchasing property in Mexico. You should verify the property’s title, ensure there are no liens or encumbrances, and confirm the seller’s legal right to sell the property. In some cases, multiple parties may have claims to a property, further complicating the process.
Notario Publico: In Mexico, a Notario Publico, a government-appointed attorney, oversees the property transfer process. The Notario Publico is responsible for ensuring the property transaction adheres to Mexican laws, verifying the property’s legal status, and registering the transaction with the Public Registry of Property. Working with a Notario Publico is essential but may be unfamiliar to foreign buyers.
Contract and documentation: Property transactions in Mexico typically involve a preliminary agreement (Contrato de Promesa de Compraventa) and a final sales agreement (Escritura Publica). These documents are in Spanish and must be prepared according to Mexican law. It is crucial to engage a qualified attorney who can review the contracts, help negotiate terms, and ensure your interests are protected.
Taxes and fees: Understanding the taxes and fees associated with purchasing property in Mexico is essential, as they can be different from those in the US. Buyers need to consider the acquisition tax, notary fees, registration fees, and other miscellaneous expenses. Additionally, there may be annual property taxes and other ongoing expenses to consider. Financing: Obtaining financing as a foreigner in Mexico can be more challenging than in your home country. Mexican banks may have stricter lending requirements, higher interest rates, or shorter loan terms for foreigners.
Due to these complexities, it is essential to work with experienced professionals, such as a qualified attorney and real estate agent, familiar with Mexican property law and the local market. They can guide you through the process, help you navigate the legal requirements, and protect your interests.
Capital gains tax (Impuesto Sobre la Renta or ISR) in Mexico can be substantial when selling a property, especially for foreigners. However, there are strategies that can help minimize or reduce the amount of capital gains tax owed:
Primary Residence Exemption: If you can prove that the property you are selling was your primary residence for at least two years before the sale, you may qualify for a capital gains tax exemption. To qualify, you’ll need to obtain a Mexican tax ID (RFC) and provide proof of residency, such as utility bills or bank statements. Note that this exemption may not cover the entire capital gains amount, and the tax-free limit may vary.
Deductions: Keep records of improvements and investments made to the property, as they can be used as deductions to reduce the taxable gain. These expenses must be documented with invoices (facturas) issued by Mexican-registered service providers, including the provider’s tax ID (RFC).
Inflation Adjustment: Mexico allows for an inflation adjustment called “Indice Nacional de Precios al Consumidor” (INPC), which can be applied to the original property cost. This adjustment considers the inflation rate during the ownership period and reduces the capital gains tax accordingly.
Professional Appraisal: Obtain an official appraisal (avalúo) of the property’s value from a licensed appraiser. A higher appraised value can help reduce the capital gains tax, as the tax is calculated based on the difference between the appraised value and the original purchase price (adjusted for inflation and deductions).
1031 Exchange: Although Mexico doesn’t have a direct equivalent to the US 1031 Exchange, if you are a US taxpayer, you may still be able to defer capital gains taxes on the Mexican property sale by reinvesting the proceeds in a US property through a 1031 Exchange. Consult with a tax professional familiar with both US and Mexican tax laws to explore this option.
Tax Treaty: The United States and Mexico have a tax treaty in place that aims to prevent double taxation. Depending on your specific situation, you may be able to claim a foreign tax credit on your US tax return for taxes paid in Mexico. Consult a tax professional to ensure you’re taking advantage of any applicable tax treaty benefits.
A wave of young Americans has been moving to Mexico recently, preferring the low cost of housing, and a better way of life. Young couples are heading south of the border to have fun and have a baby. Those with Mexican ancestry may find that Mexican citizenship is a practical goal to make for a long, enjoyable visita or reubicación. Dual citizenship can help guarantee the best of both worlds, including potentially more financial benefits. Get help with the applications and paperwork.
It is important to consult with a qualified tax professional or attorney familiar with both US and Mexican tax laws to understand your specific situation and implement the best strategies to reduce capital gains tax when selling a property in Mexico.
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