QUESTION ON INHERITING A HOUSE FOR SPENCER and Others Qualified to Answer

This might be a question about the law for Spencer to answer, but if you feel that you have been through this or you know someone who has been through this please answer.

We have an 84 year old woman who lives in our Community. Her house is in her name only. She is leaving it to her daughter and children upon her death. Therefore the house will not be in their name, am I correct? Don't they need to change the Deed to show ownership after her death? I know this is expensive as my Cousin had to do this to sell her house after her husband died.

I'm assuming they will have to get FM 3's. Correct?

Big question, will they have to pay Capital gains since it's not a sale?

We just purchased a house and had to list the beneficiaries on the purchase documents. Didn't you have to do that when you purchased your house?

You can purchase property in Mexico with an FMM (tourist visa).

I assume they will have to pay capital gains if they inherit it and immediately sell it as they didn't live in it for 5 years.

CanuckBob wrote:We just purchased a house and had to list the beneficiaries on the purchase documents. Didn't you have to do that when you purchased your house?

You can purchase property in Mexico with an FMM (tourist visa).

I assume they will have to pay capital gains if they inherit it and immediately sell it as they didn't live in it for 5 years.

You can only list beneficiaries if you're married, otherwise you need a will. Everyone should have a Mexican will as a foreign will in Mexico is not valid.

I couldn't put the deed in my niece's name as she's not a direct descendant from me (such as a daughter would be.) I was told I would have to name her as the inheritor in my will in order for her to get my house after my death.

Why not sell-transfer Now... take Payments in Installments and Pay Rent to new owner
in effect... balancing the monetary exchange
Probably less chance of unforseen expenses if the vendor is in the room as opposed to in a box

What's the tax rate on capital gains here?

angela04101 wrote:What's the tax rate on capital gains here?

30%. Totally ridiculous!!!

carry bean - That IS correct.

A friend told me that since she's adopted, that she wouldn't automatically inherit the house but that a will would be needed by her parents willing it to her. I don't know if she got that right but it might be worth checking out if anyone has that situation.

There is no capital gains on inheritance in Mexico but you MUST have a Mexican will designating beneficiary or it will take years to go through probate.
The Captial Gains kicks in when the person inheriting the house wants to sell it....UNLESS they are willing to live in it full time for five years as their permanent residence AND have their Residente Permanente status.

...you MUST have a Mexican will designating beneficiary or it will take years to go through probate.
True. You can have a foreign will probated in México, but it ain't worth the hassle. Read more about wills here.

hockables wrote:Why not sell-transfer Now... take Payments in Installments and Pay Rent to new owner
in effect... balancing the monetary exchange
Probably less chance of unforseen expenses if the vendor is in the room as opposed to in a box

That would definitely be the easiest way to do it.

Ok, lady can place the children as beneficiaries on the deed and there will be no probate however there will be transfer costs upon her demise. There will be no capital gains when there is a transfer due to probate so no problems there.

A will means probate and more time and costs, changing or amending the beneficiary clause in the property deed is cheaper and more effective than a will.

Intercasa wrote:Ok, lady can place the children as beneficiaries on the deed and there will be no probate however there will be transfer costs upon her demise. There will be no capital gains when there is a transfer due to probate so no problems there.

A will means probate and more time and costs, changing or amending the beneficiary clause in the property deed is cheaper and more effective than a will.

Her children ARE listed as beneficiaries on the Deed, so she is OK there. If she dies approx what are the transfer costs?

About 5% of the tax value.

Intercasa wrote:About 5% of the tax value.

Thank you so much for your good information. I have forwarded your information to the lady so she won't worry.

Joe, you should suggest to her that she transfers the property into her kid's names while she is still alive. A much easier way to do it to ensure there are no problems.

Spencer, can a property be "gifted" to the kids so no transfer tax is applicable?

There are always transfer taxes based upon the tax value and if you transfer a property for too low a price then the buyer may have to pay capital gains as they are gaining on the purchase!

Thanks Spencer.

Carry Bean wrote:A friend told me that since she's adopted, that she wouldn't automatically inherit the house but that a will would be needed by her parents willing it to her. I don't know if she got that right but it might be worth checking out if anyone has that situation.

being that my 23 year old daughter is adopted I find this statement offensive. She is the beneficiary on the deed of our home here as well as in our Mexican will. She has all the rights of a naturally born child. I don't know where your friend heard this, but it sounds like the old game "telephone" where one person says something to another and another. Somewhere along the way it changes.

I'm done. Sorry about my soapbox.

Intercasa wrote:There are always transfer taxes based upon the tax value and if you transfer a property for too low a price then the buyer may have to pay capital gains as they are gaining on the purchase!

The tax for a traslado de dominio is based on the highest value of either the amount of the transaction, the appraised value or the tax value. It doesn't matter if the property is sold or transferred through inheritance or donation.

Local notarios calculate based upon tax value from all the deeds I have ever seen, this is the 2% tax, Impuesto Sobre Transmisiones Patrimoniales which is a municipal tax and there is a sliding scale.

While the law states that the tax may be calculated upon higher of transaction or tax appraisal, locally they seem to always use the tax appraisal. Maybe where you are that may not be the case.

Anybody here wish to check their deed and disclosure of the payment of the tax to confirm this?

Intercasa wrote:Local notarios calculate based upon tax value from all the deeds I have ever seen, this is the 2% tax, Impuesto Sobre Transmisiones Patrimoniales which is a municipal tax and there is a sliding scale.

Is it 2% or a sliding scale?

joyfull wrote:

Carry Bean wrote:A friend told me that since she's adopted, that she wouldn't automatically inherit the house but that a will would be needed by her parents willing it to her. I don't know if she got that right but it might be worth checking out if anyone has that situation.

being that my 23 year old daughter is adopted I find this statement offensive. She is the beneficiary on the deed of our home here as well as in our Mexican will. She has all the rights of a naturally born child. I don't know where your friend heard this, but it sounds like the old game "telephone" where one person says something to another and another. Somewhere along the way it changes.

I'm done. Sorry about my soapbox.

Maybe you're offended but my friend is adopted & her parents live here & that's what they were told so they've arranged it so she will inherit. As I said, it's worth checking out to avoid problems in the future. No need to get your knickers in a knot.