What is the Predial? and Why is it Important to Change Ownership when Selling a Property?
What is the property tax?
Property tax is a tax that owners of real estate must pay annually. It is intended to finance public works projects that improve the quality of life of the population, such as paving, garbage collection, road construction and repair, public lighting, among others. The tax is levied by state or municipal authorities, and Mexico City may have the Secretariat of Administration and Finance as the authority. The amount to be paid is determined based on the cadastral value of your property, the type of property, surface area, age, among others. It is important to have the ballot to avoid an increase in the total amount. If you already know the predial and need to update the information on the ballot, we invite you to visit our Instagram account to learn how to do it.
Advantages of changing the ownership of the predial when selling a property
1. Increased Property Security
The transfer of the property to third parties affects the greater security of the property, since the new owners must comply with their financial responsibilities, such as the payment of the annual property tax, in addition to other public services. These responsibilities contribute to the improvement of the safety and quality of the place, such as increased public lighting, street cleaning and the installation of new green areas. In addition, new homeowners also have the security of having home insurance to protect their property, contents and to request expert assistance if necessary.
2. Changing ownership is easier
It is easier to change the owner than to change the ownership of the property because the change of owner requires fewer documents and formalities than the change of ownership. To change the owner it is enough to have the
- Public Deed registered in the Public Registry of Property and Commerce.
- a valid official identification
- the last paid property tax bill
- in some cases, a Power of Attorney or simple Power of Attorney signed by the grantor, attorney-in-fact and two witnesses accompanied by official credentials.
In order to change the owner, however, it would be necessary to have in addition a
- Private Purchase and Sale Contract
- Assignment of Rights, Judicial Sentence with agreement of cause of execution (Positive Prescription, Judicial Registration, or other of possession), all these documentations must be registered before the Public Registry of Property and Commerce. Therefore, the change of ownership is much simpler than the change of owner.
3. Reducing the paperwork to sell a property
Before starting the process of selling the property, it is important to carry out a series of necessary procedures to guarantee that the property is in optimal conditions. These steps are:
- Verify that the property document is up to date and that it is free of encumbrances, debts, liens or other similar formalities.
- Make sure that all tax payments are current.
- If the property is located in the Federal District, an operating license for the real estate agent or intermediary (in the case of using one) is required.
- Verify the physical condition of the property to detect any imperfection that may hinder its commercialization.
- Change the ownership of the property so that the future buyer appears as the owner of the property. This can be helped by a notary’s office to carry out a transfer of ownership, which will provide all the necessary legal guarantees to avoid undesired situations.
By following these steps, the commercialization of the property will be done in a correct and safe way, avoiding the appearance of any problem.
4. Better Protection Against Foreclosures and Foreclosures
It is important to change the ownership of the property when selling a property, since the new owner will be responsible for the property taxes after the sale. This is important to avoid the seller being left with the outstanding tax debt and having to pay the fines and surcharges considered by the municipality. In addition, the new owner will be able to benefit from the discounts and facilities offered by the government to catch up with the payment of taxes. Finally, the change of ownership is important to avoid the authorities seizing the property and having to take it to an auction in order to collect the debt.
5. Changing the ownership of the property can help to increase the value of the property.
By changing the ownership of the property, owners increase the value of the property by demonstrating responsibility and financial security by being up to date with utility payments. This contributes to a better image of the property, which gives the property a higher value and increases the possibility of selling it at a better price. The change of ownership also helps to avoid conflicts in the buying and selling process, reducing risks for the buyer and giving him/her greater peace of mind.
6. Can reduce property taxes
When selling a property, changing the ownership can be a way to reduce taxes. This is because, when changing ownership, the new owner must pay property tax according to the new capital gain. In this way, the seller can save some taxes by transferring the property to others. One way to change ownership is to use a notarized document, such as a deed of sale. By signing this document, the previous owner transfers all rights to the property to the new owner, who must pay property tax based on the new appreciation of the property. This helps to reduce taxes for the seller, minimizing the payments to be made on the property.
7. It may increase the chances that someone will accept the property on credit.
The change of ownership of a real estate property when selling it is one of the fundamental steps to increase the possibility that a buyer will accept the credit. On the one hand, the buyer will be sure that the property is free of encumbrances and, on the other hand, the banks will be more willing to grant the mortgage loan if the buyer is the owner and proprietor of the house or land. This also means less expenses and legal paperwork involved in the process, which will benefit both the buyer and the seller. The change of ownership of the property also helps to ensure that the buyer complies with the terms of the loan agreement, since the mortgage lenders will hold the buyer responsible for payment of the outstanding debt and taxes.
8. It can help ensure that the transfer of ownership is completed safely and securely
Changing property ownership to sell a property helps ensure that the responsibility for payment of property taxes is transferred efficiently and safely to the new owner of the property. By changing property ownership, the seller is prevented from remaining liable for property taxes even after the property has been sold. This helps to avoid legal problems and provides peace of mind to the seller knowing that there are no outstanding liabilities. In addition, the change of property ownership facilitates the buying and selling process, since it clears the way for the new buyer to transfer the property to his name.
9. It can help reduce the risk of litigation with property owners.
Changing the ownership of the property when selling a property can help reduce the risks of litigation, since this action ensures that the new owner assumes the correct tax liability that comes with ownership of the property. The change of ownership also prevents the area in which the property is located from being affected by the buyer’s performance, since the buyer commits to keep the corresponding tax payments up to date, thus avoiding indebtedness and therefore the loss of the property.
What steps must be followed to change the ownership of the property when selling a property?
Investigate the requirements to change the ownership of the property.
Step 1: First, it is necessary to have the Public Deed registered before the Public Registry of Property and Commerce.
Step 2: You must also present a valid official identification (INE, passport or professional ID).
Step 3: In addition, the last paid property tax bill is required.
Step 4: In case you want to promote the name of a third party, you must present a Power of Attorney or simple Power of Attorney, signed by the grantor, attorney-in-fact and two witnesses (accompanied by official credentials of all those involved).
Conduct market research on property buyers.
Conducting a market survey when selling a property can assist in the change of property ownership through a deeper understanding of current real estate market prices and conditions. This gives the seller a clear idea about price and other features that may be attractive to buyers, allowing the seller to offer a property that buyers will be satisfied with. In addition, a market study is useful to know the documentation needed to make the change of ownership of the property, as well as the tax formalities and the advertising mechanisms to be used to promote the property. This will help the seller ensure that all paperwork is in order and payments are made in a timely manner to successfully complete the sale process. Ultimately, a market study can save time and effort by allowing the seller to make the best offer to potential buyers, thus ensuring a successful sale process.
Calculate the cost of sale to make sure you have the most in your guideline.
To calculate the cost of selling a property and get the maximum on your guideline, follow these steps:
- Perform a complete inspection of the property to detect possible imperfections that may hinder its marketability.
- Evaluate the factors that determine the selling price such as the price, the payment method, the environment and the condition of the property.
- Consider whether you have the necessary experience to carry out the sale process on your own, or use the services of a real estate agency.
- If you decide to carry out the sale on your own, do not sign any document, contract or promise of sale without prior advice from a notary.
- If you use a real estate agent, make sure that he/she is experienced in the type of property you are selling, that he/she is properly established, and that he/she provides you with both agency and personal references.
- Once you have found a buyer, make a calculation of the taxes to be paid, such as Income Tax (ISR), to ensure that the transaction is carried out in accordance with the law.
File the marriage at the county portal or at a municipal office.
To change the ownership of a property in Mexico, it is necessary to file a predial casamiento. This involves the following process:
- Going to a Notary: First it is necessary to go to a Notary Public to advise on the legal status of the property and verify if the sale and purchase can be formalized.
- Gather the Documents: Once the notary’s endorsement has been obtained, the necessary documentation must be gathered to change the ownership of the property. This documentation includes the title of the property, property tax and water receipts, official identifications of the current owner of the property, a purchase contract, a public deed registered before the Public Registry of Property and Commerce of the CDMX, and a valid official identification.
- Power of Attorney or Power of Attorney: In the event that the purchase-sale of the property is in the name of another person, a Power of Attorney or a simple Power of Attorney must be presented, signed by the grantor, the attorney-in-fact and two witnesses (accompanied by official credentials of all those involved).
- Private Contract of Purchase and Sale: If the case includes a private contract of purchase and sale, assignment of rights, judicial sentence with agreement of cause of execution (positive prescription, judicial immatriculation, or other of possession), then it must be registered before the Public Registry of Property and Commerce of the CDMX.
- Signing and Recording the Deed: Finally, it is necessary to sign and record the transfer of the deed before the death of the owner, in the county where the property is located. This generally has a cost per page.
FREQUENTLY ASKED QUESTIONS
Why is it important to change the owner when selling a property?
It is important to change the owner when selling a property because the new owner will be responsible for the payments of the property, such as water, electricity and property taxes. The cadastral appraisal is an important factor to take into account in order to know the amount that must be paid as property tax. In order to make the change of ownership, it is required to present the Public Deed registered before the Public Registry of Property and Commerce of Mexico City, as well as a valid official identification of the interested party or legal representative, the last paid property tax bill and a Power of Attorney or a simple Power of Attorney. If it is a Purchase-Sale contract, Assignment of Rights, Judicial Judgment with agreement of cause of execution, among others, they must be registered before the Public Registry of Property and Commerce of Mexico City in order to be able to make the change of ownership. This is the only way in which the new owner can be responsible for the payments corresponding to this tax and be up to date with the obligations of being an owner.
How is the property tax payment made when changing the owner?
Changing the owner of the property tax may seem complicated, but if you follow the necessary steps, you will have no problems. The following documents are required to change the owner of the property: Public Deed registered before the Public Registry of Property and Commerce, valid official identification (INE, passport or professional ID), last paid property tax bill, and in case of promoting another person, present a Power of Attorney or simple Power of Attorney, signed by the grantor, attorney-in-fact and two witnesses (accompanied by official credentials of all those involved).
In addition, it is important that the contracts that must be registered before the Public Registry of Property and Commerce are up to date, these are: Private Contract of Purchase-Sale, Assignment of Rights and Judicial Sentence with agreement of cause of execution (Positive Prescription, Judicial Inmatriculation, or other of possession).
Once the necessary requirements have been obtained, the process to make the change of ownership of the property is very simple. It is enough to go to the offices of the Housing Institute of Mexico City (Invi) to present the documentation and process the change. Once the process is completed, the property tax bill will be issued with the new owner. Payment must be made at the time of issuance in order to enjoy the tax benefits.
How is the value of the property tax calculated?
Step 1: To calculate the predial value of a property, start by determining the cadastral value. This is calculated by adding the unit value of the land and the construction and multiplying them by the surface area of the building.
Step 2: To calculate the unit value of the land, evaluate the location of the property. Depending on the location, there are three possible types of value: area value, enclave value and corridor value.
Step 3: To calculate the value of the building, take into account the types of properties, number of floors, area, construction and age.
Step 4: Finally, to calculate the cadastral value, multiply the unit value of the land by the area of the land, and the value of the construction by the number of square meters of the property.
Step 5: After knowing the cadastral value of a property, the amount of the Property Tax can be calculated. This amount is determined by the assessed physical factors of the property, such as the type of property, surface, construction and age.
What are the benefits of changing the property tax owner when selling a property?
Changing the owner of the property when selling a property brings with it a series of benefits. By doing so, the new owner will assume responsibility for the payment of the property tax and the maintenance of basic services such as water, electricity and gas. In addition, legal problems between the previous owner and the new owner due to non-payment of services are avoided. The change of property owner also avoids the accumulation of interest due to delinquent property tax payments, allowing for greater financial organization. The change of property tax holder also contributes to the correct updating of the fiscal data of the municipality. This helps the municipal treasury to carry out its work efficiently and without any problems. Finally, the change of property owner is a necessary requirement for the correct registration of the property in the Public Registry of Property and Commerce of the CDMX. Performing this procedure guarantees legal security and legal stability for the new owner.