Updated: Dec 20, 2022
San Miguel de Allende (SMA) is the most charming small town in Mexico. This nearly 500-year-old municipality, has been named, for the sixth time, the “Best Small City in the World” in the “Readers’ Choice Awards”, the oldest and most prestigious recognition of excellence in the travel industry, by Condé Nast Traveler magazine. It is close to two international airports (each a 1.5 hour drive) and close to a wonderful big city, Queretaro (45 minutes’ drive) that features the largest mall in Mexico (with every brand you can find in the USA), a Costco and pretty much anything that you could want of a big city. It also has reliable fiber optic, fast internet.
In short, SMA is a very special place in the world to visit and an even better place to live full time especially if you have the ability to work remotely.
Remote Working Benefits
For individuals or families whose main income providers have the ability to work remotely, SMA is a place to seriously consider for your home. As remote workers, you can continue earning the same income that you do in your home countries with the incredible buying power advantage that living in SMA provides. Remote working families can buy homes in SMA for a fraction of the price of a house of the same size and amenities in their home countries. Once you own your home, your cost of living will lower significantly, and the quality of your life will increase exponentially.
Lower Cost of Living
Property taxes for a million dollar house PER YEAR is under $2,000 USD. The cost of food,
particularly if one chooses to shop at neighborhood fruit and vegetable shops, meat markets etc. where the majority of Mexican families shop is a fraction of the price you pay in your home countries (think 1,200 pesos - $60 USD per week for two people*). Entertainment (like concerts, plays, lectures), going out to dinner, going to the movies are half to a third of the price in the USA. For example: two movie tickets at a multiplex facility with a large popcorn and two drinks total cost is less than $15 USD*).
Quality of Life
It is hard to explain how much easier it is to live in SMA with all of the help that is available by wonderful people that work for you doing the time-consuming things that most ex-pats must do for themselves on a daily basis. Imagine not having to clean your house, cook your meals, mow your lawn, keep your garden up, or go grocery shopping. Imagine not having to have a car or driving. Imagine how much time these tasks take up in your typical week… here in SMA, you can afford to hire gracious people to do these things for you at extraordinarily low costs. With this extra time, you can do much more than just work and survive; you can work and have time for many other hobbies and interests for you and your children.
Education System &Affordable Extra-Curricular Exposure
An additional growing trend is that families are arriving with their school-aged children, who will be participating in the education system in SMA. These children have accessibility to a variety of prestigious private schools, which they can enroll in for a fraction of the cost they would pay in your home countries. Living in Mexico encourages children to speak Spanish and become bi-cultural. Speaking multiple languages and living abroad has consistently distinguished students when it comes time to apply for university. Add to this the ability to expose your children to extra-curricular activities that are many times either too expensive or too time consuming to offer them in your home country. For example: equestrian training, professional tennis lessons, and every conceivable training of the arts. Here in SMA all of this is possible and affordable.
Low Crime
Miguel de Allende has one of the lowest crime rates in all of Mexico and much lower than many cities of all sizes in the country from where you are from. When you choose to migrate to SMA, you can rest easy knowing that you are living in a safe area that is known for its cultural charm and warm community.
Ideal Climate
Another reason why you can find a lot of ex-pats in San Miguel is because of its glorious climate. All year round, you can bask in the sunshine that is not too hot and not too cold, and never humid. This makes San Miguel the ideal place for anyone who is looking to live in an extraordinary environment.
Summing it Up
SMA is an extraordinary place to live as compared to any other place in the world. SMA
remains a great place to super-stretch your income and purchase a beautiful home at a fraction of the price that you would pay in your home country. Your cost of living will be reduced by 50 to 60% and your standard of living will increase markedly. Considering all this, it’s easy to see why San Miguel de Allende has become such a hot spot for migration, especially for those that can work remotely.
*These costs are as of the date of this article.
Jeff Kimmel is a lawyer and a member of the California bar since 1980. He became a partner of the Mexican law firm PORTILLA, RUY-DIAZ Y AGUILAR in 2017 (https://www.portilla.com.mx/attorneys). He is a licensed Mexican real estate broker in Guanajuato. He started KIMMEL REALTY GROUP in San Miguel de Allende in 2021
with the mission to help its clients take the risk out of buying real estate in Mexico
(https://www.krgsanmiguel.com/).
© 2023 Jeff Kimmel DBA KIMMEL REALTY GROUP all rights reserved.
Use by others requires prior written permission.
Updated: Nov 9, 2022
Since 2021, despite nearly two full years of pandemic-based fears and travel restrictions, the real estate market in San Miguel de Allende has been bullishly hot. Demand never really diminished, it was simply suppressed. Once the world started to get back to normal, the SMA market took off and has not slowed for the past 18 months. In particular, mid- to high-end properties have been selling quickly.
The increase in the US interest rates caused the US market to slow. However, it did not affect the SMA real estate market because nearly all transactions here are done on a cash basis. Once you pay for your house, your cost of living decreases and your standard of living increases by at least a factor of three. A very compelling combination.
A new mortgage product, which KRG is intricately tied to, is now available. The loan is based on your US-based credit, not Mexican credit as in the past. Ask us about it by contacting us here.
One very interesting trend that has emerged is that expat buyers are no longer mostly retirees. Two distinct new sets of buyers have emerged since pre-covid years. The first are remote workers. There is a flood of expats moving permanently to SMA between the ages of 25 and 45. Both, singles and families are buying houses here constantly. The second are politically motivated expats moving here for a myriad of reasons.
A severe recession in the US could hit SMA hard, as has been the case historically, and it could slow the real estate market significantly (think 2008–10). However, this time it may further motivate both the remote workers and the politically motivated buyers to move due to the advantageous cost of living and higher standard of living.
For more information, please do not hesitate to reach out to us here.
Jeff Kimmel is a lawyer and a member of the California bar since 1980. He became a partner of the Mexican law firm PORTILLA, RUY-DIAZ Y AGUILAR in 2017 (https://www.portilla.com.mx/attorneys). He is a licensed Mexican real estate broker in Guanajuato. He started KIMMEL REALTY GROUP in San Miguel de Allende in 2021 with the mission to help its clients take the risk out of buying real estate in Mexico (https://www.krgsanmiguel.com/).
© 2023 Jeff Kimmel DBA KIMMEL REALTY GROUP all rights reserved.
Use by others requires prior written permission.
Capital gains tax calculations are normally calculated by Notary Publics here in San Miguel de Allende and in Mexico generally. The calculations are complicated as they not only consider the price the property was bought and sold for but also, improvement costs paid, whether you have receipts for the improvement payments, when the property was bought, what the peso to dollar exchange is and was on the date of the purchase, and other factors. While the SRE Permit you must obtain as a foreigner in order to purchase a property in San Miguel requires you to be treated like you are a Mexican citizen with respect to your ownership of the property, an expat will not be treated exactly the same as a Mexican citizen when they wish to obtain capital gains tax exemptions.
The capital gains tax exemption value changes from year to year but it can be worth upwards of approximately $200,000 USD (in pesos) for each name on the deed who qualify*. Note, the tax exemption does not apply to undeveloped land and lots regardless of your immigration status.
For Mexican nationals, qualifying for the exemption requires proof that they have been issued an RFC number by the Mexican Federal tax authorities. This number essentially verifies that the person is registered with the Mexican tax system (SAT); the Mexican equivalent to the IRS in the United States.
For expats however, qualifying for the capital gains exemption requires that they can prove all three of the following*.
They hold either a temporary or permanent immigration status (including possession of temporary or permanent cards).
They have been issued an RFC number by the Mexican Federal tax authorities.
The property being sold is their primary residence.
An expat that cannot prove all three of these criteria will not be entitled to this ample tax exemption and will face a capital gains tax rate of more than 30%.
Obtaining RFC numbers has recently become more difficult and time consuming than in the past. It now requires an appointment be made at an SAT office and an in-person application. Obtaining both temporary or permanent immigration visas (and turning the visa into immigration cards) also is time consuming. So, some planning is needed before putting your house for sale if you want to claim the tax exemption. We can help you in these processes.
Under current Mexican law, this tax exemption can be utilized once every three years. You don’t have to wait three years to use the exemption the first time but once used, you must wait another three years to claim it again.
When we take our selling clients to determine what their capital tax liability will be, we ask the Notary to assume a range of hypothetical sales prices in advance so that the client has a clear idea of what their tax will be, or if they will be subject to a tax at all.
It is very important that you use an attorney or a professional agent to help you determine that you do meet the required criteria and determine what your capital gains tax will be before you list your property or have offers to purchase. Scrambling to lower or eliminate your tax after you are in contract to sell can create big problems that can easily be avoided.
*As of the date of this article this is the approximate manner that the exemption is calculated, and criteria required of expats. The tax exemption law changes regularly so you must check when you are thinking of selling to know exactly what the exemption can save you.
Jeff Kimmel is a lawyer and a member of the California bar since 1980. He became a partner of the Mexican law firm PORTILLA, RUY-DIAZ Y AGUILAR in 2017 (https://www.portilla.com.mx/attorneys). He is a licensed Mexican real estate broker in Guanajuato. He started KIMMEL REALTY GROUP in San Miguel de Allende in 2021 with the mission to help its clients take the risk out of buying real estate in Mexico (https://www.krgsanmiguel.com/).
© 2022 Jeff Kimmel DBA KIMMEL REALTY GROUP all rights reserved.
Use by others requires prior written permission.