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Capital gains on real estate

Real estate is not only part of its owner's wealth, but also an investment. We often hear this term “capital gain"in the media, advertisements, and almost everything related to real estate.

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The capital gain is the increase in the value of the property over time due to different factors (such as accessibility, location in the urban environment, services and infrastructure, the city and the value of the building).

The real estate are the basis of a family's wealth, besides being a good way of determining the future, because the real estate generally increase in value over time.

We can define the capital gain as the profit obtained from the result of the positive difference between the purchase price of a certain good and its sale price in commercial or economic transactions.

According to the definition of the Royal Academy of Spain (RAE), the term capital gain means "the value of the asset increases for external reasons", i.e., it must start from the natural value of the asset separately, and in general will increase year by year. So, the price in 2020 will be the highest in five or ten years, therefore, buying a house is a great investment. This value, which increases over time, is called the capital gain.

-The capital gain of a property is related to the profit obtained from a positive difference between the price at which it was purchased and the price at which it was sold.

The factors most commonly used as calculation references are:

Location:

  • If the property is located in an area with all basic services, complete facilities, a quiet environment or close to a school, supermarket or office, its value is likely to increase.

2. Accessibility:

  • Verify that there are communication channels that make your destination accessible. In addition to calculating transportation costs, you will avoid buying beautiful houses that are difficult to access, which can undoubtedly reduce your prices.

3. Urban Infrastructure:

  • Urban infrastructure refers to the functional support of goods and services for the benefit of the community's inhabitants, aimed at improving the standard of living and quality of life: electricity grid, drinking water system, rainwater discharge, telecommunications (telephone and Internet), garbage collection, etc. There are also private services, those that can improve the standard of living and quality of life, such as shopping centers, entertainment venues (cinemas, theaters), schools (different educational levels), hospitals and churches.

4. Security

  • The safety of the area where the home is located is a factor that directly affects its value. Safer areas have better capital gains because they have a higher demand and provide protection and peace of mind to families.

5. Development plan

  • Capital gains are highly dependent on future construction. The city and state have formulated a long-range urban development plan, which predicts the development of the city; through these, it is possible to understand the current and future land uses, the possible businesses and types of housing to be built, and the roads required to visualize the community to be developed.

6. Maintenance and upkeep of the property:

  • While equity is primarily related to external factors, it is also important for owners to seek ongoing maintenance for its protection. From painting roofs and walls, replacing cables and pipes at the end of their useful life, waterproofing and repairing cracks, to general cleaning, these are all issues that need to be addressed. Abandoned houses entail additional expenses, so maintenance and upkeep are factors that can indirectly affect appreciation, so, as they say colloquially, "cat's hands" are more worthy of adding value to real estate.

7. Property functionalities

  • All aspects of the property, such as the number, distribution, size, parking spaces and green area of the rooms and bathrooms, will affect the value of the property. If it is a second hand house or apartment, its protected status and the remaining useful life of the property should be considered depending on the type of property. One aspect that is very important to point out is that in these months of pandemic in which we find ourselves with the need to stay at home, we have reevaluated its meaning in terms of protection, because it is our shelter to prevent possible COVID-19 Contagions, and at the same time, we realize that we need to provide space for home offices and perform work or school tasks in it, also factors such as indoor ventilation, natural lighting, outdoor areas, and amenities such as terraces, gardens, balconies and decks are elements that increase the value of the property nowadays.

How is the capital gain on a property calculated in Mexico?

In order to calculate the net value of a property, the above factors must be analyzed, starting from the original value of the property, the age and current situation of the property must also be considered.

For more accurate information, it is recommended to seek the advice of experts in the real estate field.

Although property tends to generate capital gains, in some cases (very rare and unusual) capital losses, i.e., a decrease in value, may occur.

Are you interested in investing in real estate in the Mexican Caribbean? We present the cities that best suit your needs. capital gain currently have.

In the Mexican Caribbean, the areas with the highest capital gains in the last 12 months have been:

  • Cancun: part of the southern zone, which concentrates most of the new developments in the city.
  • Playa del Carmen: around Centro Maya, Colosio, Av. Constituyentes and La Veleta.
  • Tulum: Region 15 and Aldea Zamma.
  • Meanwhile, the areas that are expected to increase their capital gains in 2021 will be Playa del Carmen and Tulum, due to the amount of tourism that has arrived during the pandemic and has triggered a real estate boom.

At iBrokers we have the best projects and real estate properties in the country which will guarantee you an excellent capital gain. Contact us and one of our consultants will assist you and solve all your doubts.

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Agencia Inmobiliaria Ibrokers México
Real Estate Agency Ibrokers Mexico

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