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 Buying in Mexico
The following information is considered a guide to answer your questions regarding buying real estate in Mexico
Between significant changes in Mexican laws in 1989 and again in 1993, the NAFTA treaty of 1995 and investor-friendly laws buying real estate in Mexico is easier then ever, particularly in the "restricted zones".
The restricted zone is defined as any land within 62 miles or 100 kilometers of Mexico's borders and within 31 miles or 50 kilometers of the Mexican coast The Mexican government has made it relatively easy to circumvent those difficulties with the aim of encouraging foreign real estate investment in the restricted zones. So, even though Cancun is on the coast, foreigners absolutely can own land. In the restricted zones there are two ways to do this, form a Mexican corporation (which can be 100% foreign-owned) or, in case of residential property, set up a real estate trust called a fideicomiso.
What is the Fideicomiso (fee-day-co-me-so)? It is a real estate trust - the initial term of which is 50 years - similar in concept to trusts set up in the United States. Under this inviolate type of trust, a Mexican bank must be designated as the trustee and as such, holds legal title to the property and is owner of record, but the beneficial use is held by the property buyer. The beneficial owner may enjoy the unrestricted use of the property, including the right to reside on the property, sell the property, rent/lease the property, improve the property, etc. For all intents and purposes a fideicomiso grants the same rights and obligations regarding land ownership as those enjoyed by Mexican citizens. Another very important point is that while the bank holds title, the fideicomiso does not become a part of the banks assets and can not be attached by a bank creditor. The one time cost for establishing a fideicomiso is approximately USD $1200. The trustee (the Fiduciario) charges a yearly administration fee, which cost depends on the property's value and varies from bank to bank.
Can The Government take your Land after those 50 years? Not if you (or your beneficiaries) re-new the lease for another 50 years (and 50 years after that, and so on). This 50-year renewal process can be continued indefinitely, enabling the foreign investor to obtain long-term control over the property. If the beneficial owner dies anytime during the 50 years of a trust period, a named substitute beneficiary will receive all of the rights and obligations that arise from the trust contract. It is important to understand that the 50-Year Title is NOT a lease, as some people seem to believe. It is simply another way to hold title.
Do I Need a Mexican Real Estate Agent?
Mexico does NOT license or regulate real estate agents. A foreigner buyer might consider hiring a 'regular' lawyer in Mexico to handle their affairs if they're not comfortable with, or unsure of, the process.
Should I have a Lawyer?
Under Mexican law, you must utilize a special-type of lawyer to purchase real estate. Such an attorney is called a Notario Publico and likened to a combination of real estate lawyer, tax assessor and IRS agent. Notarios are the most powerful attorneys in Mexico (like U.S. lawyers are officers of the court, Mexican Notario Publicos are also agents of the federal government of Mexico) and are appointed after a stringent approval process (think Bar and CPA exams at the same time!). NOTE: Do not think of notary publics in the U.S.!
The Notario examines all real estate documents for authenticity, verifies title, formalizes the property transfer and authorizes the execution of the deed (escritura) as well as recording it with the public registry of property. and collects all applicable property and transfer taxes, among other tasks involving in real estate transactions.
What are the Transactions Costs for Buying Real Estate?
There are a number of fees related to buying real estate in Mexico. These costs include a 2% property transfer tax, fee for the Notario and title registration fees. On average, you should figure the fees will total approx. 3% of the purchase price.
Can I Get Title Insurance?
Title insurance has been available in Mexico since 1993 and can be purchased on an optional basis if desired.
How About Mexican Property Taxes?
In the state of Oaxaca / Mexico the rate is 0.2% of assessed valuation whether the land is undeveloped or not. So, if you buy a lot for $ 300,000.00, your property taxes would be $600.00 per annum until a house was built at which time the tax would be against the value of your house and property, but still at the same rate.
Can I Get Finance to Purchase a Property in Mexico?
Home mortgages at low fixed interest rates for up to 30 year terms are now available in Mexico to citizens of USA!
You can now purchase your dream home in Mexico and use your Mexico property as collateral for your mortgage loan!
Additional Links
Sueno Real
Huatulco Info
Legal Info
Buying and Selling in Mexico
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