Buying Real Estate and Owning Property in Mexico

FAQ

Yes! Today, Mexican laws give foreigners the ability to own real estate in Mexico. There is, however, a Restricted Zone that extends 50 km inland from the coastline. Outside the Restricted Zone, a foreigner may acquire land and be direct owners of the property with all the rights of a Mexican national in compliance with Mexican Law. Inside the Restricted Zone, there are two alternatives for foreigners who wish to buy real estate. Since 1973, foreigners have been able to purchase coastal property through a Mexican bank trust, known as a Fideicomiso.
A Fideicomiso is established by the government and gives foreigners the same rights of ownership as Mexican citizens. The only difference is that they never receive the actual fee simple title. A bank holds it in trust for them. The Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico, all exclusively for the purpose and protection of enabling foreign ownership of coastal property in Mexico.

Alternatively, you may own property by establishing a Mexican corporation. The corporation is the direct owner of the property and enjoys the right to conduct business in Mexico. (Consult your agent and attorney to find out which form is best in your case)
Property taxes have historically been low in Mexico because they have never been considered a source of governmental revenue. Known as Predial, the tax is calculated as a percentage (currently .25% of the assessed value), determined at the time of sale. Generally speaking, you can expect to pay $100 usd per $100,000 usd of assessed value yearly.
The coastal real estate market in Mexico is booming. Mexico's economy, the 9th largest in the world, values and encourages foreign investment dollars and especially tourism; Mexico is a top world-destination for both vacation and retirement among US and Canadian citizens.
In the legal process of purchasing property, your real estate company, an attorney, the bank, and the notary all have important roles, each ensuring that the transaction is legal. Your attorney will represent you and protect all your transactions. A legal sales contract is written by the licensed Mexican attorney in English and Spanish. A Mexican Notary (Notario Publico) is a licensed attorney and a government official who is certified by the Mexican government to act as the official representative in your closing. A Mexican Notary is very different from a notary in the US with far greater responsibility and has passed stringent exams required by the government. They provide strict security of records and documents, and record transactions with the Public Registry. Their role is taken very seriously in Mexico, where they can be held liable for any discrepancies in the documents. The duties include: Ensure the legality of the transfer of title
Calculate and retain the seller's capital gains
Collect the buyer's acquisition tax
Coordinate appraisals
Verify Certificates of No Liens and No Debts
Request all required permits
Record the transaction at the Public Registry
Record the transaction at the Cadastral (tax) office.
The total closing costs include taxes, the Notary's fee, setting up your escrow account, appraisals, origination fees, applications, establishment of the trust and obtaining the necessary permits. This costs approximately 5%-7% of the sales price. There are set fees, established by government regulations, which make up 4% of the total cost. Those are 2% acquisition fee, 1% recording fee, and 1% Notary fee.
It is a common misconception that the government in Mexico can seize property. It is false. Under the North American Free Trade Agreement (NAFTA) Mexico may not expropriate land except for a public purpose such as building a road. In the extremely rare case that the land where your home is needs a road through it, the government pays market value for the property. It is the same process as Eminent Domain in the US, Expropriation in Canada or Compulsory Purchase in the UK.
Absolutely. The property will only close if the title is free of any claims, judgments, liens or legal issues.
Title Insurance has been available in Mexico since 1993 and the purchase of it is optional. Your attorney and the Notary both verify that the title is clear and legally transferrable.