Questions Foreigners Have When Buying Real Estate In Mexico

18 March, 2023

Many foreigners own Real Estate in Mexico for housing, investment or vacation purposes.

Its territory, nature and its people have unique characteristics that make this country an excellent place to live.

Some of the destinations preferred by many Americans, Canadians, Europeans and South Americans are the coastal areas on the Pacific and Atlantic sides.

Due to its beautiful beaches, tourist destinations and there are also beautiful cities where many retirees find the lifestyle they were looking for.

Among the most popular places, we can list Cancun, Playa del Carmen, Tulum, Isla Mujeres, on the Caribbean side, Los Cabos, Puerto Vallarta, Mazatlán, Ixtapa and Zihuatanejo.

On the Pacific side and cities like Mérida, Tepoztlán, Guanajuato, Querétaro and San Miguel de Allende.

They have become very popular places with foreigners in the last two decades due to their climate, culture, nature, renowned local cuisine, the warmth of their people and the quality of life in general.

Before deciding to buy a property in Mexico, you have probably already visited some of these places mentioned, and you plan to live in Mexico for a few years or perhaps you want to make an investment in a property.

It can give you a rental income while you are not using it, the real estate market in Mexico has shown positive growth in recent years and that a foreigner owns a property is very accessible.

However, the procedures may vary from your place of origin.

Below we have summarized some of the frequently asked questions our clients have about owning a home in Mexico, with the idea of guiding you through the selection and purchase process.

For a complete list, visit the FAQs on our website.

How do I find a real estate agent in Mexico?

Finding a seller is easy, but finding a professional Real Estate Agent that meets your needs as an international buyer, who guides you through the selection process, explains all the legal details involved, provides good advice and can also earn your trust is not so simple.

We suggest that you interview the Agent and ask about his knowledge of the area, as well as his experience in the buying process for foreigners. We invite you to choose the broker that you consider correct.

At Maya Ocean we provide professional assistance to find the right property for you in Mexico, we guide you through the process of selecting your desired home while protecting your interests and accompanying you through the legal and purchasing process.

Our experienced group of Real Estate Agents know the Riviera Maya, its market trends, its development, its past, its future and its zoning very well.

They have chosen to call the Riviera Maya home and live and work here full time.

How do I find the correct property?

We suggest idealizing the house of your dreams to adapt your needs in the best possible way and on the other hand have a realistic budget on how much you are willing to spend without exceeding your financial limitations.

We recommend that you use a Real Estate Advisor who, according to his needs and budget, will guide you during the selection process.

Once you have selected the best options, the Real Estate Agent will schedule appointments to visit the properties that suit your interest and budget.

As a foreigner, can I own a property in Mexico?

Yes, foreigners can directly obtain properties in the interior of Mexico.

If you plan to own in coastal areas, Mexican Law states that: properties within 50 km of any waterfront and 100 km of any border must be acquired through a bank trust or the establishment of a Mexican corporation.

What is a trust?

The Law establishes that in the coastal and border areas of Mexico (100 kilometers from the border and 50 kilometers from the coast) a foreigner can buy real estate through a Trust.

The Trust is a 50-year renewable banking agreement that grants a foreign Buyer the right to use, enjoy, improve, rent, sell or enjoy the property of it.

The foreign Buyer is called the Beneficiary of the Trust.

As the beneficiary, you retain all ownership rights and responsibilities in the property and have the right to sell, lease, improve, mortgage, or assign the property to your heirs.

What is a Notary Public?

A Notary Public is a lawyer, certified by the Government of Mexico to act as an official and impartial representative who performs the authentication of legal documents and is responsible for ratifying all real estate transactions.

The Notary is equally responsible to the Buyer and the Seller, ensuring the legality of the transfer of the title.

Do I need a Temporary Resident Visa to buy a property in Mexico?

Anyone, even someone in Mexico with a Tourist Visa, can buy a property. It is stated that if you sign a contract, rent a house, buy a house or rent a property, you are no longer a “tourist” and are therefore invited to apply for a temporary resident visa.

But to acquire a property, it is not necessary to have a temporary resident visa.

What are the different types of visa in Mexico?

Tourist visa:

The Visitor Visa obtained when you first enter Mexico can be continuously renewed simply by leaving Mexico within 180 days.

Temporary resident visa:

This type of Visa is for foreigners who live part-time in Mexico.

To obtain Temporary Resident Visa status, you must demonstrate that you have sufficient resources to be financially independent, work, or own a business in Mexico.

Permanent residence visa:

This document is for foreigners residing in Mexico.

To apply for a resident visa, you must have four years as the holder of a temporary resident visa, permanent residence allows you to enjoy most of the rights and privileges of a Mexican citizen, except the right to vote.

As an immigrant, you are not required to renounce your native citizenship, you can work freely and remain in Mexico without annual renewals of immigration documents.

What are the costs of the Trust?

The payment of the fees for the permission granted by the Ministry of Foreign Affairs for the constitution of the trust has a cost of approximately USD 400 or 13,910 MN plus the VAT that is paid annually, it is always important to check the prices, since they can vary.

What is the ISAI tax?

When buying a property, you must pay the Property Acquisition Tax (ISAI), also called Domain Transfer Tax, which is local and varies according to the laws of each State.

The income of the different entities is normally 2% and is calculated on the highest value of the operation; however, (this changes according to the State of Mexico, for example, in some cases, it can be 5.6% ”.

What is the ISR tax?

People who sell a house cause an Income Tax for the disposition of a house, so if the sale value is maximum 700,000 Investment Units (UDIS) equivalent to approximately four million pesos, they can exempt the payment of tax.

What are the rights and obligations of a real estate sale contract?

It is the right of the buyer to know all the clear and precise information about the acquisition of his future assets.

This information generally includes: the size of the land, the age of the construction, the measurements of the rooms and other structural and architectural aspects of relevance.

Another important right of the buyer, which also functions as the right of the seller, is that, in the clauses of the sales contract, the total value of the property must be included (generally validated by a real estate appraisal), the price to pay for acquire it and the monthly amounts of the mortgage loan (in case of having this support).

The buyer must make the necessary contributions on time, so as not to breach the contract and fall into failures that bring financial and personal consequences.

This clause of the property sale contract must include the monthly amounts to be paid, fines and penalties for not making the payment, and the legal or financial consequences derived from this.

Likewise, this legal document must include all taxes to be paid and assigned to the corresponding party.

That is, the buyer must pay taxes such as ISAI or Property Acquisition Tax, while the seller must declare ISR or Income Tax.

What are the steps in the purchase process?

Selecting the right property for your future home or investment according to your budget.

We recommend visiting the property with our agents before making a final decision.

Once the property has been selected, the seller will send all the necessary documents, conditions and requirements to you and us.

Negotiate the contract and the price.

Let us know that you are ready to book or write a proposal that includes the price, your terms and time.

The Reserve normally represents a full deposit of the required advance (10% to 25%) or a partial deposit (5% to 10%) with the commitment to complete the deposit in 30 to 60 days to retain the property.

Within the selected time period, the offer is accepted, rejected or a counter offer is made.

Cash is normally paid to the notary, the sellers listed by the real estate agency, or into an escrow account.

Signing of the contract at the Notary in Mexico or through an authorized representative.

You become the owner of the property and it is registered in your name in the Public Registry of Property and Commerce of Mexico.

What is an escrow account?

It is a contractual arrangement in which a third party (the interested party or the escrow agent) receives and disburses money for the main parties of the transaction, generally, used with abundant terms that carry out the legitimate actions that follow.

The disbursement depends on the conditions agreed by the parties to the transaction.

In Real Estate, an “Escrow” is used to ensure that the funds from a transaction change hands at closing.

If you are a buyer, you want your funds in the seller’s account to be closed only once, not before.

Is it necessary to use a security deposit or “Escrow”?

No, but many people use escrow in real estate transactions today as a safe and efficient way to transfer funds between a buyer and a seller, rather than depositing directly into the seller’s account, before the beginning of any closing procedure. or any due diligence that is performed.

Do you need a lawyer?

No, however, some attorneys specialize in real estate transactions and your legal advisor is always welcome to secure all transactions and documentation involved.

Can someone manage my property?

Yes, in the Riviera Maya there are a variety of companies that specialize in property management, representation and maintenance.

Over the years, we have identified a few that we consider to be the most honest and professional, that we can recommend.

What about the maintenance of the property?

Keeping your property in proper condition for rental maintenance is very important and also consider that a damaged home decreases in value.

Property management agencies and individuals have staff who can take care of keeping your investment in top condition if you don’t live in the area.

You already have a good idea of what you are entitled to during the process of buying Real Estate in Mexico as a foreigner.

If you need more specific information, please contact us and we will find a local real estate agent to help you find the right property.

Author

Maya Ocean

Maya Ocean Real Estate

We are a company dedicated to the Sale of Real Estate and we also offer the option to Manage, Promote and Rent. Our real estate inventory and area of operations extends to the Riviera Maya mainly in the cities of Playa del Carmen and Tulum...

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