With its stunning beaches and vibrant culture, Mexico is a popular destination for foreigners looking to purchase a second home or retire overseas. However, before you buy a home in Mexico, you should understand the legal requirements and procedures involved in the process.
It has not always been easy for a foreigner to buy a home in Mexico. For a time, foreigners could not purchase properties in Mexico if they were close to the country's borders or oceans.
This changed in 1993, now foreigners can buy properties in restricted areas by using a trust. When the desired property rests on a restricted area like a beach, foreigners can use a trust that provides them all the benefits of ownership as trustees while complying fully with Mexican law.
Finding the right home to buy in Mexico
Research different locations to determine where you would like to buy. Consider factors such as the city or town, access to amenities, your future plans, and the local culture when making your decision.
Look for a real estate agent with experience working with international buyers and make sure to ask for references. The agent can help you find the right home, negotiate the best price, and guide you through the whole process.
Make an offer
Once you find the ideal home you are ready to make an offer. Make sure that you talk to a lawyer before you transfer any money or sign any papers. They can help you avoid problems and save you money.
When you're ready to purchase, remember to look for available financing options. In Mexico, US citizens can access different financing options, without needing Mexican residency or citizenship.
Manage the necessary licenses
Foreigners can buy a house in Mexico under an agreement with the Federal Government through the Ministry of Foreign Affairs (SRE).
In this agreement, also known as the Cláusula Calvo, foreigners accept that only the Mexican government will be empowered to resolve disputes related to the property.
If you plan to buy on the beach or border area known as the “restricted zone” (62 miles along the borders and 31 miles wide on the coasts) you will also need to set up a trust and obtain a special license from the SRE.
Getting a trust to buy a property in Mexico
Mexican banks are allowed to buy properties in the restricted zone. The bank owns the land on behalf of the foreign buyer, the purchaser has all rights and responsibilities of selling, leasing, mortgaging, and entrusting the property. The Trust lasts for 50 years, can be renewed, and it’s transferrable to other foreign buyers.
A reliable notary starts the process of creating the trust by checking the property's legal status. This audit includes taxes, verifying the seller's ownership and rights to transfer the property, and the terms and conditions of the trust’s contract. Afterward, the notary will work with the bank to finalize all the trust documents.
Complete the purchase
The seller must pay taxes and sign over the property deed to the buyer before the buyer pays for the property. Then the transaction is registered at the Public Registry of Property. Property registration is key to avoiding fraud or illegal appropriation of the property. Once the registration is done, the title is issued to the new owner or the bank trust.
Don’t forget to pay property taxes and fees
The selling party must pay the required taxes, the seller must pay ISR, and declare the sale of the property. The buyer has to pay ISAI (Real Estate Acquisition Tax). In addition to paying these taxes, the buyer should also consider:
- Real estate agent fees
- Notary/Lawyer fees
- Registration Fee
- Title insurance, among others.
Buying a home in Mexico as a US citizen requires careful planning and understanding of the process. From securing financing and registering the property to ensure a successful transaction. By working with a reputable real estate agent and following all necessary legal requirements, you can make your dream of owning a home in Mexico a reality.
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