Legal advice

Owning land in Mexico is easy with the right legal advice


Legal note

HOW TO BUY LAND IN MEXICO AS A FOREIGNER
Owning Land in Mexico: the Law
In 1973, the Foreign Investment Law allowed foreigners to buy real estate anywhere in Mexico except the areas within 100 km (64 miles) of international borders or within 50 km (32 miles) from the coastline at high tide.
In 1993, Mexico amended the constitution to allow foreigners to purchase real estate within the restricted zone by means of a bank trust (Fideicomiso).
The bank trust requirement (Article 27) is currently being reviewed by the Mexican government, and in April of 2013 Congress’ lower house voted to loosen the restrictions on foreigners buying lands within restricted zones. The measure passed 356-119 and now only needs approval from the Senate and a majority of the country's 32 state legislatures to become law.

Purchasing Land in Mexico through a Fideicomiso (bank trust)
The fideicomiso is a bank trust where the bank (trustee) holds the trust deed for the purchaser (beneficiary). While the trustee is the legal owner of the real estate, the beneficiary keeps all ownership rights and responsibilities and may sell, lease, mortgage, and pass the property on to heirs.
The fideicomiso is authorized by the Mexican Government under the Ministry of Foreign Affairs.
The bank checks ownership and insurance, and verifies that the property is free of liens.
A trust is granted for a 50-year period, renewable at any time (for another 50-year period) by submitting an application to the bank. If the 50-year period expires without renewal, the owner has another 10 years in which he may submit an application to renew the trust.
If property already has a fideicomiso, the existing trust may be transferred to the new owner and will be good for the remainder of its 50-year period, or the trust may be renewed. If property is already in a fideicomiso, probate and transfer tax are avoided when the property is transferred.

TRUST (Fideicomiso) FEES:

  • Applying for the Fideicomiso: $2,000 USD
  • Taxes, notary and lawyer fees: 8% on the cost of purchasing the land or home
  • Maintenance of the Fideicomiso: $450 USD a year•Tax on the property fee: about $100 USD per year (for a property worth $100,000 USD); VAT of 16% on fees.
  • No Value Added Tax (Sales Tax) is payable on residential property

Purchasing Land in Mexico through a Mexican Corporation
To purchase a commercial property in Mexico, you will have to establish a Mexican corporation (it may be foreign-owned), and as such you will be able to purchase property in a restricted zone without a fideicomiso.
Commercial property pays higher water, electric, and telephone rates.
A Mexican corporation may not own a single-family residence.
The Tax Authority may choose to perform a commercial appraisal after the purchase. If appraisal value is 10% greater than the declared value, the difference between the two amounts is subject to 20% Appraisal Tax, payable within 15 days after the appraisal.
Commercial Property transactions are liable to VAT at the current rate in addition to the Acquisitions Tax.

Buying land in Mexico: legal documents and process
When buying land in Mexico, you will have to sign a “Convenio de Compra/Venta,”which is a purchase agreement, prepared by lawyer or notary. You will sign the document after the final price has been established and agreed upon. It states the seller's and the buyer's name, address, age, marital status, etc. It also states the exact size and location of the property as it appears on the deed.
The agreement must show the amount to be paid including the down payment, which is paid at the signing of the agreement. A 5%-10% deposit is expected from the buyer.
When dealing with real estate in Mexico, keep in mind that the seller will then have to provide a copy of the Land/Property Deed. It is important to hire a lawyer to review the document.
The date of initiation of closing must also be declared.
Once the deed is transferred to the buyer, the buyer will have to turn over the payment to the seller.
Cash or monetary instruments of any kind over US$10,000 must be declared when entering Mexico. There are no limits on how much can be transferred in or out of the country. The capital gains tax is 15%; 28% for foreigners.
The process of registering a property can be completed in around 48 to 108 days.

If you have any questions, visit our Frequently Asked Questions (FAQs) page or contact us.


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