How to buy a property in Mexico as a foreigner?
Mexico has been attracting foreign real estate investors for a long time now. Buying real estate in the country can offer an excellent investment in both short and long term especially if the property is in the South and close to the tourist destinations.
The milder weather, the nature, the local cuisine, and the friendly local people, all this makes Mexico a desirable destination to buy a real estate for investment or to live in. Although the real estate market is open for non-Mexican citizens, there are some requirements you need to know if you want to invest in the local real estate market.
If you decide to go to the State of Quintana Roo where the famous Cancun, Tulum, Playa del Carmen, and Isla de Mujeres are, to get familiar with the market and meet a real estate agent, do not forget to pay your Visitax – the tourism tax required from every visitor heading to this part of Mexico.
How can a foreign citizen buy a real estate property in Mexico?
The process in acquiring a real estate in Mexico has become smoother and easier over the years due to the increased number of people wishing to get their own piece of this beautiful land. The real estate market being open for foreigners, investors from Canada, the US, and the EU contributing to the largest part of the foreign investments in this sector.
Depending on the zone and the purpose of your purchase you can buy a property in Mexico directly or via a corporation.
Acquiring a property in Mexico
Here are the basic steps to follow if you wish to buy a real estate property:
- Choose a lovely house to buy.
- Sign the contract documents and pay the deposit – usually of between 6%-10% if the building is still under construction and up from 40% if the property is already built.
- The deposit will be asked via a bank transfer.
- Prepare all the documents needed according to the terms of the sales contract.
- You may need to fill in a Fideicomiso application – a bank trust which complies with the Mexican Regulation Act designated to foreign investors wishing to acquire a real estate property in the so-called Restricted Zone.
- Pay the closing fees which usually range between 5% – 7% of the deal. You will be able to dispose of your new property even though the deal is not yet closed.
- Mexico’s Public Registry should then issue the Escritura – an official document stating new ownership of the property.
- The process from the beginning to the end will take around three months depending on the type of deal and the property.
Although created to ease the acquisition of properties at the Restricted Areas, you may be advised to apply as this trust is used as a sure vehicle to buy, sell, and rent a property in Mexico.
Important to know:
The whole documentation will be written in Spanish including those coming from your side. Find a Mexican lawyer or a lawyer company working with a Mexican peer, familiar with the local real estate legislation to lead you though all the process.
The Restricted Zone or Restricted Areas, is the land within 50 km (31 mi) from the sea and 100 km (62mi) from any border.
Real estate price in Mexico
Below is the average price of the housing market in Mexico in 2021:
|Location||Price (sqm) in City Center||Price (sqm) outside of city center|
|Guadalajara||1,190.86 USD||697.80 USD|
|Mexico City||2,233.19 USD||1,286.45 USD|
|Monterrey<||1,746.89 USD||1,437.67 USD|
|Playa del Carmen||1,316.57 USD||1,083.14 USD|
|Puerto Vallarta||1,806.65 USD||1,306.31 USD|
|Average price||1,658.83 USD||1,162.27 USD|
The price of the land in Mexico as of December 2021:
|Location||Minimum price||Maximum price|
|Guadalajara||62,200 USD||2,691,343 USD|
|Mexico City||20,230 USD||8,700,000 USD|
|Monterrey||32,844 USD||5,355,068 USD|
|Playa del Carmen||30,940 USD||10,000,000 USD|
|Puerto Vallarta||297,000 USD||1,626,300 USD|
Fees and taxes
The taxes and the fees are something one should bear in mind when calculating the final piece of deal. Although impossible to mention all the taxes, the listing below gives good perspective to what to expect in terms of fees and taxes:
|Agency/Agent fees||From 3% to 6% + 16% VAT|
|Notary/Lawyer fees||From 0.07% to 1.12%|
|Acquisition Tax||From 0.18% to 4.5%|
|Registration Fee||From 0.02% to 1.8%|
|Title insurance||From 0.5% to 0.7%|
Best locations in Mexico to buy a real estate
According to the real estate deals signed in 2021, here are the most desirable locations to buy a house/apartment in Mexico:
- Puerto Vallarta
- Cabo San Lucas
- Playa del Carmen
In 2021, the following locations were among the cheapest ones:
- Real estate in the Yucatan Peninsula
- Towns and villages in the Oaxaca region
Fideicomiso in brief
The Fideicomiso Trust has been implemented to prevent possible foreign invasion. However, it brought as a consequence limitation in the development of the regions to which it refers.
In 1993, the Mexican government changed the law again, allowing foreign citizens to buy properties in the Restricted Zones under certain requirements.
When foreigner wishes to acquire a real estate in these territories, they can only do so indirectly, through a trust agreement between them and a Mexican Trust Bank acting on behalf of the Mexican state.
Fideicomiso – is a document signed between a private or corporate foreign party with a Mexican bank that owns the rights for the properties at the waterfront and near the borders.
The steps in detail when buying a property in Mexico
The initial offer
It represents a “promise to buy” through which the seller is shown the interest in acquiring a property.
The buyer approaches the seller with the following information:
- Final price and payment plan
- Deposit requirements
- Details on the deadline for acceptance of the offer
The above is the basic but not the only information that can be included. All other parameters are welcomed so the seller can have a clear idea what are the intentions of the buyer.
Promise of Sale Contract
This is a binding document for both parties establishing the terms under which the purchase contract will be carried out. It usually describes how the transaction will be carried out once the negotiations are completed.
Establishment of a Trust
For establishing a Trust, the buyer needs a permit from the Federal Ministry of Foreign Affairs. The Trust then will have to be registered in the Public Registry of Property and the National Registry of Foreign Investments. It is highly advisable for the buyer to set a will in Mexico regarding the local property.
Remember that under Fideicomiso the real estate properties are held by Mexican banks. Under a will the heirs of the property will be determined so, in case of a death of the interested party, the real estate will not go back under the banks’ management.
- A certificate of free of encumbrances.
- A settlement certificate (to prove that there is no outstanding tax liability).
- An appraisal of the property.
- Recognition of the property to be acquired
Irrevocable Trust Agreement
Finally, there is the irrevocable trust agreement under which the parties are granted to the created trust. Then, the date of the deal closing is set. All taxes and fees left must be paid. The deal is closed with the transfer of the rest of the real estate price.
Operation of the Trust when acquiring real estate in Mexico
The Trust facilitates the purchase and management of the property. Likewise, it helps in the resolution of conflicts that may arise, creates an extrajudicial environment, or forms a newly constituted business.
The acquisition of properties in the Restricted Zones can only be done through a trust agreement between the interested party and a Mexican Trust Bank. The Latter acts on behalf of the foreign buyer granting him all rights and responsibilities to sell, lease, mortgage or entrust the property.
The trust bank is in charge of verifying that the property is free of liens or any claim on it. This trust is valid for 50 years and can be renewed at any time for the same period of years.
Is it possible to buy a property in Mexico from abroad?
Numerous non-Mexican lower and real estate agencies offer their services to foreigners wishing to buy a property in the country. No matter whether you plan to travel to Mexico to buy a house or lead the deal from your home country, it is crucial to hire experienced professionals to help you though the steps in the acquisition.