Your Complete Guide to Buying Property in Mexico

Buying real estate in Mexico is very achievable for foreign buyers, but it works a little differently than in the U.S. or Canada. Here’s what you need to know about ownership, taxes, and the notary process before you start your search.

Buying a Home

Property Taxes

Property taxes are much lower in Mexico than other parts of North America. They are typically about $100 USD per year for every $100,000 USD of property value, with a 15% discount if paid before February 15th.

The Bank Trust (Fideicomiso)

Foreigners (non-Mexican) are able to purchase real estate in Mexico. They may directly own rural or urban land in the interior of Mexico, with certain limitations on specific agricultural tracts. In the restricted protected zone, a Bank Trust Deed is used. These protected areas include 100 kilometers along all natural borders and 50 kilometers along coastlines — all of Baja California, Puerto Vallarta, and coastal Nayarit fall within the restricted zone.

The Bank Trust Deed, or “Fideicomiso,” is established through a Mexican bank, giving foreign buyers the rights and privileges of ownership. As of 1994, the Foreign Investment Law allows these deeds to be established for a term of 50 years, renewable forever. This public deed is called an Escritura.

In the restricted zone, title can be held in one of two ways:

• A Mexican bank trust, used for residential property
• A Mexican corporation, which can hold nonresidential real estate — foreign nationals can be sole and exclusive stockholders of the corporate stock holding title to this nonresidential property within the restricted zone

If you hold property as residential and claim it as a fiscal residence in Mexico, you may be eligible to waive partial capital gains tax. Certain restrictions apply.

The Notary

The public notary in Mexico is responsible for the transfer of real estate. The notary’s responsibilities are much greater than what buyers are typically familiar with in the United States or Canada. The notary in Mexico is appointed by the governor of the state and the executive branch of the federal government, and is an attorney with additional specialization who has passed an extensive exam.

He or she is appointed for life. The Deed (Escritura) is prepared from the purchase-sale agreement. The Escritura, as well as all closing documents, are in Spanish — English translations are courtesy translations only.

Prior to closing, the notary examines the seller’s documents to verify the title. A search of the public records is done to determine the status of the title and the existence of any liens against the property. The notary is responsible for the collection and payment of property taxes and government transfer taxes. If a seller owes capital gains, the notary determines, collects, and pays this tax when due.

The Escritura, or public deed, names the seller conveying and the buyer receiving the property, along with the legal description. The terms of the bank trust (Fideicomiso) agreement are incorporated into the Escritura, along with a description of the metes and bounds of the land, and a plat. In the case of construction, a floor plan or footprint of the building is also included. A buyer should also receive evidence that utility services on the property have been paid to the date of closing.

At closing, the notary meets with the buyer and seller to formalize the transfer, requiring appropriate signatures upon execution of the deed. The Escritura is then recorded with the public registry where the property is located.

Closing Costs

The buyer pays closing costs, while the seller pays any capital gains taxes and real estate fees. Closing costs in Mexico are typically higher than what buyers are used to in the United States and Canada, and include:

• Appraisal (Avaluo)
• Cautionary Notice (Aviso Cautelar)
• Provisional Notice (Aviso Preventivo)
• Certificate of No Debt (Certificado de Libertad de Gravámenes)
• Certificate of No Property Tax Debt (Certificado de No Adeudo Predial)
• Fiduciary Fee (Comisión Fiduciária)
• Copies (Copias)
• Additional Files (Folios Adicionales)
• Property Transmission Payment Forms (Formas para Pago Impuesto Transmisión Patrimonial)
• Tax and Legal Instruments (Impuesto Sobre Negocios Jurídicos e Instrumentos Notariales)
• Tax on Property Transmission (Impuesto Sobre Transmisiones Patrimoniales)
• Registration in Public Register (Inscripción Registro Público)
• Registration in Foreign Investment National Register (Registro Nacional de Inversión Extranjera)

Getting Started

Before we begin our search to find you a property, there is some information that we need to know — we call this our Home Buyer Consultation. We will ask you some questions to help us get a better idea of your ideal neighborhood and home:

What type of property are you looking for: House, Condo, Land, or Commercial?

• Number of bedrooms and baths?
• What area are you interested in?
• How will you use the home — part time or full time? Interested in vacation rentals?
• What features do you most need or want?
• What is your budget?

We will review your search parameters and demonstrate the FlexMLS portal and app, explain listing notifications and market conditions, and go over scheduling of appointments.

Viewings

If you are here in Mexico, we will set up viewings to show you properties that we think will be a good fit for your criteria. If you are outside of the country, we can send you links to properties and set you up to receive automatic updates when something new comes on the market that fits what you’re looking for.

Step 2: Financing

For American citizens: MoXi, a global mortgage company. For Canadian citizens: SEAPORT Credit Canada.

Step 3: Setting Your Search

We will begin a search for you based on price, location, and house-specific criteria provided by you. You provide feedback about the search results and tell us which homes are of interest to you. We will set up showings and begin viewing your top home choices, working together to narrow down your preferred list until you find the home you want to buy.

Step 4: The Offer

We will discuss and write an offer to present to the seller. Negotiation follows, and once accepted, the agreements are initiated, signed, and dated. The offer details all terms of sale, closing date, and price, and has one effective date: when all parties have signed the offer and all addendums in agreement.

The period of due diligence then begins. We always recommend an inspection and allow time to review the report. The seller has a period of time to provide documentation and/or information to satisfy the conditions in the offer. As a buyer, you have a deadline to order, complete, review, and accept or reject the home inspection, as well as a deadline to review legal documentation and accept or reject it.

Step 5: Close the Contract

Once all conditions are satisfied or removed (usually 7 to 14 days), we will request that an escrow account be opened for you. An escrow agreement will be signed by both buyer and seller and a file number is issued. The buyer pays the cost ($750 USD) of opening the escrow account, and will have a deadline to wire a 10% minimum deposit (part of the purchase price) and escrow fee into the new escrow account.