Frequently Asked Questions

Yes!

There are legal steps to follow when trying to buy property in Mexico as a foreigner. With our help and guidance we will keep the process simple and understandable.

In this region, foreigners who want a property for sale in Mexico need a trust agreement issued by a bank, called a fideicomiso.

• The 1917 Constitution designated a zone of 100km (62 miles) on the Mexican borders and 50km (31 miles) on the coasts as the limit for foreigners to purchase property. This zone was known as a "prohibited zone" but new legislation now considers it a "restricted zone".
• A foreigner may purchase the right to own, occupy, use, modify, rent and sell real estate through a bank interest in a trust agreement with the banking institution, which holds legal title to the property.
• The bank holds legal title to the property and acts as a trust holder when the beneficial title is held by a foreigner.
• The bank is obligated to deal with the property solely for the benefit of the owner.
• The beneficiary can be a foreign person or a legal person as a foreign company.
• The trust agreement exists only for the benefit of the beneficiary, who is as a practical matter the owner of the property.
• The property may be transferred by will or inheritance, may be used as collateral for rent and may be enjoyed, rented or sold freely as determined by the beneficial owner.

The 1993 Foreign Investment Law went further and authorized full ownership of non-residential real estate for a Mexican corporation that can be 100% foreign owned. This includes real estate purchased for development that may be sold to foreigners for residential use. The corporation is considered Mexican, and therefore foreign investors can own the land directly.

• Any Mexican or foreign bank may set up a trust (the equivalent of a U.S. trust benefit) through a Mexican bank to purchase real estate anywhere in Mexico, including the restricted zone.
• When purchasing property in Mexico as a foreigner, the buyer requires a Mexican bank of his choice to act as trustee on his behalf.
• The bank, in the normal way, obtains the permission of the Minister of Foreign Affairs for the acquisition of the property chosen as a trust.
• The duration of the trust is 50 years and can be automatically renewed for another 50-year period.
• During this period you have the right to transfer the title to a third party, including members of your family.
• The bank becomes the legal owner of the property for the exclusive benefit of the beneficiary/buyer who has all the benefits of direct ownership, including the possibility of leasing or transferring his rights to the property to a third party or an heir.
• The bank ensures compliance with the trust, in accordance with Mexican law, assuming technical, legal and administrative supervision for the protection of the buyer's interests.
• Trusts are not used as assets of the bank.
• More and more Mexicans are opting to use a trust, as it will indicate who will become the primary beneficiary in the event of death.
• The trust functions as a will and testament for the purchased property, saving time and money by avoiding a lengthy probate case (which in Mexico can be up to 3 years).

In addition to having the necessary funds, there are documents that you must present to the notary to purchase property in Mexico as a foreigner:

• Valid passport
• Valid driver's license (usually 2 photo IDs are required).
• Proof of address (either from your country or in Mexico) is usually a service payment.
• Personal information (full legal name, date of birth, address, contact information, email and phone number).
• Beneficiary information (full legal name, copy of passport, IDs, and address).
• Mexican CURP number (if you have one).
• Mexican RFC number (if you have one, or a generic foreign number will be created for you).

The CURP is a formal identification number that all Mexicans receive at birth (on their birth certificate). Mexican residents receive the CURP on their resident card and foreigners have it on their visa (temporary or permanent).

If you do not plan to stay more than 6 months in Mexico, you do not need it.

If you plan to stay in Mexico for more than 6 months, then it is necessary.

If you wish to stay in Mexico for more than six consecutive months, then you will need a resident visa. The visa is obtained for the first time outside of Mexico, so applicants should go to the nearest Mexican Consulate.

If you wish to apply for a visa or change your immigration status in any way, there is an online procedure to start the process. 

After 4 years it is convenient to leave the country to apply for a new visa or to convert it into a permanent resident visa.

If you already have nonimmigrant status in the first or second year, then you can either convert to a permanent resident visa or leave the country. You can apply for a change 6 months in advance of its expiration.

The MVPR can be applied for after 4 years without the need to renew it every year.

There is a minimum income to obtain this visa of around $2,000 USD per month or $102,000 USD of investment per individual. You will need to corroborate income through bank statements but immigration officials have the discretion to combine assets including real estate to arrive at an equivalency. The idea is for you to be financially self-sufficient.

Once you have contacted the Consulate, they will provide you with a Visa that will be added to your passport. With this document you can legally enter Mexico and you have 30 days to present the visa to the local immigration office to exchange your temporary visa for a permanent resident document.

Once you have your permanent resident document, your new CURP will automatically appear on it.

The RFC is a unique number for paying taxes, designated to all persons active or not active in Mexico.

This can be obtained online here or in a short visit to the SAT offices in Puerto Vallarta, where you will be able to obtain your RFC in order to purchase a property.

You will need your valid passport, immigration visa and proof of address to obtain the RFC in person at a SAT office.

• All sales are conducted at a Notary Public.
• A contract in Spanish with a translated courtesy in English is written and presented for your review and signature on each page.
• If there is an agreement with the seller, I work with closing coordinators, attorneys who will facilitate the process for us at no extra charge to the buyer.
• We created an escrow account (approximately US$$800) to hold funds until closing.
• A standard 10% deposit is required to formalize the sale.
• The standard closing time is 45 days and could increase to 90 days if the property is acquired through financing.
• The ending balance of the 90% is transferred to the trust a few days before closing.

The closing attorney prepares all the documents with the Notary and the Public Registry and when they are ready for closing, we meet with the notary to sign the final signatures. At closing, the buyer receives a certified copy of the deed but the original can take up to 6 months to be formally recorded at the Public Registry office. Once ready, the Notary will notify the buyer so he can pick it up.

• In Mexico the deeds, usually known as public instruments, can be found at the local Public Registry of Property, which is open to the public.
• The deed must be finalized and signed by the Notary Public.
• The deed will list the parties involved in the transaction including the Notary, seller, buyer and the Trust bank.
• The deed identifies the buyer.

Once the deed is finalized and signed by the Notary, the seller, the Trustee (if a bank is involved) and the buyer, (who will also be the beneficiary of the Trust) the purchase price changes hands and the transaction is considered closed.

• In Mexico, the Notary Public is a quasi-governmental official who reviews all documents of importance regarding the sale of a property.
• The training, function and responsibility of the Notary Public is completely different in North America.
• The Notary must be licensed in Mexico.

Becoming a Notary Public involves attending law school in Mexico, obtaining a law degree, passing the exam and being accepted to the bar in Mexico. To aspire to the position, the prospective candidate must work as an apprentice with a Notary Public for many years. A Notario cannot serve as a Fideicomiso. The Notary's job is to see that certain formalities have taken place. While a job is always a lawyer, it is not the Notary's job to give any legal advice. Any buyer or seller who wants legal guidance should hire a separately licensed attorney.

Yes you can!

The required paperwork is:

• Passport
• Proof of address
• Tourist Visa or FM3 provided upon arrival in Mexico.
• 3 local references
• $3,000 pesos to open account

I recommend using Bancomer for a peso account, as they offer a fully bilingual service for foreigners (Preferred Customer Section) and are experienced in dealing with property owners and renters who are not here year-round, and they give you a gold card that can avoid lines at the branches. Benefits include being able to pay bills online, write checks in pesos, draw up monthly bill payment orders, check your balance, and make payments online when you are not here. It is recommended to make an appointment at the bank because it can get crowded! To avoid paying a commission, it is recommended that your account always have at least $3,000 pesos.

• The simple answer is yes, if you generate money you must pay taxes.
• Yes, if you are a non-resident or do not pay taxes in Mexico (you need a valid permanent resident visa or a Mexican voting card and all accounts in your name as proof of address).

However, to determine the gain, costs and expenses are deducted from the amount for which the property was officially sold:

• The original cost of the land and the depreciation value of the construction, based on the number of years of ownership of the property and the adjustment for inflation according to consumer price indexes.
• Additions, alterations and improvements, but not maintenance done on the property (construction) adjusted as above.
• Commissions paid to the real estate agent and broker by the seller.
• Closing costs, including expenses and taxes paid by the seller. The Notary will withhold the calculated gain after deductions and give it to the tax authorities in Mexico. The seller must deduct this amount in his annual tax bill, which will be converted into an adjustable tax credit in the United States.

To make sure you are paying what you owe and not overpaying, we work with different tax attorneys who will help us make sure the whole process is legal and follows the correct steps.

If you have other questions about buying real estate in Mexico, please contact us for assistance. We understand that the process of buying property in Mexico as a foreigner can be confusing at times, but our team of experts is here to help you every step of the way.