purchasing property is easy with the right people supporting your decision. faq's, legal information and much more.
CAN I FULLY OWN PROPERTY IN MEXICO?
Yes of course, you are able to get full title, it is in your name, you own it forever and can will it to who ever you want.
CAN THE MEXICAN GOVERNMENT TAKE MY PROPERTY?
NO!! With our help we ensure that we only show properties that have fully transferable titles. The stories you may have heard is about foreigners deciding to try and go around the system, negotiating to buy Ejhido land which does not have title. I liken this to Native land in Canada or the USA. You can find the chief, buy the land from him but never actually own it when you are not a Native.
DO I NEED TITLE INSURANCE?
No! Not in Mexico. When you close a property with the right Realtor and Lawyer, the Title is yours! Mexico is a country of laws and the strongest laws here under the Mexican system is Contract Law. Not that the government wants us to ever say this but even if you never pay your fideicomiso no one can take your title. Not the government, bank or anyone else. The only thing that will happen is you have to pay it with interest in order to sell your property and transfer the title to someone else. As said above if there is no transferable title then you can not buy it. If someone is trying to sell you title insurance in Mexico they are trying to take your money.
WHAT IS A FIDEICOMISO?
The Fideicomiso is essentially your permit for owning land in what used to be the restricted zone. The restricted zone prior to 1970 was 50km from the beach and 100km from the boarders. Only Mexican citizens could own in that zone. Since 1970 a foreigner can now own land in this zone though the Fideicomiso. This is a Mexican bank trust. The beneficiary of this trust has all the power of the trust, you can move it to a different bank, cancel it with the sale of your property, add more properties to the trust, move properties to a different trust etc. Depending on the value of your property your Fideicomiso fees are between $400 and $1000 per year USD.
WHAT ARE MY CLOSING COSTS WHEN I BUY A PROPERTY?
Typically when you purchase a property your closing costs are between 5% and 6%. These costs are extremely important to pay. Remember the question can anyone take my property? or do I need title insurance? Not is you have closed your property correctly. These closing costs loosely break down to 2% Legal fees, 2% Tax to the Mexican Government, 2% permit fees which includes your first year Fideicomiso payment.
DO I GET HIT WITH CAPITAL GAINS TAX WHEN I SELL MY PROPERTY?
Yes! However one of the reasons we have such happy clients is that part of our service when dealing with the lawyer is to put a plan in place at the time of purchase to minimize this tax. Almost no body pays the full tax burden with us due to this strategy. Even though your property is bought and sold in USD it is registered with the government in MXN pesos. One of the great things about buying now is that the peso is averaging at 19 per 1USD. When the peso gains strength you could make $50000USD on your property and break even in the registration of your sale with the Government.
WHY DO I NEED A GOOD REALTOR?
There is no law requiring you use a Realtor, you could look at properties on your own, find yourself a good lawyer and go from there, keeping in mind that anyone you talk to who is selling you a property or development has their interests in mind not yours . A Realtor is much more in Mexico than someone to negotiate on your behalf.
A Realtor is in your corner, they will know about the developer, what other projects have they built, how if they are of high quality, delivered on time, delivered with title. What questions to ask about the title if it is a re-sale home. Information regarding the common area management, hurricane protection, upkeep etc etc. A Realtor's job does not stop at the completion of the sale. Ours is a referral business. We can help keep an eye on your property, recommend a great property manager, vacation rental specialist.
Most importantly we know all the great restaurants in the area :)
WHAT KIND OF RETURN ON MY INVESTMENT CAN I REALISTICALLY EXPECT?
You will see many claims from many developers and sales offices from 4% to 20% on your investment. But this is your money, your investment and income future. We have models, projections and actual data from any area you are looking to invest in. Before you purchase it is a good idea to sit down with a recommended vacation rental professional who works in the area. They will be able to provide you with actual data from the area on rental incomes, both long term and vacation rentals. Under promise and over deliver, that way your budget is solid along with your future. The norm on vacation rentals is 8%. This is a net return on the purchase price of your investment. When your vacation rental professional presents you with a model for your unit, it should take into account the following expenses.
1) All Utilities
2) Maid and Laundry Service
3) Property Management fee
4) Rental Commission to the profeshional
5) HOA Fees
7) Fideicomiso Payment.
At the end you should expect to have a minimum of 8% return NET, NET. Any property you buy will pay for itself in 7 to 8 years with your gross return.
CAN I FINANCE MY PURCHASE IN MEXICO AS A FOREIGNER?
This is a big topic! There are options available to you here. We will need to have a discussion on this to ensure you are looking with the correct budget in mind. Financing from independent sources are available to foreigners. We do not recommend financing more than 60% of any property. With 40% down you will obtain title at closing.
You can also get financing from some developers on their new construction projects however this will severally limit your options. Most of our clients obtain financing from their own country as it is much lower interest and they can secure it with their existing home.
HOW DO I USE MY PROPERTY PURCHASE TO OBTAIN MY MEXICAN RESIDENCE?
The Mexican Government has made it very easy to both invest, purchase and obtain residency in Mexico. If you own property registered over $1500000 mx peso's. Approximately $90000 USD. Once you have purchased and titled your property you will be able to bring that title deed into a Mexican consulate of your choice. Based on that Title deed they will issue you either a Temporary or Permanent residency visa. It really depends on your age, health and the person you happen to be speaking to that day. A temporary residency visa is good for 4 years (renewable every year). You can come and go as much as you like to and from Mexico. You are still a resident in your home country and in North America would pay income tax in your home country. In the case of a Permanent residency visa, you would then be spending over 6 months in Mexico and would be required to pay income tax in Mexico. According to NAFTA you only need to pay tax to the country you are a full resident in. So if you have a rental property in Mexico and are earning income you only have to pay this in Canada or the USA if that is the country you are a resident from. As you can imagine Mexico would prefer to collect those tax dollars, which is why they make so easy to become a resident.
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