Mexico offers a rich culture, beautiful landscapes, and a relatively low cost of living. Many people are drawn to the idea of owning property in Mexico, whether as a vacation home, investment property, or permanent residence. However, buying property in Mexico can be different than what you have experienced in your home country.
Understanding Mexican Property Law
One of the first steps in purchasing property in Mexico is understanding the country’s property laws. Foreigners can own property in Mexico, but there are restrictions on the type of property that can be owned and where it can be located.
The Mexican constitution prohibits foreigners from owning property within 50 kilometers of the coast or 100 kilometers of the border. However, there are exceptions to this restriction in certain areas designated as “restricted zones.”
Hiring a Real Estate Agent and Lawyer
To navigate the complex laws and regulations involved in Mexican real estate transactions, turn to a reputable real estate agent and a lawyer familiar with Mexican property law.
A trusted agent can help you find properties that meet your needs and budget. On the other hand, a lawyer will guide you through the legal aspects of the transaction, including reviewing contracts and ensuring that the property is free of any liens or encumbrances.
Financing Your Purchase
Financing options for purchasing Mexican real estate are easy with our trusted partners. These are available to nationals and foreigners alike. MexHome works with some of the world’s top, cross-border lenders to secure financing. They are reliable companies offering home loans and refinancing in Mexico. Currently, our partners have financing options for completed, habitable residential properties.
Title and Ownership
Mexico has two types of property ownership: ejido and private property. Ejido land is communal land owned by a group of people, and it is not recommended for foreigners to purchase. Meanwhile, foreigners may own private property, but the title must be clear and free of any liens or encumbrances. A lawyer can help you with this process and ensure the title is properly transferred to your name.
Taxes and Fees
When buying property in Mexico, there are several taxes and fees to consider:
- Transfer Tax (Impuesto sobre la Transmisión de Bienes Inmuebles or ITBI): This tax is paid by the buyer and is based on the property’s purchase price. The rate varies by state but is typically between 2% and 5% of the purchase price.
- Notary Fees (Honorarios Notariales): A notary public is required to oversee the property transfer process in Mexico. Notary fees are typically 1% to 2% of the purchase price.
- Property Taxes (Impuesto Predial): This annual tax paid to the local municipality is based on the property’s assessed value.
- Homeowners Association Fees (Cuotas de Mantenimiento): There may be monthly or annual fees for maintenance and services if the property is located in a gated community or condominium complex.
- Capital Gains Tax (Impuesto Sobre la Renta or ISR): If you sell the property in the future, you may be subject to capital gains tax on the profit. The rate varies depending on the time you have owned the property.
Property Management
If you are not living in the property and renting it out, you may need to hire a property management company to manage tenant relations, maintenance, and rent collection. This service will come at an additional cost, usually a percentage of the rental income.
A local caretaker is also worth considering. They can take care of all the repairs, maintenance, and rental bookings on your behalf.
Key Takeaway
Investing in real estate in Mexico can be an excellent opportunity for foreign investors. However, you must understand the legal and financial aspects of purchasing and owning property in Mexico. Consult a reputable lawyer and real estate agent to ensure a smooth and successful transaction. With proper planning and research, owning property in Mexico can be a profitable and enjoyable investment.
At MexHome, we can provide expert guidance and support throughout the entire process of purchasing and owning property in Mexico. Our all-in-one real estate agency can help you navigate the legal and financial landscape of Mexican real estate and ensure that your investment is secure and profitable.
Call us anytime at +1 866 271 6887 for more information. One of our MexHome-certified AMPI agents will help you with each step when buying real estate in Mexico.
