Buying a home in Mexico is new to many people. We are here to make it easy. Explore this section of our website to understand how it works.
Can a Non Mexican Buy Beachside Property in Mexico?
Yes Non-Mexican citizens can buy property in Mexico. All foreigners have the full protection of the law with regards to real estate transactions in Mexico. There are no immigration requirements and you do not have to be resident in Mexico to own property here.
Formerly there were many restrictions. These were almost all removed with the Foreign Investment Law of 1973, which was a constitutional amendment which allowed foreigners to purchase real estate free and outright except inside the “restricted zone’. This "restricted Zone" is the area within 100km (64 miles) from an international border and 50km (32 miles) from the coastline at high tide and the original Mexican Constitution created this zone at its inception. In this zone only natural Mexican citizens could own property. The purpose of this was to protect the country from land and sea invasion. Cuyutlan is within this zone.
The Mexican government, which encourages foreign investors, created two options for foreigners to work around this antiquated clause in the constitution.
- Having a Mexican Bank hold the title in trust for the owner. A Bank Trust or Fideicomiso
- Having a Mexican Corporation hold the title in trust for the owner
Both methods are safe and secure and only require a small additional expense and paperwork
How Does A Bank Trust or Fideicomiso Work?
Simply speaking you are the owner of the land. You have all the rights of ownership. You may sell the property or leave it to a survivor at your death. You have tax liability and may use it as collateral. The bank is simply holding the title for you in trust in much the same way some people create a trust fund for a child or minor. The bank is the legal owner of the real estate, but the beneficiary (you) retains all legal rights of ownership and as a result may sell, rent, and bequeath the fideicomiso or property to whomever they choose or their heirs.
Your Bank Trust must be established at an authorized Mexican Bank in their Trust Department and authorized by the Mexican government through the Ministry of Foreign Affairs. The fideicomiso is actually a good thing for a property owner since it offers the buyer added securities. The bank is required to verify the property’s ownership and be sure that it is free of liens. This is a step that can sometimes be neglected in regular real estate transactions with unfortunate results. Having the bank involved means that they check to make sure everything is properly done.
The trust is established for a 50-year period which is renewable for another 50-year period after that. If the 50-year period expires without renewal, the owner has another 10 year period in order to submit an application for renewal. When a home or land is purchased with an existing fideicomiso, the remainder of that trust is merely transferred to the new owner or can be renewed at that time. The bank charges an annual fee for holding the property which is based upon its value. Bank Trusts are perpetually renewable.
What about putting the property in a corporation? Is that easier or better?
Mexican corporations can be 100% foreign-owned (you and your spouse, for example) and still hold title to property within the restricted zone (without a fideicomiso). These corporations were once a popular option for foreign investors looking to buy within the zone. They now have more restrictions and also have further reporting and accounting requirements than the fideicomiso; making their use in purchasing property not as advantageous as in the past years.
Financially the cost of setting up a fideicomiso and a corporation are very close to each other. The recurring fee you would be paying a bank each year for the fideicomiso is very similar to the reporting expense of a corporation. However if you are intending to purchase several properties in the restricted zone you may want to consider a corporation since you pay the bank for each bank trust but only need one corporation for an unlimited number of properties.
Can you explain to me about Federal Zones at the beach?
No one, including Mexican Nationals can own property in the Federal Zone, which applies to only beachfront property within 20 meters (about 66 feet) from the mean high tide line. This property is owned by the Mexican Federal Government under the Federal Maritime Land Zone Law. It is possible for foreigners and Mexicans to obtain use of the beach land for a reasonable fee under a concession granted from the Federal Government. This concession grants temporary use and, at the option of the Government, these concessions may be renewed for specific periods of time.
On the malecon (boardwalk) in Cuyutlan there are beach restaurants who are on this Federal Zone and pay rent to the Federal Government for the privilege. In larger resorts you may see a hotel with a bar or a terrace or even a pool right by the water. They are paying a yearly rent for that land to the Federal Government.
It is typical for homeowners on the beach to build a small terrace or a palapa roofed pavilion or maybe even a firepit. The procedure for obtaining a lease for the federal zone in front of your property is not difficult or expensive and at Cuyutlan Properties we can help you with the process.
Are property taxes expensive in Mexico?
Property taxes are very low in Mexico as a whole. The property tax, which is known as a "predial" is typically 0.1% of the assessed value. Taxes are paid annually in our county seat which is Ameria. We take care of this procedure for many of our property management clients for a small fee.
If you purchased a property with an assessed value of $100,000 USD your annual tax bill would be about $100 USD.
Predial has never been a large source of revenue for the Mexican government and is just another reason to love living in Mexico