Have you ever wanted to own a beach house in Mexico? Investing in real estate in Mexico is an attractive option. In this article, we will specifically talk about Puerto Vallarta and Bahia de Banderas, that boasts beautiful beaches and delicious food.
Mexico has relaxed regulations when it comes to foreign investments, making it easy to own residential property. Unlike in some countries, you can hold the title in your own name instead of requiring a trust, although trusts can still be used for asset protection or estate planning purposes.
However, if the property is near the coast or an international border, special rules apply. Mexico has a restricted zone that extends 31 miles from the coast or 100 kilometers from an international land border.
Since the early 20th century, non-citizens have not been able to hold property in their name within this zone. To encourage foreign investment, the government created a regulation that allows the use of a trust to purchase property within the restricted zone. A real estate agent can connect you to a notary who will take care of most of the process, which includes the following steps:
- Making an offer to the seller, usually through your agent, which is typically a verbal agreement.
- Signing the sales contract, known as “promesa de compraventa.” This document outlines the price, terms of the sale, and any special arrangements or penalties.
- Paying a deposit, typically 5% to 10% of the total price.
- Initiating the creation of a trust if the property is in the restricted zone. The trust is valid for 50 years. If the previous owner had a trust, it is possible to transfer it to you, but it still needs to be renewed after 50 years.
- Arranging for the valuation process through the notary, where an expert determines the value of the property for tax purposes.
- Signing the deed at the notary’s office. This is where the final payment is typically made, and once the deed is signed, the property is officially yours.
- Paying taxes, collecting fees, and initiating the registration of the property. The notary handles these tasks, and you just need to provide the necessary funds.
- Completing the final registration process, which typically takes around three months.
- Considering closing costs, which should be around 5% of the purchase price. This includes a 1.5% notary fee, a 2% transfer tax, and additional fees such as trust setup fees. If you obtain a mortgage, the costs will be higher.
We recommend buying from a reputable real estate agency and asking any questions until you have a clear understanding. If needed, hire an interpreter to clarify terms in Spanish. Enjoy your new home!