Overview of the Real Estate Buying Process in Mexico
It is very common that foreigners want to acquire housing in countries other than those of their origin and residence, either for business or because they are looking for new places to live in. That is why at HalloCasa we strive for you to receive reliable and concrete information about how the process is being carried out.
According to the Political Constitution of the United Mexican States, only Mexicans born in the country or naturalized, or societies accredited as Mexican, may own private property in the national territory. However, foreigners can buy houses in Mexico as long as they meet certain requirements, which allow them to acquire real estate in Mexico.
The principal is an agreement in which the foreigner waives the possibility of invoking the protection of his government with respect to the goods, which must be outside the so-called “restricted area” that is within the range of 100 kilometers from the land borders and 50 of the beaches, in which case it is a mandatory requirement that the acquisition be through a bank escrow.
Therefore, it can be said that foreigners can buy land on Mexican beaches because, with an escrow, the bank holds title to the land but the foreigner is left with rights to the land for a maximum of 50 years.
This zone is the strip of the coast of the national territory up to 50 km (30.5 miles) inland or 100 km (61 miles) at the borders of the country.
2. You like a property
We are happy to see that you are interested in a property published on HalloCasa. On HalloCasa you will be able to use a large number of tools in order to understand the process of buying properties, as well as to find general information about it. On HalloCasa you can also find available documents and additional information, which will allow you to investigate in detail the environment and infrastructure of the property, facilitating the buying process.
If you like a property and you are interested in knowing more about it with the objective to easily make a purchase decision, the first step is to investigate at the public registry office to confirm that the property is free of mortgage encumbrances or limitations that may affect the buying process.
3. Contact the seller
In Mexico, property sales are done in two ways: directly through owners or indirectly with brokers. HalloCasa will tell you the language in which you can communicate with the contact persons. Most agents speak English, but in case you need a translator, on HalloCasa you can also find translators.
4. You receive detailed information about the property
The seller will send all available and necessary documents to you. However, a visit to the property may be of interest for you, so if you need assistance with travel arrangements, HalloCasa’s experts will be available to advise you at the time you contact them. We recommend that you take a look at the tour operators; this will allow you to realize how beautiful this country is.
5. You negotiate the contract and the price
Contract negotiations are often processes in which both parties gradually approach each other. It is important to take into account that in Mexico apply specific conditions to the contract of trading, so it will be useful to know its details. You will be able to know notes regarding the additional purchase costs in our frequently asked questions; it can be very interesting for you.
6. You sign the contract and make the payment
You are about to acquire your property! You sign the contract, either personally in Mexico or through an authorized representative of the country of origin. On HalloCasa you can consult information about notaries who you can contact. Read below also our detailed process of buying real estate in Mexico.
A Public Notary is a licensee in law and is the only one authorized by the Mexican government to formalize transfer processes of property titles in their protocol books. The resulting documents are registered in the Public Registry of Property and Commerce, giving legal evidence of the title in the name of the buyer.
7. You become the owner of the property
Your property is already registered in your name in Public Registry of Property and Commerce of Mexico. Congratulations! You recognize that this country has great potential, and believes that this is a promising country. We are happy for you! Enjoy your property!
Detailed Process of the Buying Process of Real Estate in Mexico
- 1. You like a property
- 2. Contact the owner / agent
- 3. Information Transfer
- 4. In case of requesting a Appraisal
- 5. Signing of the promise of sale agreement
- 6. You transfer the money to a Mexican bank account
- 7. You can buy from abroad or Mexico
- 7.1 Option 1: You travel to Mexico
- 7.2 Option 2: You buy from abroad
- 8. When signing the contract in Mexico
- 9. By signing the contract abroad
- 10. Registration of the Deed
- 11. Open a Bank Savings Account
1. You like a property
For each property, you will find information on the following topics:
- General information about the property
- Its location
- Its infrastructure
- Demographics of the area
- Additional Information
2. Contact the owner / agent
Methods of getting in touch with the owner/agent:
- Through email
- Through telephone
- Through Skype
Pay attention to the details of the language skills of the owner/agent.
3. Information Transfer
The owner or broker in charge of the sale of the property will send you the following documents:
- Certificate of Freedom of Liens: allows to evaluate that the property has no lien, or any litigation or pending lawsuit on it and thus can be transferred with a clean title. This is obtained directly in the offices of the Public Registry of Property and Commerce.
- Certificate of no Fiscal Debt. This certificate allows evaluating if the property tax has been paid before the transfer of the property. The intention is to show that there are no pending debts with the municipal authorities related to property taxes. In Baja California, this certificate is also required to state that there are no pending debts with other authorities such as the State Commission for Water, Public Services and the Municipal Urban Council.
- Appraisal of the Property and Cadastral Demarcation. In accordance with the Cadastre Law, it is mandatory to carry out a demarcation on the property and make an official appraisal. The appraisal must be made estimating the commercial value of the property, considering its surroundings, a market inspection and regulation of the zone. A detailed description of the measures and adjoins, commercial value, subdivisions should be included if any land use is approved, commercial description of existing constructions in the property, uses and any other relevant information relating to the property. The appraisal must be prepared and certified by a Mexican banking institution or by a Public Appraiser.
- Others: Some transactions require obtaining and preparing additional documentation, in order to carry out its closure. For example, some properties may have restrictions, such as administrative requirements (e.g. escrow permit or a requirement that the property must be subdivided).
In the case of buying directly from the legal owner, we advise you to consult a lawyer, have your documents translated and certified before they are sent to you.
You can contact translators through HalloCasa.
4. In case of requesting a Appraisal
It will have to be carried out so that you can know the value of the property you are acquiring, besides that this data will serve you to check if what you pay for it is the right price. Also, this information serves for the notary to determine the rights and taxes that you must pay to buy your home.
An appraisal is a valuation of a certain good which provides a specialist (in Mexico they are called appraisers). Each appraisal gets assigned its own property value. In order to issue this document, several aspects must be taken into account: the state of the property, its antiquity, the area where it is located and its general physical characteristics.
HalloCasa offers you the option to get in touch with experts and real estate appraisers.
- Name of the Appraiser
- Details of Contact
- Available languages
5. Signing of the promise of sale agreement
- The market price (or real value)
- The value of the appraisal (optional)
- The environment
You or your representative signs the contract of the promise of trading. The fundamental parts of this contract are:
- Full identification of the buyer and seller. Foreigners are identified in Mexico with the passport. However, in order to invest in the country, the foreigner must obtain a CURP code. (The Unique Key Code of Population Register is assigned to all persons living in the national territory including foreigners, Source).
- A detailed description of the property including the identity number which is called “Folio Real”.
- The value of the property and method of payment. The value of the penal clause should also be stipulated in case of non-compliance by either party.
- Must figure the notary’s office in which the definitive deed will be signed, as well as the date and time of such
- Likewise, it stipulates the distribution of notary expenses, taxes, and any other expenses that cause the process of trading.
To know the rates of purchase of real estate in Mexico, see the section “What are the transaction costs (notary fees, taxes, transfer costs)?” In our FAQ below.
- In case you make the purchase directly with the legal owner, ask a lawyer to translate and certify all documents. Make sure you have a copy of these.
- For those who do not have enough knowledge of Spanish, it is recommended to consult a lawyer who speaks the language, or hire a translator: HalloCasa provides you with a list of translators so you can get in touch.
- Examples of these documents can be downloaded from Downloads.
- Remember that the contract of sale in Mexico must be in charge of an authorized notary. According to Mexican law, the notary is a neutral party and is entitled to represent the two parties, ie buyer and seller.
6.You transfer the money to a Mexico bank account
Most of the properties in Mexico are acquired in cash (Mexican pesos -ARS) and in US Dollars and there are several ways to enter the money into the country to do it, of which we share here the safest and most ideal:
- Exchange houses (Money Gram, Western Union and Xoom): choose the one with the highest market position and transfer the money you require to make the purchase of the property and to cover other expenses that you consider will have.
- Official Banks: Transfers to official banks, if you do not have an account in any of them, will be complex as well as expensive. In case you have a trustworthy person in Mexico, you will be able to deposit the money in that person’s account, however, that transfer will be done in Mexican pesos and will cost you a commission according to the Mexican bank.
To open a bank account in Mexico if you are a foreigner, you must accredit the following:
- Temporary or permanent residency document in Mexico
- Unique Key Code of Population Register (CURP), a mandatory number that individually identifies each person residing in Mexico, whether native or foreign resident.
- Proof of domicile, no more than three months old to prove your domicile in Mexico. For example telephone bill, electricity, water, gas, leasing contract with the tax authority (Source)
7. You can buy from abroad or Mexico
7.1 Option 1: You travel to Mexico
Before traveling it is ideal to previously confirm the time you will need to carry out the complete business. Remember to bring all the necessary documentation. Check with your bank about the best option to transfer money to Mexico according to the seller.
Prior permission must be obtained to foreigners to acquire real estate in Mexico, which is granted by the Mexican Government. This must be requested personally in the Secretary of Foreign Affairs to the General Direction of Legal Affairs in Mexico, Federal District. The process can also be done through a legal representative that is authorized by a power of attorney.
It must be filled out by machine or computer and must be presented together with its original attachments and two copies, with the applicant’s details: name, surname, nationality, migratory document number, immigration status, address (for notifications) and the data of a person authorized to receive the constancy. It also has to be signed by the applicant and accredit his status of stay.
In addition, you must include the details of the property, i.e. the description and location of the property, as well as the purchase permit; specify the form of acquisition and attach the indications with regard to the surface, measures, boundaries and adjacents to it. All with the autograph signature of the applicant or, failing that, the representative.
If the request is made by a legal representative, it will have to be accompanied by a special power to conclude the agreement, or by a general power of attorney that meets the requirements. On the other hand, if it is a foreign person, his legal existence must be proven by means of the presentation of documentation of the country of origin, adequate and translated by a proficient translator.
7.2 Option 2: You buy from abroad
In this case, you must grant power of attorney to a representative in Mexico, fulfilling the requirements that they have previously indicated.
Because this document must be legalized at the Mexican consulate nearest to your residence site, we suggest you contact the consulate so that the document meets all the conditions that they require. This will save time and make progress in the process.
In Downloads, you can download an example of such a power of attorney.
8. When signing the contract in Mexico
- The notary checks all documents (see Downloads)
- You sign the contract.
- You make the negotiated payment.
- On the date, place agreed and before a notary public, you and the seller or broker in case it is done through an intermediary will meet to sign the deed. To do so is the legal celebration of the transfer of ownership of the property.After signing, you will transfer or deliver the remaining money and the seller will proceed to make the transfer of the property together with the keys of the same.The format of the sale must include a section specifying the characteristics of the property, detailing:
- The meters of the property: Here the land and the built property are detailed.
- The title of ownership: It is the certification of the legality of the transaction.
- Land use: In the case of the contract of the trade of a house, it must be certified that the land is suitable for housing construction.
- Taxes: The owner states that services fees such as electricity, water, and property taxes are paid.
- Free of liens: The owner declares that the property does not have mortgages or legal actions that affect the property.
- Free of loans and easements: The owner declares that there are no third parties that could claim the property.
- The buyer: The declaration of interest on the property.
9. By signing the contract abroad
- The notary checks all documents.
- Your representative signs the deed and makes the agreed payment.
10. Registration of the Deed
When you notarize a house, you can prove the ownership of the property before third parties. The steps to follow are as follows:
- Attend a notary: he will request a certificate and will notify the Registry of the purchase. This offers legal support from the start of the process as well as a record of land use and not land and water bills.
- The notary retains and pays taxes (federal and local) to the corresponding authorities; Prepares the documentation and the drafting of the deeds.
- Posteriorly, transact the inscription in the Public Registry of Property and a certified copy of the deed is issued.
Remember that, in matters of legality, even the tiniest details are important. Thus, consider that in the property deeds there are no blank spaces, which do not contain obvious erasures or amendments. Also keep in mind that you cannot use abbreviations.
If in addition to asking yourself, what do I need to notarize a house? You wonder how to notarize a land? Consider that the requirements, in general, are the same. Within the deeds are requested:
- Data of the notary (full name, notary’s number)
- Data of the seller.
- Property data (address, surface, measurements, boundaries, adjoins).
- Personal data (full name, among others).
The information with which it is complemented is about the trading (what is the value, verify that it is up-to-date of payments, etc.), the mortgage guarantees, and in the case of having requested the process with INFONAVIT, everything with respect to the requested loan (amount, conditions, guarantees and insurance).
The costs of notarization vary because the payment must include the Rights, that is to say, what is paid for processing non-debit certificates, the registration before the registry and the permits that must be requested. The expenses for the appraisal, the generation of the deeds and the fees are extras that have to be considered. Also, it is necessary to calculate registry that has a cost of between 5 and 8% of the value of the property; In addition to the acquisition tax that represents 3 to 4% of the appraisal and the cadastral value of the property. Consider that each year are held Notarial Journeys, which offer discounts for notarial expenses such as procedures and taxes.
11. Open a Bank Savings Account
Any foreigner can open a bank account in Mexico, either as a resident or as a simple tourist. To do this, you only have to go to an office of the chosen bank and request it. In the website of the Association of Banks of Mexico, you will find, among other information, a list of the banking entities present in the country.
The documents that must be provided to open a bank account in Mexico are the following:
- Current Passport.
- Authorization of residence in Mexico, whether temporary or permanent.
- Unique Key Code of Population Register (CURP), a mandatory number for all residents in Mexico, whether native or foreign, who individually identifies each person. It is assigned by the National Registry of Population (RENAPO) and to obtain it only the original and copy of the residence permit in Mexico must be presented in one of the many places qualified to request it. You can consult a list of these sites here (access to the website “Unique Key Code of Population Register (CURP)” of the Mexican government’s National Commission for the Protection and Defense of Financial Services Users).
- Accreditation of having an address in Mexico. For example, a domestic bill (water, electricity, gas, etc.).
- In the case of a bank account linked to the commercial activity of a mercantile society, it is necessary to add to this documentation the deed of the constitution of the society.
In general, all Mexican banks ask to make a minimum income when opening a bank account. The amount of this income can vary a lot between one entity and another, so you should inform yourself beforehand.
Banks in Mexico usually open from Monday to Friday between 08.30 h and 16.00 h. A few entities also open on Saturdays.
Opening a bank account in Mexico, is not always easy for a foreigner since you must present a proof where it certifies that you have a domicile in the national territory.
- Current PASSPORT.
- PROOF OF DOMICILE.
Telmex, Electricity, Water or Property tax no more than two months after being issued.
* For the account opening it is NOT necessary that the proof of domicile is in your name, in credits, YES.
- PERSONAL REFERENCES (from two to three)
Name, address, telephone, kinship and time of knowing.
- FM2 or FM3 CURRENT
With authorization to carry out PROFIT activities in the country
- Name(s) of beneficiary(s)
Being a foreigner is not caught in the assumption that his stay is temporary; when in reality, many stay to live permanently or die. So we have seen many funds stuck in the bank. At this point, you must provide Legal name, date of birth, address, telephone and kinship.
What are the expenses necessary for the process of buying and selling a property in Mexico?
Real estate taxes are 0.05% -1% of the appraised value of the residential property, payable during the month of February of each year.
In the case of a property that generates rental income, the tax debt is generally 34% of the reported net income.
ISAI (Property acquisition tax):
This is paid by the buyer. Of this tax you do not save when you buy house, department, land, etc. It is calculated based on the purchase price of the property and is a percentage that depends on the state of the republic in which you are. It ranges from 1% and up to 5%. In Nuevo Leon, as in almost all of Mexico, 2% is charged.
This tax is charged by the notary at the time of signing and then paid to the state.
Important note about ISAI: Your advisor should normally make an estimate of this concept within your initial mortgage credit expenses. This tax is included in the total of the notarial expenses calculated, which is calculated by adding the ISAI, registration fees and notary fees. In NL currently, the total cost of notarial will be for about 4.5% of the purchase price but may vary slightly.
ISR (Income Tax):
It is paid by the seller. A calculation is made at the notary’s office with which the transaction will be closed and charged based on the “utility” that the seller will receive, that is, depending on the difference between the price at which he bought and the price at which he will sell.
This calculation is not as simple to perform as it depends on many factors, such as:
- The price and year he bought,
- The modifications or improvements that were made to the property
- And then those values are brought to present value to update that price.
It is always suggested that this calculation is done directly in the notary’s office so that all the important data can be provided and the make the proper calculation.
Important note about the ISR: The current law allows exempting this tax as long as you are selling the house in which you live (your house-room) and provided you have not sold and exempted this tax for the sale of another property in the last 3 years (before was 5 years).
The way you can prove that it is your home is by presenting one of these 4 documents:
IFE credential, electricity receipts, telephone receipts, or account statement, in your name and obviously with the same address.
These two are usually the only relevant taxes that are incurred in a sale and most operations are sufficient for you to know both.
On very rare occasions, you will find a plus tax; it is the ISR by acquisition:
This tax is calculated when your appraisal is 10% or more, above the trade price. Example: If you are going to buy a house at $ 2,000,000 pesos, then this tax would be generated if your appraisal results in more than $ 2,200,000 pesos. You must be very careful about this issue since this tax is very expensive, you would be charged 20% of the excess amount.
Anyway, this tax is very rare to be present and there are several ways in which it can be avoided, especially taking into account that the criteria of the notary is very important for this calculation and there are notaries that will not take into account an appraisal of a bank for this encumbrance. Seek advice and lean on the notary to clarify this in time if this is the case.
The property taxation is the tax paid to the municipality for the possession of a property. This is NOT an expense in which you incur in your initial expenses, but you must contemplate it from the time you own it. The property tax can be paid bimonthly, although you can receive discounts if you pay all year in advance. PD of the property taxation: it is the seller’s obligation that the property is up-to-date at the time of the trade and the notary must be assured of it.
VAT? Do not worry about that for now. The current law indicates that VAT is not applied for the acquisition of properties and neither the interests of your mortgage credit carries VAT.
In short, knowing the first two taxes (ISAI of the buyer and ISR of the seller) you will be well informed. Although we do not like it, you should know these taxes and above all contemplate them in your initial payout calculations to make your purchase a success (Source).
Where can I find real estate financing in Mexico?
Due to the great influence of the real estate industry in the development of Mexico, mortgage capital has been implemented so that the North Americans can acquire properties in Mexican tourist destinations. At present, the Escrow is sufficient to guarantee to protect the lender.
The availability of mortgages shows a vote of confidence in Mexican tourist destinations. The prices of properties in this area have shown stability is why the condominiums have had a surplus of 5% per annum; in addition, with the eventual entry of casinos to the Mexican territory, market conditions are still in a better situation.
There are 7 million of North Americans who travel to Mexico every year and from this number, statistics show that more than 400,000 Americans and Canadians have chosen Mexico as a retirement home. Most are located in Puerto Vallarta, Riviera Maya, Lago de Chapala and the Los Cabos area.
As a foreign client enjoys all the benefits when acquiring a property, the only existing restriction is that it is managed by a bank.
AS A PURCHASER YOU SHOULD PROVIDE TO THE BANK THE FOLLOWING INFORMATION:
- A copy of the title or deed of the property indicating the exact surface and adjoining areas.
- A copy of the blueprints of the property.
- The names of the beneficiary(s), nationality, address and telephone numbers.
- The agreed purchase price.
- ID (passport)
- Migratory form FMT (TOURIST)
- Temporary or permanent
- Proof of domicile
- Payment of the property
- Application with KYC customer data
It is mandatory that the purchase is made through a banking institution, which offers benefits such as fixed interest rates, insurance, fixed monthly payments and even the opportunity of cofinancing if the interested party works in the country and is quoted for INFONAVIT or the FOVISSSTE. Among the basic requirements to request it are:
- Check licit and regular income.
- Deliver the migratory format FM2 or FM3.
- Take a minimum amount of specific months living in Mexico, which varies depending on the bank
- Be economically active.
- Be over 18 years of age.
- Have a minimum working age of 1 year.
This is enough so that anyone who sees the beauty and potential of the country can get a place to move in Mexico, whether looking for the best residential areas or a place to do business.
About the real estate market in Mexico
How liquid is the market?
- At levels of $ 80,000 mn to $ 125,000 mn, we find the “informal” properties, which are self-construction, unregulated housing, housing that is located in unprotected or unsuitable places, for example in dry river beds or in landslides or in non-urban areas. This is the dwelling that “suffers” when the river beds grow, or in landslides. It is also housing built in places of high poverty, ejidal land or other areas not suitable for construction.
- It’s a living house of social interest starts at price levels of $ 125,000.00 mn and up to levels of $ 1,250,000 mn. Here we can find households developed by the “homebuilders” who were affected by the laws promulgated last year, and that are ARA, Homex, Geo and Urbi to name a few. It is a household that is developed on a large scale and is focused on the purchasers with credits Infonavit or Fovissste. It is a household of less than 70 m² and that has the minimum amenities and also has all the services and is regularized housing.
- The next step corresponds to living places from $ 1,250,000 to $ 3,000,000 mn. Here the mortgage loans apply and the combination of credit Infonavit and Fovissste. From this level, it is very important to capitalize on real estate assets. When you do a search, ask about options in mortgage loans
- step more interesting, especially for real estate brokerage, is the level of $ 3,000,000 mn to 6,000,000 mn and represents a significant part of the market in sales in $. Although it represents less than 10% of the total housing stock, it is a level of housing that is booming and that is representative of the socioeconomic level A and B. Also at this level there is purchase of real estate by investors, who are part of their investment portfolio, as they are excellent for income.
- The next category would be in the range of $ 6,000,000 to $ 10,000,000 mn, and this is still a very thin percentage of the market and certainly has a significant supply and demand. The socioeconomic level is A and we can find areas of growth of this type of properties very important in the country. Mortgage lending is a great tool to generate wealth, and using it at these levels of purchase is highly recommended.
- One more category would be $ 10,000,000 and the limit, therefore, may not really exist, since it encompasses luxury properties and all its varieties (Source).
How has the Mexican real estate market developed in recent years?
Mexico City: bet on the vertical and mixed uses
The country’s capital in 2010 concentrated 17.7% of the Gross Domestic Product of the country, more than any other federative entity of the Mexican territory. Mexico City is not only the most important city in the country, it also occupies an important place in the Latin American socioeconomic panorama and, therefore, in the world.
In recent years, the focus has been on vertical constructions, and many colonies, formerly industrial or residential, have changed their architectural landscape with apartment buildings and offices.
Monterrey: corporate and housing growth
The second most important city in economic terms of the country and the third with respect to the number of inhabitants, it has a real estate growth ordered around two axes. The first one related to the demand of corporate spaces; According to CB Richard Ellis, there are 950 thousand square meters.
Guadalajara, Puebla and Toluca: industry and retail
In terms of population, they are respectively the second, fourth and fifth cities of the country; Their metropolitan areas accounted for 4.43, 2.72 and 1.93 million inhabitants in 2010, with the growth of 19.8%, 20.2% and 25.6%, from 2000 to 2010, according to INEGI data. Automotive and electronics manufacturing plays a crucial role in these three cities (Source)
The following types of housing are common in Mexico:
- Single house
An own space, independent and on which you can decide what color you prefer on the facade or when you want to have a party until late at night with your friends. If you are located in a safe area, you will not have to worry about paying for an additional surveillance service, which will allow you to remove expenses from your budget.
Of course, there are many architectural styles, and choosing one will depend a lot on your taste. Bet on the functionalist if you lean the simple forms and sobriety on the outside; If you are more traditional, the neo-colonial may work well for you; Instead, if you like to trend and care for the environment, opt for an eco-friendly house.
They are two houses within the same property but separated from each other. Although these types of houses are more popular in the United States and England, in Mexico it is possible to find this type of housing. As we Mexicans always like to be close to the family, it is common for two nuclei of the same family to live in a duplex house.
It is ideal if you want to be close to your family, and negotiating a change in the facade or paying for some shared services is much easier; However we recommend not to wear out the relationship with your neighbor family in small disputes. An additional advantage is that you will always have much closer neighborhood surveillance.
- Fractionation and Horizontal Condominium
It could be said that the houses within a fractionation and those that are part of a horizontal condominium are like close cousins. Basically, they are the same although with a small difference: inside the fractionation, the facade and the stroke of each residence is different from the others, whereas in the horizontal condominium it is the same or very similar.
Both share, however, common surveillance services, in addition to being relatively isolated from the rest of the city, being in isolated residential units. The horizontal condominium counts also with the advantage of the common spaces, like playground or pool; however, organizing parties can bother your neighbors.
- Weekend house
You already have a house or apartment of your own. And your years of hard work have provided you with a monetary surplus that allows you to buy a second home. An excellent way to use that money is to buy a weekend home. Yes, as you hear, a small (or large, depending on how you want it) space to get away from the city.
We recommend that your weekend house is three hours away from your townhouse, so you can visit it frequently and keep it in good condition with greater ease. Some of these weekend houses have a pool or tennis court, while others have sea or mountain views.
- House on the beach (has restrictions for foreigners)
It could be counted as a weekend house. Or maybe not, if you live in a city removed far from the sea. While it may not be a suitable investment in the first instance, you can rent it to vacationers during peak season or weekends for visitors, whether tourists or people going to a wedding or convention near the residence.
It is a good idea to purchase real estate insurance since properties near the sea are not exempt from bad weather, such as tropical storms or hurricanes. If you want to rent the house for a longer period of time (one or two years), we suggest you contact the Lamudi team to advertise your property on the beach online (Source).
What are Strata?
In Mexico, there are 6 socioeconomic levels, each with different income and consumption habits.
Socioeconomic level A / B (Rich Class): This is the stratum that contains the population with the highest standard of living and income in the country.
Socioeconomic level C+ (upper middle class): In this segment, people with an income or standard of living are considered to be slightly above the average.
Socioeconomic level C (middle class): In this segment, people with an average income or standard of living are considered.
Socioeconomic level D+ (Lower middle class): In this segment, people with income or living standards are considered to be slightly below the average level, ie the low level that is in the best conditions (that is why it is called low / High or D+).
Socioeconomic level D (Poor class): Level D is composed of people with an austere standard of living and low incomes.
Socioeconomic Level E (Extreme Poverty): The E level is made up of people with lower incomes and standard of living throughout the country. (Source)
Legal Matters in Mexico
Do I have to declare my rent income before the Mexican Tax Administration Service SAT?
Lease income is considered to be the amount that a resident abroad obtains for rent and, in general, for granting the use or enjoyment and other rights that are agreed upon a real estate in Mexico, inclusive when derived from the sale or cession of the mentioned rights, provided that said goods are located in national territory.
Calculation of income tax
The tax will be paid by applying the rate of 25% on the income obtained, without any deduction.
The people that make the payments will calculate the tax and will make the retention and total or corresponding payment before the Service of Tax Administration.
When the person who makes the payments is resident abroad, the taxpayer who obtains the income must calculate and pay the tax by declaration, which he will submit either via the Internet or bank window, within 15 days after obtaining the income.
Obligation to issue receipts for income or revenue collected
The leesses must issue tax receipts for the income received, which must have tax requirements.
When the rent is paid to an escrow, the fiduciary institution must issue the tax receipts and perform the retention and the corresponding total (Source).
Is there a limit on the amount or price for investments?
According to the Law for the Prevention and Identification of Operations with Resources of Illicit Origin (‘Anti-Money Laundering Law’), the payment of housing in cash will only be allowed if it is for 8,025 times the minimum salary of the Federal District, about 540,000 pesos.
The remaining money must be paid through some financial instrument such as a check or bank transfer. “The notary is obliged to attest to the way in which he was paid and will also have to keep a copy of the bank documents with which the payment was completed,” said Pérez Almaraz (Source).
What kind of real estate can a foreigner acquire in Mexico?
You cannot in restricted areas. The restricted area is the land off the coast of Mexico up to 50 kilometers (30.5 miles) inland, or from the Mexican border with other countries up to 100 kilometers (61 miles) from it.
Outside this restricted area, foreigners can legally acquire any type of real estate by simply paying a fee.
For nonresidential properties, foreigners may acquire real estate through Mexican corporations (and, under certain conditions, these corporations may be 100% foreign-owned). The two primary conditions are the acceptance of foreigners to be governed by Mexican law, and that property is registered as non-residential before the Secretariat of Foreign Relations. This applies to real estate inside and outside the restricted area.
Within the restricted area, for residential real estate, the acquisition must proceed through an escrow (Source).
What immigration policies apply to foreigners? Can I bring my family in an emergency?
Article 16. Migrants shall comply with the following obligations:
- When dealing with foreigners with a regular immigration status, guard and safeguard the documentation proving their identity and their situation.
- Show documentation proving their identity or their regular immigration status, when requested by the immigration authorities.
III. Provide the information and personal data requested by the competent authorities, within the scope of its attributions, the foregoing without prejudice to the provisions of the Federal Law of Transparency and Access to Governmental Public Information and other applicable provisions in the matter.
- The other obligations established in the Constitution, this Law, its Regulations and other applicable provisions.
Temporary Resident Visa for Real Estate Acquisition
Applicable to the foreigner who intends to go to Mexico as a temporary resident for a period of more than 180 days and not more than 4 years, for having acquired property in Mexico. This visa does not authorize remunerated job in Mexico.
The visa issued in the Consular Section has a maximum validity of 180 days for a single entry. Once in Mexico, the holder of the visa must process before the National Institute of Migration within 30 days upon entering the territory the temporary resident’s card.
Requirements to process the visa
The dates for the consular interview and the delivery of documentation for visa procedures are made through the Internet page of Mitel, it is suggested to download and read the guide of MEXITEL
- Original and copy of current passport
- Filling in the visa application form
III. A photograph with the face visible and without glasses, in color, passport size, whose measurements must be at least 32.0 mm x 26 mm and a maximum of 39.0 mm x 31.0 mm, with white background and front
- Original and copy of the document that establishes legal residence (visa and/or resident’s card), applicable to foreigners who are not nationals of the country where the visa application is filed. In Spain, it does not apply to Spaniards.
- Accredit having acquired real estate in Mexico, through the following documentation:
Original and copy of Public Deed issued before Public Notary that certifies that the foreign person is holder of real estate, with a value that exceeds forty thousand days of general minimum salary in force in the Federal District, (2’921,600 pesos, around Of 152,722 euros)
VI Payment of cash rights in the Consular Section for the issuance of a visa in accordance with the Federal Rights Law, according to the exchange rate applicable during the month.
Documentation written in another language must be accompanied by its translation into Spanish (Source).
Is there a reliable property administrator on the site?
HalloCasa provides you with a list of property managers.
Can I transfer money from Mexico to my country of origin?
Yes, you can transfer money from Mexico to abroad. We recommend that you discuss this matter directly with the administrator of your property.
Apart from the bank transfer option, you can use companies positioned as western union, money gram, or xoom.
Restrictions on the purchase of real estate:
Firm of the contract of trade
Types of houses: