Mexico Buying Property in Mexico

Buying Process, Fees & Taxes

Can foreigners buy property in Mexico?

Yes, foreigners can buy property in Mexico and the Government of Mexico welcomes investment from overseas buyers. However, there are some restrictions. According to Mexican law, foreign ownership of land within 31 miles (50 km) of Mexico’s coastline or within 62 miles (100 km) of Mexico’s international borders is prohibited. Commonly used workarounds include purchasing property through a bank trust called a “fideicomiso” which is set up by a local bank with the foreign buyer as sole beneficiary or via the establishment of a Mexican corporation.

Buying process

Buying property in Mexico is a relatively simple process, which typically involves the following steps:

1. Begin your property search.
2. Find your perfect property and make a written offer in the form of an “Offer to Purchase” contract which typically includes the proposed price, payment terms, details of the earnest money deposit and a deadline for the seller to accept, reject or make a counter offer.
3. If your offer is accepted by the seller, you will be expected to make payment of an earnest money deposit which is typically 5% to 10% of the agreed asking price. Earnest money deposits are often paid into an escrow account.
4. A promissory agreement will then be drawn up which binds both buyer and seller.
5. Your attorney should request all required documentation from the seller and verify the legal status of the property, including review of title and confirming that the seller has the right to transfer the title.
6. Present your identification documents to a Notary which should then be filed at the public registry.
7. The notary, your attorney and the bank will then ensure the “fidecomiso” documents are drafted and finalized.
8. Once all paperwork is ready, you will sign the final deed, settle final payments and the property title will be officially transferred to the bank trust.
9. Pay all required taxes.

Fees & taxes

Transfer Tax & Notary Fees

Closing costs typically amount to 4% to 8% of the property value, comprising conveyance taxes, registration rights and costs of the deed of sale and Trust Deed, plus Notary fees.

Property Tax

Annual property taxes (predial) are levied at rates ranging from 0.05% to 1.2% of the property’s cadastral value, depending on location.

Popular areas such as Playa del Carmen have rates as low as 0.19%, while the national average ranges between 0.4% and 0.9%.

Early payment discounts of up to 50% are often available through February.

Residency & Citizenship

How long can a foreign citizen stay in Mexico?

Foreign nationals are permitted to remain in Mexico on holiday with a tourist visa for up to 180 days.

How do you become a resident of Mexico?

Temporary Resident Visas

If you plan to stay longer (and live part-time in Mexico), it is possible to apply for a Temporary Resident Visa and “Rentista” status. Temporary Resident Visas are valid for a period of 12 months and can be renewed for up to 4 years.

To qualify for a Temporary Resident Visa, applicants must demonstrate financial solvency through one of the following:

• Monthly Income: Approximately $4,000 USD net monthly income (based on 300 x Mexico’s minimum daily wage of $278.80 pesos)
• Savings/Investments: Approximately $70,000 USD in bank accounts or qualifying investments (based on 5,000 x daily minimum wage)
• Property Ownership: Mexican property with a valued exceeding $11,152,000.00 Mexican pesos (approximately US $590,000)
• Dependents: Add $500-$1,800 USD per dependent (varies by consulate)

Your first temporary resident permit is typically granted for only one year initially and can be renewed for a maximum of 4 consecutive years.

Permanent Resident Visas

If you plan to permanently reside in Mexico, it is possible to apply for a Permanent Resident Visa and “Inmigrado” status.

Permanent Resident Visas are available through the following routes:

• After 4 years as Temporary Resident: Convert from temporary to permanent residency within Mexico
• Direct Application (Retirees): Approximately $7,100 USD monthly income or $280,000 USD in savings/investments
• Age Requirement: Most consulates require applicants to be retirement age (over 60) or receiving pension/social security benefits to qualify directly for permanent residency

Permanent residents enjoy most rights of citizens, including the ability to work without additional permits, excluding the right to vote.

How do you become a citizen of Mexico?

Individuals who are fluent in Spanish and have resided lawfully in Mexico for 5 years (or 2 years in the case of those born in Spain or Latin America) can apply for citizenship by naturalization.