How to Buy Property in Mexico as a Foreigner

A Guide for American and Canadian Citizens
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How to Buy Property in Mexico as a Foreigner – A Guide for American and Canadian Citizens

Posted by Emmanuel Gutierrez on September 18, 2023
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Investing in Paradise

Many of you may have visited Puerto Vallarta or Banderas Bay before, and you’ve likely experienced its allure as a fantastic option for retirement, investment, unforgettable vacations, or even a five-month escape to the world’s best weather (October to March).

Thriving Real Estate Market

The real estate market in this region is flourishing, driven by its exceptional environmental conditions, strategic location, and strong security measures. This harmonious blend has attracted foreign investments, leading to substantial capital gains and impressive rental incomes facilitated by modern online platforms such as “Airbnb,” “vrbo,” “booking,” and many others

Simplifying Property Ownership in Mexico

While owning property in Mexico might seem daunting, it’s entirely feasible. You simply need to understand the process and the legal aspects involved to feel confident before making one of the most significant financial decisions of your life.

The "Fideicomiso" - Your Path to Property Ownership

To own property as a foreigner, you’ll typically utilize a “fideicomiso,” often referred to as a bank trust. This arrangement offers a relatively low-cost solution that allows you to turn your dreams of a paradise home or condo into reality.

Legal Framework

But where does this “bank trust” (fideicomiso) process come from? According to the first fraction of the 27th article of the Mexican constitution, foreigners cannot acquire full ownership of land within 100 kilometers along the frontiers and 50 kilometers along the coast. This is the primary reason why purchasing property in Puerto Vallarta & Banderas Bay often involves a bank trust.

Trustee and Beneficiary

To own property as a foreigner, you’ll typically utilize a “fideicomiso,” often referred to as a bank trust. This arrangement offers a relatively low-cost solution that allows you to turn your dreams of a paradise home or condo into reality.

Key Role of the Public Notario

It should be noted that all real estate transactions must go through a public notario, an experienced lawyer empowered by law to oversee official acts. In this case, they will formalize your trust.

Understanding Costs and Taxes

To provide clarity on the expenses involved, let’s break down the process of buying property in Puerto Vallarta and Banderas Bay:

Property Acquisition Process

When you contact us, one of our agents will reach out to understand your interests and needs. We have an extensive portfolio of over 1,000 properties for sale throughout Banderas Bay and Puerto Vallarta. We’ll quickly identify options that align with your requirements.

Making an Offer

Once you’ve found your dream house or condo, we’ll assist in crafting the offer to purchase. If your offer is accepted, we’ll proceed to open an escrow account. Both sellers and buyers will sign the escrow agreement, and buyers are required to transfer 10% of the property’s cost to the escrow account.

Fideicomiso Creation

The next step involves the notario, who will create your fideicomiso. This process typically takes 4 to 6 weeks. During this period, you can enjoy Puerto Vallarta’s clear beaches, culinary delights, and explore the city with our team’s free tours. Additionally, a property inspection, with fees averaging around $11 cents per square foot of construction, is essential.

Closing the Deal

Two days before the closing date, when the notario provides you with a set date, you’ll need to transfer the remaining 90% of the property’s cost to the escrow account, along with a fee of $700 to $750 USD (depending on the escrow company). The closing costs, which encompass taxes and notario fees, will amount to approximately 4% to 6% of the total property cost.

On the closing day, you’ll sign your new deed trust (fideicomiso) and authorize the escrow account to transfer the total amount to the property seller.

Reach Out with Your Questions

Should you have any doubts or questions, do not hesitate to reach out to us. Our General Director, Emmanuel, is both a lawyer and a real estate broker, and we look forward to the opportunity to work with you.

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