Buying a house in Mexico from the United States How to do it? – Mexico is one of the ideal destinations for vacation homes. The beautiful beaches, warm weather and low cost of living are the main reasons why a lot of people are becoming interested in buying a house in Mexico from the United States. Here properties are sold for a fraction of the price of homes in Florida, Southern California, Hawaii and Arizona therefore you can afford to get a big home or a better quality home if you are on a tight budget.
You can also generate income by renting your home if you’re not using it and popular destinations in Mexico like Playa Del Carmen, Cancun and Tulum bring millions of tourists each year. If you’re wondering whether you can buy your house in Mexico from the United States then the answer is definitely yes. There are no particular laws that prevent foreigners from purchasing and owning property in Mexico. The bank trust or fideicomiso is a way through which you can easily purchase and sell a property in Mexico as a foreigner. This guide will help you to know how to buy a home in Mexico.
Highlights of this Post
Can An American Purchase A House In Mexico?
Yes, an American can purchase a house in Mexico. The resident of the United States along with other foreign nationals who are interested in buying a property in Mexico must expect the purchasing process to be a bit different in Mexico than that of their home country.
The only difference is the need for a fideicomiso or bank trust while purchasing property within a specific distance of Mexican national borders or in beachfront property. The fideicomiso or bank trust means the bank of Mexico holds the title of the property. Entering a fideicomiso agreement is safe and secure and home buyers can do anything with their property like selling, renting, leasing or passing down to their heirs.
Do I Need To Be A Resident Of Mexico To Own A Property As An American?
There is no requirement to be a citizen of Mexico to own property in Mexico if you are a citizen of the United America. You can purchase a home in this country through the fideicomiso system. Like any other real estate transaction in the country, those comprising properties held in fideicomiso are governed by Mexican federal law.
Even if you own multiple Mexico properties you need only one fideicomiso. With Fideicomiso, purchasing a property in Mexico as a citizen of the United States is possible in your preferred area, for instance beachfront property. The bank will be the legal owner whereas American home buyers will be the beneficiary of the trust. As a beneficiary, you can retain the legal rights of home ownership in Mexico.
What Is A Fideicomiso?
Fideicomiso is an agreement established at the time of the closing and title point of the sale and is a renewable 50-year trust. The trust grants title for any property to a Mexican bank that acts as a trustee bank. Even though you will not have the actual title you will not lose your authority. The trustee is to follow the instructions of the trust beneficiary.
On an average, foreigners or US citizens buying a property in Mexico have to pay around $500 to $700 to maintain a fideicomiso. A common myth about fideicomiso is that it does not allow U.S. citizens or foreign buyers to pass Mexican property over the years but this is completely wrong. The trust agreement lasts for about 50 years and after that, the property owner including their heirs have the opportunity to renew it.
You are legally free to live there in your home and sell, rent, lease or pass the property to your heirs. To make sure you have the right documents and paperwork for creating fideicomiso and purchasing a desirable area in Mexico you need to work with a notary public in Mexico.
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How To Buy A Property In Mexico As A United States Citizen?
The only requirement for a citizen of the United States to purchase a property in Mexico is to have a bank trust agreement known as fideicomiso that is sanctioned by the government of Mexico. The agreement provides the same property rights to a citizen of the United States that Mexican residents enjoy.
You can work with an authorized bank in Mexico and use the fideicomiso agreement to purchase, rent, lease or sell real estate. To establish this agreement foreigners or citizens of the United States need to apply through the Ministry of Foreign Affairs and register in the National Registry of Foreign Investment and Public Registry of Property.
Although you are unfamiliar with this type of agreement or arrangement, the process of fideicomiso agreement is easy to navigate with the knowledge and guidance of real estate agents and lawyers. Read the below-mentioned points to understand how to buy Mexico real estate as a citizen of the United States
The first and foremost step to purchasing a Mexican property is to find a property that meets your needs and requirements and then start an initial offer.
Making an initial offer is a standard part of a real estate transaction that informs the seller of the property about your interest in purchasing the house in question. You can work with the realtor to find a desirable property in Mexico and when both parties come to a mutually acceptable deal you can start the next formalities.
Once the acceptance of the initial offer is done and all the negotiations are finalized the next step is to create a promissory agreement. The agreement is signed by the seller and the buyer and they agree to a time frame to finalize the deal. The agreement is the official hard copy version of the agreement and includes all relevant details of the transaction that are negotiated by the parties.
Pay Your Deposit And Create A Fideicomiso If Required
Once you document the deal you need to make a down payment which is around 5% to 10% of the sale price. In case you are purchasing land or property within a Mexican restricted zone you need to have a Fideicomiso.
The instructions of Fideicomiso lasted for about 50 years. You need to obtain permission to complete the purchase process and sign an agreement through which you will be bound by Mexican law for real estate dealings.
Delivery And Title Transfer
Properties in Mexico are delivered before the titles are transferred to the purchaser. This type of order is not so common in the United States of America. Interested Americans who want to purchase real estate in Mexico can obtain the keys to their new house before the title gets transferred to Fideicomiso.
The assigned delivery statement will register the delivery of the Mexico property. By following the statement home buyers will get a notice of the amount of the closing cost. Once you pay the closing cost the fideicomiso will take the position of the property title and the local public registry in Mexico will issue the final deed.
What Are The Costs Included In Purchasing A Property In Mexico As A Citizen Of the United States?
Apart from paying the agreed property price to the seller, you need to incur additional costs to purchase a property in Mexico. The costs include notary costs, acquisition tax, registration fees and title insurance.
The notary makes your legal procedures accurate and the right documents and paperwork are presented. In case you have purchased a property to sell it you need to settle a few more costs in the form of agent fees or relevant taxes.
There are a number of factors that will influence the price of a Mexican home you buy from the United States, including your purchasing method (on credit or cash) and your nationality (Mexican or foreign).
You should expect to pay the following amounts when you purchase a new property as a Mexican and through a mortgage:
- Costs associated with property appraisals
- 10% of the value of the house as initial
- Credit approval 10% of the value of the house as initial loan approval 2% fee
- A fee of $780 (which covers the costs of checking the file) is required for the origination of each file.
- There is a maximum notarial fee of 9% of the property’s value
- For foreigners, the trust has a cost of $1,000 for entry and $400-$500 for renewal
What do I need to buy a house in Mexico from the United States?
- Must have Mexican nationality.
- Down payment of at least 10%.
- Have a consular registration, an INE, or a passport.
- Make sure your financial situation is stable.
- You must have lived in the United States or Canada for at least six months.
- You must appoint one of your family members to represent you in Mexico.
- Have at least one year of experience at the job you’re applying for.
- Have a minimum age of 25. BBVA accepts applicants between 18 and 85 years of age.
- Applicants must prove that the funds they are applying for are from a legal source. A W-2 form or pay stub can be used.
- Having a good credit score in the United States, Canada, or Mexico. It would be best if you had a good credit rating in your country of origin and residence.
It is important to note that the property must also meet a requirement that is mainly concerned with its cost. Members of AMPI ( Mexican Association of Real Estate Professionals) have extensive knowledge of the property market in Mexico and can assist with your property purchase or provide professional support.
Documents To Buy A House In Mexico From USA
To complete your application, you will need the following documents:
- Valid identity document, most commonly a passport
- Proof of nationality. A Mexican born in an Aztec country would need a birth certificate, while someone with dual nationality would need an immigration certificate.
- Copy of the marriage certificate. When the buyer is married, this is required. If the marriage took place in Mexico, only a certified copy will be needed and an original apostilled document for a marriage in the United States or Canada.
- Proof of address. A copy of a bill for a home utility or lease payment may be consigned.
- Proof of income. The pay stub, W-2 forms and 1099 forms in the case of self-employment, etc. You can also submit the latest federal tax returns, as well as account statements.
In addition to your business license, the last three company account statements and a copy of the tax return should be deposited at the bank if you own your own business.
Do I Need To Pay Property Taxes In Mexico?
Just like the United States of America candidates purchasing a property in Mexico need to pay property taxes. When acquiring a home in Mexico you need to pay acquisition tax which accounts for 2% of the assessed value of the property during the purchasing time.
Homebuyers are responsible for paying annual property tax called predial every year and the exact amount of annual property tax that you need to pay will depend on the size and location of the property in Mexico. Paying the taxes earlier will help you to receive some discount.
Should I Work With A Lawyer Or A Real Estate Agent To Buy A House In Mexico?
Although working with an experienced real estate agent can be beneficial in many ways, having a licensed and experienced Mexican attorney by your side will be the right choice for the following steps.
- Drawing up your Mexican property will
- Designing the contrato de promesa while making an initial offer on a Mexican property
- Drawing up the purchase sales agreement
- Setting aside money in escrow
- Interacting with the ministry of foreign affairs.
A notary in Mexico oversees all the real estate transactions. A notary is an experienced and well-versed lawyer who is responsible for making sure the title of the property is recorded accurately in the public registry.
The government of Mexico appoints the notary and candidates need to pay specific notary fees based on the purchasing price of the home. Some home buyers prefer to appoint their notary who will act as their lawyer to coordinate with the notary public and review the sales contract.
How To Choose The Right Property In Mexico?
The type of property that you should go for depends on where you wish to purchase land in Mexico. If you purchase a property in major Mexican cities then go for town houses and apartments since finding freestanding homes or land can be challenging.
On the other hand, if you are going for a property by the beach then look for land parcels, large villas and apartments a lot of which are in residential hotels.
Condition Of The Property
Generally, there are no building standards for purchasing a property in Mexico. If you want to purchase a brief fabricated property you can hire a surveyor for performing a thorough inspection before you settle in your new place.
Can I Buy A Mexico Property Without Requiring Fideicomiso?
Americans can also buy property or land in Mexico without requiring a Fideicomiso. This process is through a Mexican corporation. Americans need to own the company 100%. This viable option is used by investors in the United States of America to purchase a large number of properties.
Mexican corporations can own their properties and their full rights of property ownership in a few restricted areas. However Mexican corporations cannot purchase single-family residences. If you’re interested in using your property in Mexico to generate income or start a business then you can form a Mexican corporation.
This is an easy option and you need to pay around $1500 US to get started. For this, you need to have at least two partners and neither need to be a Mexican citizen. After forming a Mexican corporation you can buy your property just like a citizen of Mexico. Forming a Mexican corporation will save money on income tax however you need to keep in mind the following points:
- The transaction should be completed through check or wire transfer only and no cash involvement should be there
- You have to pay an annual accountant fee even if you don’t generate any money
- You cannot avoid capital gains at the time of sale
If you wish to buy a property in Mexico to move to full time or have a second home in another country then you need to go the Fideicomiso route.
The acquisition tax of new properties in Mexico
There is a different tax code for each district in Mexico. How does this work? Taxes on property transmission are based on where the house or apartment is located, and are paid by the buyer. Below is a table that includes federal district taxes to give you an idea of the costs:
|Property acquisition or transfer tax in DC, Mexico
(in Mexican pesos)
(in US dollars)
(in Mexican pesos)
|Up to 87,159.70
|From 87,159.70 to 139,455.47
|From $ 4,368 to $ 6,990
|0.03163% of property value
|From 139,455.47 to 209,183.01
|From $ 4,368 to $ 10,485.26
|0.03261% of property value
|From 209,183.01 to 418,366.13
|From $ 10,485.26 to $ 20,970.54
|0.03261% of property value
|From 418,366.13 to 1,045,915.32
|From $ 20,970.54 to $ 52,426.34
|0.03696% of property value
|From 1,045,915.32 to 2,091,830.65
|From $ 52,426.34 to $ 104,852.68
|0.04565% of property value
|Over $ 104,852.68
|0.04565% of property value
About the notary fee (notarial expenses)
If you plan on buying an apartment or house in Mexico, you will need to pay notarial fees. Exactly what do notaries do? Make sure the buyer and seller have all the paperwork for the house in order and that they have followed all the legal procedures. In addition, it will attest to the authenticity of the date and signature on the sales document, which is essential for the subsequent search of the property.
In Mexico, how much does a notary public charge? This will depend on the property’s value. Typical charges in DC, Mexico would be:
|Notary fees for DC, Mexico
(in Mexican pesos)
(in US dollars)
(in Mexican pesos)
|Up to 132,791
|From 132,791 to 265,584
|From $ 6,656 to $ 13,312
|1.125% of property value
|From 265,584 to 531,168
|From $ 13,312 to $ 26,625
|0.975% of property value
|From 531,168 to 1,062,333
|From $ 26,625 to $ 56,249
|0.825% of property value
|From 1,062,333 to 2,124,670
|From $ 56,249 to $ 106,499
|0.675% of property value
|From 2,124,670 to 4,249,340
|From $ 106,499 to $ 212,998
|0.525% of property value
|From 4,249,340 to 8,498,680
|From $ 212,998 to $ 425,995
|0.375% of property value
|From 8,498,680 to 16,997,358
|From $ 425,995 to $ 851,990
|0.225% of property value
|More than 16,997,358
|Over $ 851,990
|0.075% of property value
Buying a home in Mexico is a dream for a lot of citizens in the United States. This dream is pursuable with the right support and local knowledge. Americans can buy property and land in Mexico without any restriction. Today a major chunk of Mexico’s property market is owned by local people, however a significant number of foreigners or immigrants, particularly United States citizens, are also purchasing land or houses in this country. No matter whether you are planning to buy property in Mexico to live full-time or as a means of investment you need to follow the aforementioned steps.
In addition to how to buy a home in Mexico from the United States, you can also learn about Government First Time Home Buyer Programs and assistance. Check out our blog posts at Get Government Grants to learn more about government assistance programs.
Frequently asked questions
Can An American Buy A House In Mexico?
Yes, anyone can buy a property in Mexico. The only condition is that anyone who is willing to buy the house or any property in Mexico, must fulfill the eligibility criteria to buy a property in Mexico from the USA.
What are first time Housing Grants in Mexico?
Housing grants for first time home buyer programs motivate and help those buyers that are buying the house for the first time as well as have some financial issues. The Mexican government is supporting these first time home buyer through various grants and programs, anyone can get for more information by visiting the official website.