Owning property in Los Cabos is one of life’s luxuries and great pleasures. And with just a little understanding of the ins and outs of owning in Mexico, it can be worry free. Canadians & Americans buy and sell property in Mexico every day. How does it work?
Mexican Property Trust (“Fideicomiso”)
Over the past several years, the Mexican government has made significant strides in attracting foreign investment to Mexico. One of the best and most common investments is owning property. Laws have been passed that have made investment in Mexico safer and easier than ever.
One of these laws formulated a method by which foreigners can hold safe and legal title. It is called a Mexican Property Trust (“Fideicomiso”). Modeled after a similar law used in Monaco, this Trust Agreement allows foreigners all rights of ownership.
The Department of Foreign Affairs in Mexico City issues a permit to a Mexican bank of the buyer’s choice to act as purchaser for the property. The bank acts as Trustee, and the buyer names the Beneficiary of the Trust.
The Beneficiary can be the buyer personally, multiple partners, an estate trust, a U.S. or foreign corporation or LLC, or any other entity of your choice. By law, the property is not an asset of the bank in this arrangement. The bank is simply the Trustee charging an annual fee of approximately $500.00usd.
The Beneficiary may use, occupy, bequeath or sell the property at their sole discretion by instructing the Trustee of their wishes. The initial term of the Trust is 50 years, and this term can be renewed indefinitely. In other words, the Trustee is in full, long-term control of the property. As with real estate ownership elsewhere, when you sell there are capital gains to be paid.
Our closing coordinator will handle all the paperwork and legalities for you, working with federal and state notaries. Typically, a Trust can be established within 60 days. You are notified and informed every step of the way, and we are always available to answer questions. Your deposit(s) and purchase funds are held in an insured Escrow Account until the Mexican Property Trust is complete and the property rights have been transferred to you.
U.S. Title Insurance is available and recommended for properties in Mexico purchased by U.S. citizens.
The process of buying property in Mexico involves several key steps: finding the right property, making an offer, securing financing (if needed), conducting due diligence, signing a sales agreement, and completing the closing process with a notary public.
Yes, foreigners can buy property in Mexico. However, if the property is within the restricted zone (50 km from the coastline or 100 km from the borders), they must do so through a fideicomiso (bank trust) or a Mexican corporation.
A fideicomiso is a bank trust that allows foreigners to hold the title to real estate in restricted zones. The bank acts as the trustee, but the foreign buyer retains all ownership rights and can sell, lease, or transfer the property.
Closing costs typically include notary fees, registration fees, title insurance, and legal fees. These costs can range from 3.5% to 5% of the property’s purchase price. This is including the Mexican Governments 2% acquisition tax that all real estate sales incur.
We are very lucky to that our annual property taxes are lower than most other countries.
As an example if your condo was purchased for $1m your annual property taxes are approx. $600usd/year. If you have a $10m dollar home, you annual property taxes are approx. $5000/year.
Each gated community has differing HOA structures and fees and depending on the amenities, golf course, beach club, gym, racquet & sports center, etc…. will depend on the annual dues. Ie. Querencia has one Fazio golf course and a 2nd one under construction, a beach club, raquet & sports centers, gym, severl pools, and they have an annual membership of $46,000/year with a fee to join the club at $290,000usd.