| What
do I need to Purchase Property in Mexico?
When it comes to buying property in Mexico the news for
foreigners is good.
Major US insurers have recently started to provide title
insurance and this has made buying property in Mexico as
safe as buying property in the UK.
In interior Mexico, foreigners may purchase property directly
in their own names. Real estate located near coastlines
or borders (which are known as restricted areas) must be
purchased with a bank trust or Fideicomiso.
How does a Trust deed work?
The bank (know as the trustee) holds the trust deed for
the person or persons purchasing the property (know as the
beneficiaries). This property is not part of the bank’s
assets and cannot be subject to any lien or attachment for
any bank obligations The beneficiaries has all ownership
rights to the property and may sell, lease, mortgage or
pass on to their heirs as desired under law. A bank trust
is not a lease.
You may live in, rent, remodel or sell the property and
have rights to all profits.
A trust may be set up for a period of up to 50 years and
is renewable indefinitely. If you purchase property currently
held in a trust deed, a new 50-year period can be established
or the existing trust deed may be assigned to the purchaser.
Trusts are renewable at any time by simple application with
the bank. It was never the intent that these properties
pass back to the government at the end of the trust period.
This is a common misconception and fear of most buyers.
In fact at the end of the 50-year period the owner has an
additional 10 years to renew the trust with the bank. The
annual cost of the trust is £150-£200.
Rental potential is also good. Net yields of 15 per cent
based on 40 per cent occupancy are currently possible in
some areas. This combined with 15-20% annual property value
increases makes for a very attractive investment.
A double taxation treaty exists between Mexico and the
UK to ensure that you are not taxed twice on profits from
Mexican property. Bargain Homes Abroad recommend that you always consult professionals
for advice on taxation issues.
As soon as an agreement has been reached with regards to
a property purchase the following step is to go to the notary
public. Lawyers are not needed since the notary public is
legally authorised to complete the property-buying transaction
and advise the parties involved accordingly.
Be sure to get a copy of the actual Ecritura or Title Deed.
This document should be given to you by the seller without
arguments should everything be in order. Take the Escritura
to the notary public to verify the deed’s validity.
The registration of the title deed should be made in the
Registro Publico de la Propiedad or Public Registry of Properties.
This should be done promptly since the transaction is not
valid until registered. The normal time-frame for this is
two weeks.
When buying from a developer you should have the notary
check to make sure that all the permits are in order for
development and construction.
Completion costs including taxes, title insurance, trust
formation and legal work should add about seven to ten per
cent of the price of the property.
Property transactions are done in US dollars which eliminates
any risks related to the devaluation of the Mexican Peso.
Taxes on property in Mexico are extremely low compared
to the UK. On a £50,000 property taxes should be no
more than £100-£150 a year. If the property
is part of a community there will probably be community
fees to be paid monthly. Community fees vary greatly from
one property to another and if you’re purchasing a
property that is part of a community you should find out
what those monthly fees will be.
Capital Gains Tax is generally paid by the seller. If for
some reason you come to agreement whereby the buyer will
pay the tax, make sure you know how much it will be. The
public notary will normally inform you of the total costs
before the transaction takes place. When the seller signs
over the deed the money changes hands and this normally
takes place in the notary public’s office.
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