Investors Guide to Mexico

The Purchasing Process

The purchasing process for Mexican property can involve a good deal of paperwork, so it is advisable to use a lawyer who specialises in Mexican real estate transactions.

While the buying process may vary between development and real estate companies, the general process is to pay a deposit of approximately 10% of the property purchase price. Once the deposit has been paid, the Private Purchase Contract will be issued.

If the property to be purchased is located within the restricted coastal/border zones, the lawyer will begin to arrange the necessary paperwork to set up a Mexican Trust (Fideicomiso), and also make the necessary checks to ensure the development company’s permits are in order.

Many sales on property in Mexico required the remaining payment of the purchase price to be paid upon completion or hand-over, along with the necessary fees and taxes. Part of the legal fees may be required at the beginning of the process, with the remainder to be paid upon completion, depending upon the legal firms regulations.

Fees & Taxes

The fees and taxes associated with purchasing in Mexico amount to approximately 10% of the purchasing price and include the following:

• Property Acquisition Tax – 2%
• Registry fee – 1.3%
• Public Notary fee – approx. 1.5%
• Set up of the Bank Trust (Fideicomiso) – approx. 750USD
• Foreign Office Permit – 150USD
• Appraisal Tax – amount will depend on the outcome of the appraisal, if the value is more than 10% of the purchase price, the tax will be 20% of the difference between the two prices.
• Legal fees – approx. 1%
• VAT (Sales Tax) – not applicable to residential property

Financing the Property

While it is possible to arrange financing from within Mexico, it can be difficult and with higher than average interest rates, with lenders unlikely to loan any more than 80% of the purchase price. Arranging financing from outside the country can provide improved rates and options.

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