Have you ever wanted to own a beach house in Mexico? Investing in real estate in Mexico is an attractive option, in this article, we will talk specifically about Baja, a northern State near California that has beautiful beaches and delicious food.
Mexico has relaxed regulations when it comes to foreign investments, so there are almost no restrictions on the ownership of residential property and you can hold the title in your name instead of a trust, although you can do it for asset protection or estate planning.
However, if the property is near the coast or an international border, special rules apply, Mexico has a restricted zone that occupies a band within 31 miles of the coast or 100 kilometers of an international land border.
Since the early 20th century, non-citizens have not been able to hold property in their name within this zone. But to encourage foreign investment, the government created a regulation that authorizes the use of a trust to purchase property within the restricted zone. A Real Estate agent can connect you to a notary and they will take care of most of the process that consists in:
- Making an offer to the seller can be done through your agent and it is usually a verbal agreement.
- Sign the sales contract. It will be called promesa de compraventa, and in it, the parties document the price and the terms of the sale, including special arrangements and penalties.
- Pay a deposit. It usually consists of a payment of 5 to 10% of the total price.
- Initiate the creation of a trust if the property is in the restricted zone. The trust is valid for 50 years. If the previous owner had a trust, it is possible to transfer it to you, but you still need to renew it at 50 years.
- The notary will arrange for the valuation process, and the expert will determine the value of the property for tax purposes.
- Sign the deed at the notary’s office. Usually, the final payment is made here and when the deed is signed the property is yours.
- Pay taxes, collect fees, and initiate the registration of the property. This is all done by the notary, you just need to give them the money.
- Final registration. This process is completed in three months.
- Closing costs. They should be about 5% of the purchase price. This includes a 1.5% notary fee, a 2% transfer tax, and a few other odds and ends, including the trust setup fees. This will be higher if you get a mortgage.
We recommend that you make sure to buy from a reputable real estate agency, if you have doubts ask questions until they’re clear, and hire an interpreter If necessary to clarify terms in Spanish. Enjoy your new home.