Buying Condos in Mexico For Sale
To give you some background, the Mexican Constitution prohibits foreign ownership of property along waterways and international borders - this is called the Restricted Zone To get around this restriction and promote foreign investment, the Mexican Congress created, via statue, a mechanism to allow foreigners to own property in the Restricted Zone via a bank trust. Title to property in the Restricted Zone is held in the Trust. A Mexican bank is the trustee of the trust. The trust is managed by the bank in accordance with the terms of the trust. The trust gives the beneficiary, (the buyer) the right to sell, buy, make modifications, rent, gift to heirs, inherit etc..... Currently, the trust has a term of 50 years, with another 50 year extension. Heirs can renew for another 50 years. We do expect that this extension rule will be eliminated in the future providing for no expiration of the trust. Depending on the value of the property, a trust fee of round $500 U.S. per year is charged by the bank for management of the trust.
Closing fees range from 6-8% of the appraised value of the property. Fees include the trust fees, government transfer fee 2%, appraisal fee, attorney fees, HOA transfer fees etc.... So on a $200,000 dollar property you are looking at $12,000-$16,000 dollars in closing fees.
If you rent your property for income an FM3 (Work Permit) and a Hacienda Number (Similar to IRS SS Number) are required to receive income in the Country of Mexico. Income tax and city lodging tax are required to be paid to Hacienda and the city. Usually foreigners will hire an accountant and bill pay service to prepare the documentation and pay the bills on your behalf out of a bill pay account that you have established. Fees for the bill pay service are usually around 20 U.S. dollars per month.
Property taxes are extremely low, around $300 per year on an ocean front 1600 sq foot condo valued at $200,000.
We (Realtors) are here to guide you through the process. We have the contacts and the expertise to complete your transaction in a safe and reliable manner. When you are ready to purchase that ocean front vacation property, please don't hesitate to contact me.