Yes, but there are restrictions within 50 kilometers of the coast and 100 kilometers of borders. In such areas, foreigners can own land through:
Beachside Real Estate’s closing specialists and sales team will guide you through the entire process of establishing a fideicomiso and purchasing your Mexican property.
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Yes, property ownership in Mexico is a secure investment option.
Foreigners have been purchasing land and homes in the coastal areas of Mexico for more than forty years. This is thanks in part to the help of a Mexican Bank trust which names the owner as the beneficiary and the Mexican bank as the trustee. It is interesting to note that savvy Mexican investors will also use a bank trust. The reason is that it’s a great estate planning tool. If anything happens to an owner, the property transfers to the named beneficiaries.
Owners enjoy the same rights as property owners within the United States, Canada and other parts of the world. This includes the right to enjoy, lease, sell and make improvements to the property.
While the potential cost savings might make self-representation as your own seller’s agent seem enticing, reconsidering this decision is crucial. Here are eight compelling reasons to rethink this approach. Read more
How Do I Make My Home Appealing to Buyers?
We all want people to love our home as much as we do, but especially when you are trying to sell it! While it’s impossible to please every buyers’ taste, there are several easy things you can do to make your home more appealing without spending a lot of money. Try some of these tricks and see if your showings cause buyers to swoon.
The legal framework governing real estate in Mexico has deep historical roots, spanning a 10-year war with Spain, the influence of a dictatorship, instances of land appropriation, and the enactment of the 1917 Constitution. This period was marked by significant upheavals in Mexican history, making it a particularly dramatic era. Read More
Mexico stands as a haven for global digital nomads. This picturesque country provides a serene and tranquil environment for all visitors, whether they are here for vacation or engaged in remote work. Read more
Indeed, a US citizen can relocate to Mexico, but for stays exceeding six months, a visa is required. Various visa options exist, such as tourist visas, student visas, and work visas, each tailored to the specific purpose of the individual’s move to Mexico. Real More
We get asked this question often by both buyers and sellers. What normally stays and what normally goes in the sale of a home. In real estate law, we refer to this as ”real property, fixtures, furniture and personal belongings”.
You typically get the fixtures when buying. The fixtures are yours to keep when you buy the house because they are regarded as a part of it. However, some things, such as the refrigerator, microwave, chandeliers are in a grey area and should be confirmed in a contract if in question.
Finally, the furniture has nothing to do with “the property”, examples: televisions, tables, beds, sofas, and chairs. Almost always, furniture is regarded as personal property and is therefore excluded from the sale of a home. However, it is much more typical that homes are sold partially or fully furnished in Mexico
At Beachside, we ask our sellers to provide and exclusion list up front so that it’s clear from the beginning what stays and what goes. For total clarity this inclusion or exclusion list are also part of the contract of purchase and sale. Which translates into — more peace of mind for everybody!
For numerous reasons, real estate has maintained its reputation as a secure investment, providing a relatively safe and straightforward avenue for wealth accumulation. If you’re considering real estate investment in Mexico, I’m here to assist you in discovering the perfect properties to meet your investment goals. Read More
Establishing a strong rapport with your contractor is paramount, ideally akin to the relationship you foster with your real estate agent. This synergy ensures effective communication and a collaborative approach to achieving your goals in the construction process. Read More
There are several selling expenses, taxes, and tax deductions you must factor into the deal when selling your residential property in Mexico.
When purchasing a home in Mexico, you will be required to pay a variety of “closing expenses” that typically vary from 5% to 10% of the purchase price of the home. When the time comes for you to sell your Mexican home, the buyer will cover the majority of the closing charges, but you’ll also need to budget for taxes and selling expenses.
When selling a property in Mexico, the three primary expenses are:
• Fees for sales;
• Service costs for professionals; and
Fees for Sale
It is possible to promote and sell your home without using a local real estate agent’s services, but a skilled agent will help with marketing, serving as a liaison between the parties engaged in negotiations, and assisting with the necessary paperwork to bring a property transaction to a successful conclusion.
Real estate agents in Mexico typically charge between 6% and 8% of the sale price as a commission. You must then add Mexican sales tax (IVA) to this (16%). At the time of this article, this fee is 100% deductible from your applicable taxes. The 2% transfer tax that you paid when you purchased is also deductible.
In Mexican real estate transactions, the Notary Public plays a crucial role. A Mexican Notary Public is a legal expert with crucial statutory roles. The buyer is responsible for paying the Notary Public’s fees. In addition, some buyers decide to hire a lawyer, which can increase their overall costs by several thousand US dollars, but this is usually not necessary. You will also need to plan for a “trust cancellation fee” that is charged by the bank if the property you are selling is held in a Bank Trust (fideicomiso). The amount varies, but you should plan for about US$1,000 to cover this.
Taxes on the sale of residential property in Mexico
The taxation of residential real estate sales is a complicated area of Mexican tax law, and each situation will be a little bit unique. Additionally, bear in mind that tax regulations are susceptible to change. Since buying a home is typically a long-term investment, the current tax laws may no longer be in effect when you decide to sell your property several years from now.
The recommendations in this article are meant to assist you put together an estimate of the taxes you will be required to account for when you sell a residential property in Mexico. These are the main principles of residential property taxation as of the date of this article. When you sell commercial property, there are different tax laws and rates that apply.
To gain a thorough evaluation of your situation, we advise you to seek professional guidance from a tax accountant in Mexico.
Also keep in mind that, if you are not a citizen of Mexico, you can also be required to pay taxes in your home country. In that case, you should see a professional tax accountant.
Taxes due on the sale of residential property are calculated by the Notary Public, who also withholds these amounts for direct transfer to the Mexican Treasury. The tax law makes each Notary Public fully liable for taxes due, so they will absolutely ensure that the rules have been followed and certify that sellers qualify for any exemptions and deductions they are claiming for tax relief.
Capital Gains Tax
Residential property sales in Mexico are subject to a capital gains tax of 25% on the gross sales value of the transaction without any deductions OR between 1.92% and 35% on the gain (purchase costs less allowable exemptions and deductions); the percentage is calculated on a sliding scale in relation to the gain; we advise assuming 35% as residential property sales with gains over $250,000 pesos (roughly $13,000 US dollars) will be subject to this rate.
Many family residences are eligible for a one-time tax allowance exemption under Article 92, Fraction XIX a) of Mexican income tax legislation, which lowers the tax payment. However, you and the property must meet certain requirements to be eligible for the exemption:
The property you’re selling must be your primary residence in Mexico, you must be a resident of Mexico* with a tax ID (known as an RFC, or Registro Federal de Contribuyentes), the land subject to the sale cannot be larger than three times the size of the building on the land (measured in square meters), and you can only use this exemption once every three years.
The flat-rate exemption is equivalent to 700,000 UDIs in pesos; UDI values change over time, and you may find the most recent UDI exchange rates on the Bank of Mexico website. If you meet the requirements, you may deduct the equivalent of 700,000 UDIs, which at the time of writing is approximately $5.06 million in Mexican pesos, from the sale price.
You may deduct an additional 700,000 UDIs in the name of your spouse or other family member if the same home is lawfully co-titled in their name, they are a resident of Mexico* with a Mexican tax ID, and the home is also their primary residence.
You must be eligible and provide documentation to support your eligibility in order to get the tax-deductible allowance. Speak with your Notary Public about how to go about doing this and what you must do to provide the required documentation as proof.
If you have legal residency in Mexico but don’t currently have an RFC number and want to use this as a way to claim the tax deductible allowance when you sell your residential property, speak with a licensed accountant or other professional firm with experience in property matters about getting an RFC.
* Mexican income tax legislation specifically states that the seller must be selling his or her principal residence in order to be eligible for tax exemptions on capital gains, but it does not specify whether the foreign individual selling a property must have temporary or permanent residency status. The Notary Public handling the case will interpret the legislation; some Notary Public offices may apply the capital gains exemptions to foreign citizens with residente temporal status, while other Notary Public offices may do so only if the seller has residente permanente status.
Deductions allowed for capital improvements
You can deduct the costs of any capital improvements (e.g. building extensions, new flooring, swimming pools, new rooms) while you owned the property, as well as some closing costs commonly incurred when purchasing a home. You need official receipts in Mexico, these are known as ‘facturas, for all services and building work to claim these allowances when you sell. So be sure to take advice from your tax accountant on how to account for these and follow it.
Any capital improvements made using a firm or builders who didn’t issue you with facturas for the work cannot be deducted. General maintenance does not count as capital improvement.
The currency exchange rate effect
Homes are listed for sale with prices in Mexican pesos in the majority of towns and cities in Mexico. Prices are, however, given in US dollars in Puerto Vallarta and Nayarit.
The deed will list the sum in Mexican pesos at the exchange rate in effect on the closing date, even if the house may be advertised in dollars and the transaction amounts may be listed in dollars. Any capital gains are exclusively calculated in Mexican pesos; as a result, changes in the exchange rate can have an impact on how much capital gains are computed in foreign currencies.
Selling your Mexican home as a non-resident
If you are not a resident in Mexico and/or you don’t have a Mexican tax ID, you cannot claim the one-off allowance exemption explained above, although you can claim qualifying deductions, so long as you have the official receipts (facturas) to prove the expenditures which can be deducted.
Explore our top 6 frequently asked questions about buying a home in Mexico: