Mexican laws regarding the purchase of beachfront property have changed, becoming much more buyer-friendly. Here are the answers to the most frequently asked questions surrounding buying real estate in Mexico.

CAN A FOREIGNER OWN REAL ESTATE IN MEXICO? Yes, they can. It is a common misconception that only Mexicans can own Real Estate in Mexico. Foreigners can own land in the interior of Mexico (outright with fee simple title, the same kind there is in United States and Canada) and in what is called the "restricted zone" along the coast. These areas, wchi fall within 100 kilometers (62.1 miles) along the Mexican border or 50 kilometers (31.05 miles) along the coast, are known as the Restricted Zone. Within the Restricted Zone, a foreigner or foreign corporation obtains all the rights of ownership through a bank trust, also known as a Fideicomiso. The bank trust is established by the government and gives foreigners the very same rights of wonership as Mexican citizens. The only difference is that the actual title is held in trust for them by a trustee, typically a bank. The trust operates the same way as a family trust in US.

HOW DO I KNOW THAT MY PROPERTY PURCHASE IS SAFE? US title insurance companies now offer tittle insurance for property in Mexico to ensure you have a free and clear title, just like when you buy real estate in the US or Canada. To secure your property, purchase title insurance, available through a title insurance provider. Title insurance fees are paid only once, at the time of purchase. The carrier shoulders the potential risks and indemnifies against losses or damages arising from title defects covered under the policy. Title insurance assures the marketability of your title and give you a no-fault recourse in the event of any problems.
When you purchase title insurance, extensive title search is performed, in most cases all the way back to the Sovereign State of Mexico.

HOW DOES THE TRUST WORK? A bank trust, or Fideicomiso, is a trust agreement created for the benefit of a foreign buyer, executed between a Mexican bank and the seller of property. The bank, as trustee has a fiduciary obligation to follow instructions given by you, the trust beneficiary. You retain and enjoy all the rights of ownership while the bank holds your title. You are entitled to use, enjoy, and sell the property that is held in trust at its market value to any eligible buyer.

HOW LONG DOES A TRUST LAST? IS IT RENEWABLE? The Foreign Invetment Law, a Constitutional amendment created in 1971 and amended again in 1993, allows a trust to be established for a term of 50 years, after which it is renewable. In fact, it is perpetually renewable and may be renewed at any time during its existence by a simple application.

HOW ARE THE RIGHTS OF THE BUYERS WHO SET UP A BANK TRUST DIFFERENT FROM THOSE WHO HAVE A LEASE AGREEMENT ON LAND? Under a bank trust you have all the rights of ownership: the right to buy, sell, lease, use, bequeath, improve, transfer and encumber. A lease agreement on the lnad grants you only the right to use the land. If a lesee makes improvements to the land, such as building a house, that house belongs to the landlord. Nor can the lessee sell the property or borrow money on it. He can only sell or borrow against the lease.

HOW MUCH DOES A BANK COST? The costs to establish a bank trust vary from bank to bank.

HOW MUCH ARE THE PROPERTY TAXES? Property taxes are very low in Mexico.

I´VE HEARD THAT THE MEXICAN GOVERNMENT CAN SEIZE YOUR PROPERTY. WHAT´S THE REAL STORY? From time to time the media has published negative stories dealing with the alleged injustices to foreign buyers who had purchased properties in Mexico. Most of these stories have been ill-informed and one-sided. In all of those cases developers and-or buyers did not have a proper title to the land. In the media it was reported that the Mexican governmnet had taken away their land. Potential buyers should always make sure they get title insurance in Mexico just like they would in their contry.

CAN I RESELL MY PROPERTY? Yes, you may sell your property at any time to any eligible buyer.

WHAT ARE THE TAXES I HAVE TO PAY IF I SELL MY PROPERTY AT PROFIT? The seller pays all Mexican taxes and real estate fees at the time of sale. Capital gains taxes are 28% of the difference between assessed values at the time of purchase and sale, with deductions made for inflation and for any capital improvements. Taxes paid in Mexico are normally "credited" toward taxes arising in the US or Canada as a result of the sale.

This FAQ is only intended to provide general information. It is not intended to be relied upon as legal, accounting, tax, or other professional advice or services.

e-mails:

lagigantalto@prodigy.net.mx

lagiganta.realtestate_loreto@yahoo.com

rebeca_kelli@prodigy.net.mx

Tel. 52 613 1350802     Cel. 52 613 1043611