Myths vs Facts

Let’s talk about buying real estate in Mexico – it might just be the best investment you ever make! Whether you're building out your investment portfolio, moving the family to paradise, hunting for the perfect retirement condo, or snagging a rental property to generate some extra income when you're not in Mexico, there's something here for everyone. But with all the excitement of purchasing property in Mexico comes a few myths that might give you pause. Don’t worry, I’ve got the facts to set the record straight!

MYTH: Foreigners can't buy property in Mexico.

FACT: Yes, you can!*

Foreigners can absolutely buy property in Mexico – it just depends on where the property is located. Inside what’s known as the “restricted zones” (that’s 100 kilometers from any border and 50 kilometers from the coast), you’ll need to purchase the property through a trust, known as a *fideicomiso*. But don’t sweat it, outside of those zones, you won’t need a trust at all.

MYTH: You can’t buy in the “restricted zones” at all.

FACT: You totally can, thanks to the Fideicomiso system.

The fideicomiso was created just for this! This trust system lets foreigners buy properties inside restricted zones. Think of it like holding a piece of paradise in a super-secure vault. You’ll have all the rights, whether you want to sell, rent, or even gift the property.

MYTH: Real estate in Mexico is just a long-term lease.

FACT: Nope!

A fideicomiso has a 50-year lifespan, but unlike a lease, you can renew it every 50 years for just a small fee – currently around $1,000 USD. The best part? The bank that manages your trust is simply a trustee, not an owner. They hold your property “off balance,” meaning even if the bank goes under (and for the record, no bank in Mexico has ever failed), your property is safe. It's transferred to another bank under the Bank of Mexico's watchful eye. Annual fees run about $550 USD, and each bank may vary a bit.

Now, one unique aspect of buying real estate in Mexico is the role of a Notario. But don’t get confused – these aren’t your run-of-the-mill notaries like you’d find in the US or Canada. These folks are highly trained legal professionals who’ve passed the Mexican equivalent of the bar exam, undergone years of training, and must be appointed by the state to one of a limited number of Notario offices in any given city. They’re the only ones who can register property, collect taxes, and handle all the official bits of a real estate deal.

Once you’ve completed your purchase, you’re not just a property owner – you own the beneficial rights to the trust, which is the legal body for the property. Imagine your property as a glass of water: the glass is the trust, and the water is the property. You hold the glass and control it completely! Whether you want to sell, rent, or even gift it, the choice is yours – just make sure it’s legal! And, of course, you’ll need to pay property taxes, which are a modest 0.08% of the assessed value. This value is set when you purchase the property and is registered with the local tax office (Catastro).

So, there you have it – the myths and the facts about buying real estate in Mexico. Whether you're dreaming of oceanfront property or a quaint spot in town, there’s a process in place to make it yours!

Will Hutt

Coldwell Banker La Costa

Will.hutt@cblacosta.com

+1-239-691-0782