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Buying PropertyBack to top Back to main Skip to menu
Mexico - Buying Property
Every property transaction in Mexico has to be certified by a licensed public notary who has been appointed directly by the State Governor. The notary chosen by the buyer has to ensure that all the required permits and papers are in order. They also verify that there are no liens or unpaid dues on the property. In case the property has multiple owners, the notary checks that all are in agreement for the sale.
Notarization gives the buyer additional security. However, a notary can only check the records that are available to the public. Even a notarized transaction can be challenged if there are property owners that no was aware of.
The exact steps for property purchase may vary a bit from one state to the other, though the format remains more or less the same:
1. Finding a property and verbally agreeing on the price as well as the payment terms
2. Drawing up the initial written agreement to buy/sell (convenio de venta/compra), which outlines the detailed costs, inclusions, exclusions, and deadlines. A cancellation penalty is also included in the agreement, which is paid if either party pulls out after signing. When this agreement is signed, the buyer pays an initial deposit of 5% to 10%.
3. Setting up a trust for the foreign buyer for holding the deed to the property in case it is within the restricted zone.
4. Getting permission for purchasing real estate in Mexico from the foreign secretary’s office. At this point a Calvo Clause needs to be signed, stating that the buyer won’t seek foreign jurisdiction for any property related matters.
5. Checking of the property deeds by the notary - buyers should explicitly ask the notary to ensure that the land isn’t ejido (set aside for agricultural work).
6. Appraising the land officially (avaluo) which is arranged by the notary.
7. Providing all the required documentation to the notary. This includes identification, birth certificate, and visa papers for the buyer and property deeds, tax receipts, and proof of bill payments for the seller.
8. Paying capital gains tax on the property (for the seller, if applicable)
9. Making the final payment when the property deed is signed over to the buyer at the notary’s office - the entire sale amount is exchanged at this time.
10. Paying off the notary fees as well as the taxes associated with the property purchase
Whether the buyer is paying cash or has arranged for another kind of financing, the agreed funds have to be available during the deed signing and handover at the notary’s office.
People purchasing real estate in Mexico should consider the following costs and taxes while calculating the overall price of the property:
• Acquisition Tax of about 2%, payable on exchange of any property
• VAT Sales Tax on commercial properties only
• Appraisal Tax, paid within 15 days of the appraisal report. If the appraised value is more than 10% of the price paid, buyers are required to pay 20% of the difference as appraisal tax
• Registration fee of 1.3%
• Public notary fees, which is around 1.5% of the transaction value plus the official appraisal cost
• Bank trust fees if the property is within a restricted zone. The setup fee is around US$1000 and the annual service charge is between US$1000 and US$2000.
• Lawyer / attorney fees
• Land or building survey fee (if applicable)
• Foreign office permit of around US$150
• Service fees (ranging anywhere between US$100 and US$1000 per year) in case the property is in a gated community
• Title insurance (optional)
Read more about this country
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