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Fact or Fiction?! Busting the Myths of Buying Property in Mexico

Fact or Fiction?! Busting the Myths of Buying Property in Mexico

“Wow! I sure love Puerto Vallarta! I wish we could own property here, but I think foreigners are not allowed to own real estate in Mexico.”

“Wow! I sure love Puerto Vallarta! I wish we could own property here, but I think foreigners are not allowed to own real estate in Mexico.”

Fortunately, this is NOT true and it’s one of the most common misconceptions that exist in the minds of folks who fall in love with PV and would like to own their piece of paradise.

Today, we’re going to show you how easy it is to own real estate in Mexico, and specifically, in Puerto Vallarta. Let’s take a closer look at this myth and a couple of others.

Fact or Fiction? “Non-Mexican citizens cannot own real estate.” This is FICTION. The Mexican government encourages foreign investment in real estate and has set up a special “Living Trust” system (Fidecomiso) to allow foreigners to do so.

Fact or Fiction? “Foreigners can only purchase a 99-year lease for real estate.” This is FICTION. Unlike the UK and many other countries, the “Fidecomiso” or Trust is not a lease. The land and property in your trust is yours to do whatever you wish with it. You can sell it, rent it, build on it, tear down structures, whatever is legal. You also can bequeath it to whomever you designate and when they inherit it, they can do so – in perpetuity.

Fact or Fiction? “The Fidecomiso only applies to certain zones in Mexico”. This is a FACT. The use of a Fidecomiso is only required to purchase real estate within 100 kilometers from any national border and 50 kilometers from any ocean. Properties in other parts of Mexico do not have this requirement.

Fact of Fiction? “You never know what you are going to get when you buy real estate in Mexico, you could get scammed.” This is FICTION. Using a trusted real estate agency like Coldwell Banker La Costa will ensure that your purchase is done in accordance with all the Mexican laws. Additionally, our team of in-house lawyers and notaries will ensure that what you are buying is a legitimate “lien free” deed that has been legally registered with the land registry and can be legally bought and sold.

 

Owning real estate in Puerto Vallarta can be one of the best investments that you make. Many of our buyers use their Mexican homes for their own pleasure, for family members to use and when they are not here it becomes an awesome money generating machine; the rental capabilities are endless. Of course, some folks prefer to become full time ex-pats and simply choose to live here full time and enjoy the significantly lower cost of living. Either way, owning property here is a great investment and with the help of a professional broker, easy to do.

Coldwell Banker La Costa has been in business here in PV for over 30 years. Any one of our experienced and AMPI certified agents can show you how easy it is to own your piece of paradise, we’ll even walk you through the residency requirements, how to open a bank account, get a driver’s license and many other aspects of living in Mexico! We are not here to just sell you a piece of land. Our agents and clients often become lifelong friends. Contact us today to get started living in your Mexican dream home.

 

MYTH: Foreigners cannot buy property inside of the “Restricted Zones” (within 100 kilometers from any national border and 50 kilometers from any ocean.)

FACT: The Fideicomiso system was specifically designed to allow foreigners to purchase property inside of the Restricted Zones.

MYTH: Real Estate in Mexico is really just a “Lease”.

FACT: The trust has a 50-year lifespan. Unlike a lease, at the end of the 50-year period it will become renewable for a filing fee of approximately $1,000US. Thereafter it is renewable in the same manner, for subsequent 50 year periods in perpetuity. The bank acts as trustee – most banks in Mexico have trust departments to manage trusts (fideicomisos). They charge an annual trustee fee of about $550US and each bank charges vary slightly. The trusts in the banks are ‘off balance sheet assets’ in that in the event of a bank closure or dissolution (there has never been a bank failure in Mexico – ever), the trusts are not considered assets of the bank and would be assigned to another bank under the auspices of the Bank of Mexico.

One of the interesting differences we noticed was the use of “Notarios” or Notaries. These individuals are NOT like the simple Notary Public in Canada or the USA. They must pass the Mexican equivalent of the bar exam, they are then required to take two years of extensive study while practicing in a notary’s office following which they are subjected to a 3 day examination program and finally must be appointed by the state to a specific office in a city of which there are only a predetermined number of “notario” offices appointed. Notaries in Mexico are the only entities that are recognized by the Commercial and Land Registry and the Taxation Authority and they are empowered to collect taxes for all 3 levels of government.

Once you complete the purchase process you are then the proud owner of the beneficial rights of a trust, the body of which is the property. Think of a glass of water – the glass represents the trust and the water is the property. You have complete control of the glass. Same thing with a trust – you control it completely. You can sell the property, rent it, gift it or lend it – just so long as whatever it is you are doing with it is legal. You will also be obliged to maintain it and pay property taxes. Property taxes are .08% of the assessed value – which was established when you purchased the property by way of the tax assessment appraisal that was registered with the assessment office (the ‘Catastro’).

Overall, the process was very easy, just make sure you are dealing with a reputable Real Estate agency.

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