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Frequently Asked Questions Print E-mail

  • Q: Can North Americans own real estate in Mexico?
  • A: Yes. In most of Mexico, Americans, or any other foreigners, can own land outright. Prior to 1971, land in the restricted zones - 50 km. from the ocean and 100 km. from the borders – was restricted from foreign ownership. However, in 1972, the Fideicomiso (bank trust system) was developed specifically to enable foreigners to buy residential property in the restricted zones.

  • Q: Can a Mexican property be bought as a second home? What is deductible for tax purposes?
  • A: Yes. Mexican property can be considered as a second home, thus interest & property taxes are deductible on U.S. returns

  • Q: Does the Bank own my trust?
  • A: No. The bank trust operates much the same way as a U.S. bank trust does. The bank only holds the trust for your ownership and protection under Mexican law. It does not own the trust. The bank serves as the owner’s employee. It operates solely under the instructions of the owner of the trust. It can be bought, sold, inherited & willed. The Fideicomiso acts much the same as a Deed of Trust does in the U.S. providing equity ownership.

  • Q: Is a bank trust the same as a lease?
  • A: No. Under a bank trust. the beneficiary (buyer/owner) has all the rights of ownership: the right to use, borrow money on, make improvements on, and transfer. A lease grants only the right to use. If the tenant makes improvements, such as building a house on the property, that house belongs to the landlord, nor can the tenant sell the property or borrow money on it. A lease cannot contain provisions for future renewals whereas a Fideicomiso is guaranteed renewable into perpetuity.

  • Q: How is the property title transferred?
  • A: The sale is legally finalized when it is witnessed through a Notario Publico in Mazatlan. From there it passes to the authorized Bank for the Fideicomiso ownership. The bank then reviews all the necessary documents and once satisfied that the subdivision is legal, issues the Fideicomiso. This is a long and detailed process, and can take months to complete.

  • Q: Can I obtain title insurance on my property in Mexico?
  • A: Yes. For instance Stewart Title provides title insurance for Mexican properties

  • Q: Is there escrow in Mexico to hold the deposit of funds required in my purchase agreement?
  • A: Yes. Escrow is highly regulated in Mexico, and certain Mexican banks are permitted to hold your money as a third party. Some US title companies may also be granted permission to escrow deposit funds on behalf of a buyer and seller in regard to Mexican real estate.

  • Q: Is a person selling a Mexican property (not a primary residence) for a gain liable for both U.S. & Mexican capital gain taxes?
  • A: There is not double taxation. Generally, a person will get tax credits on his U.S. tax return, for Mexican taxes paid.

  • Q: Should I worry about expropriation?
  • A: No. Non-nationals often worry about land being expropriated by The Mexican government. By Mexican Law and as agreed to through NAFTA, Mexico may not directly or indirectly expropriate property except for a public purpose (identical to eminent domain in the U.S.) When it is necessary to expropriate, swift and fair market compensation must be paid together with accrued interest.

  • Q: Can the Mexican Government take away foreigners property at any time?
  • A: No. The Mexican government formed the Fideicomiso for foreigners through constitutional law and provides them, under the Mexican Constitution, the same legal rights of ownership as a Mexican would have. Secondly, the N.A.F.T.A. Treaty (1994) between Canada, Mexico and the U.S. further put in place many requirements, including security provisions that prevent any of these governments from arbitrarily seizing land from the rightful owner.

  • Q: Must North Americans have a Mexican partner?
  • A: No. In the past, a corporation or partnership had to be owned with a Mexican partner who owned at least a 51% interest. This is no longer the case. Now, a Mexican corporation can be 100% foreign owned and is able to buy property for business purposes with fee simple title even in the restricted zones, under the Foreign Investment Law of 1993.
 
  • Q: Are non-Mexicans required to become Mexican residents in order to own property in Mexico?
  • A: No. Foreigners are not required to be residents of Mexico to own property there. However, becoming an FM3 holder can provide a number of benefits to the buyer. 
 

News Corner
AMPI Selects First Woman

The founder of Invest Mazatlan, Sylwia DeSoto, elected to be the first woman & the first foreigner member of the Board of Directors of the Mazatlan section of the Mexican Association of Real Estate Agents.
SATL in Mazatlan

In January Mazatlan became a destination for the American Society of Travel Writers (SATL). 87 reporters representing publications such as Travel Weekly, Travel News, Travel Agency Magazine & West Ways visited Mazatlan to learn more about this destination and feature it in their publications.
Teacapan Mega Project

The President of Mexico, Felipe Calderon, has placed the first stone inaugurating a mega project in Escuinapa/Teacapan. The project is supported by FONATUR and it will be “the New Cancun” with 2000 hotel rooms scheduled to be available by 2012. Once completed the overall complex is to include four golf courses, two marinas for a total of 1,000 vessels, 44,200 hotel rooms, a five mile beachfront walk, and a light railway.
 

Invest Mazatlan, Mazatlan - Sinaloa - Mexico

Tuesday March 9th 2010 07:39:55 PM