| 1. |
I have always heard non-Mexicans
cannot buy coastal property in Mexico. Is that true? |
|
No. While it was once true, times have
changed. Prior to 1973, foreigners were not allowed to hold legal title or exercise direct
rights to real property in an area located within 64 miles of Mexico’s borders and 32
miles of its coastlines. Statutes enacted at that time and amplified by additional
legislation in1993 have made it possible for foreigners, foreign firms and Mexican firms
with foreign participation to acquire interests in coastal real estate through a bank
trust (Fideicomiso). |
| 2. |
Who is involved in this bank trust? |
|
Three parties. The seller of the property is
the Trustor. The bank is the Trustee, and the buyer, or Beneficiary, is the Fideicomiso. |
| 3. |
How does the trust operate? |
|
Title to the property is transferred to a
trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the
issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or homebuyer is
designated as a Beneficiary in the Trust and the beneficial rights are recorded in the
public record by a Public Notary. |
| 4. |
What are my rights as a buyer? |
|
The trust is a legal substitute for fee
simple ownership, but in this case the Trustee is the legal holder of the property. As
Beneficiary, you have the right to use, lease, improve or sell your property without
restriction. You may also transfer your nights to a third party, or pass it on to named
heirs. |
| 5. |
Is the trust renewable? |
|
Yes. According to the Foreign Investment Law
passed in 1993. Trusts can he renewed for an unlimited number of successive 50-vear
periods. |
| 6. |
How are closing costs calculated and
who pay’s for them? |
|
Closing costs are determined by the declared
value, which is usually, the same as the sales price. That value then becomes the basis
for all related taxes and fees. Generally the seller pays for real estate fees, the buyer
is responsible for the transfer tax and the cost of establishing the bank trust (if it is
not already in existence) notary fees, registration fees, tax, appraisal fees and trust
permit fees. The purchaser’s total closing costs can vary depending on the cost of
the property and the amounts charged by the notary. |
| 7. |
If the buyer is a foreigner is his
interest limited to the balance of my 50-year trust? |
|
No. Upon application, a foreign buyer
automatically receives his own renewable 50-year permit. |
| 8. |
Do many foreigners currently own
coastal property in Mexico? |
|
Today thousands of foreign owners enjoy their
Oceanside resort property; many have benefited from property appreciation. |
| 9. |
If at a later date, I decide to sell
my property can anyone buy it? |
|
Yes. If the new buyer is also a foreigner,
you simply assign your beneficial interest. If the new buyer is a Mexican National, you
can instruct the bank to endorse the title in favor of the buyer? |
|
| TAXES
Questions |
| 1. |
How much will I be charged for
property taxes? |
|
Baja California annual property taxes are .4%
of the assessed value for tax purposes. |
| 2. |
What about Taxes? |
|
The United States and Mexico have a tax
treaty, which subjects American buyers to all applicable. Mexican laws and taxes as well
as to U.S. taxes. As a general rule though you will be granted credit by the US Government
for taxes paid in Mexico. If you have concerns
relating to specific tax and legal questions you will probably wish to consult with an
attorney and/or tax specialist. |
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