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Q&A About the Fideicomiso in Mexico

There are two options for foreigners who want to purchase Mexican property within the restricted zone (100 km of any national border and within 50 km from the coast) either through a Mexican corporation or by obtaining a fideicomiso.  The fideicomiso is a trust held by the bank, which provides the buyer with all the benefits of direct ownership.  Is the fideicomiso a lease? No, although the term of the trust is 50-year increments, it can be renewed indefinitely. Should I choose one of the larger banks to set up my fideicomiso? No, not necessarily. Since the fideicomiso is not a big part of their...

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An Important Update About Real Estate Acquisition Tax

Purchasing property in Mexico, like any other country, is associated with added expenses during closing. One of the added costs you should anticipate is the acquisition tax, also known as a transfer tax.  Up until this year, the acquisition tax in Playa del Carmen was only 2%, but as of January 2020, the Impuesto Sobre Adquisiciones de Bienes Inmuebles (acquisition tax) has increased from 2% to 3%.   The tax will be calculated at 3% of the assessed value of the property at the time of purchase and is the responsibility of the buyer. This increase affects real estate transactions in Playa del Carmen...

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Predial – Tax Time for Property Owners in Mexico

Purchasing a new house in Mexico? Do not forget the impuesto predial, Mexico’s annual property tax.  SAT - Servicio de Administración Tributaria, also known as The Hacienda, collects the Federal taxes in Mexico. Foreigners should be aware, unlike some countries where the property tax is included and paid by your mortgage company or bank, in Mexico, you are responsible for the property tax at the beginning of each year. You will not receive a bill in the mail; you must make a calendar note to remind yourself of this obligation. Review the invoice at the municipality or online. Confirm that the property location...

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Rent to Own – A Transaction Agreement

If you are selling your property in Mexico, you may get an excellent offer from a buyer looking for a rent to own situation. The potential buyer may want to live on the property while making substantial payments.  How do you protect your investment and not waste time and money if the buyer defaults? You will need to take extra precautions to protect your interests. We recommend you hire a Mexican lawyer to draw up or at least review any legal agreement you make to ensure you and your investments are fully protected. What type of agreement will protect the potential buyer...

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Mexican Real Estate – Benefits of the Fideicomiso

Obviously, it would be easier and less expensive if you could hold a direct title to your Mexican property. However, the Mexican Constitution states foreigners can not own property within the restricted zone; the fideicomiso is the safest workaround for purchasing this type of property. The primary purpose of a fideicomiso is to satisfy the Mexican Constitution by bestowing the legal title of the property in the name of the trustee. The trustee’s responsibility is to hold and transfer title deed under the direction of the beneficiary (buyer). The Benefits of a Fideicomiso It allows foreigners to purchase real estate within the...

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