HOW TO BUY PROPERTIES IN MEXICO
EL DORADO RANCH
WHAT'S REQUIRED TO OBTAIN AN FM-3 OR FM-2 VISA?
For those of you who, lease lots, rent houses, or have purchased property through a Fideicomiso Irrevocable, you must have an FM-3 Visa to be legal in Mexico. Once you have signed any sort of contract, you are no longer a tourist. I would like to say at the outset, that if you do not have an FM-3 Visa and you find yourself in a property dispute or other entanglement which puts you in the arms of jurisprudence, you literally have no rights as an "illegal alien". This means your property, bank accounts, vehicles and personal belongings, are in jeopardy. The very minimum you need for owning or leasing property is the FM-3 Visa which is renewable every year for 5 years. The following is a list of items you will need to obtain your FM-3 or FM-2 Visa:
1 . PROOF OF INCOME: $1,000.00 per person or 1,500.00 per couple deposited into either a Mexican or American bank account. If not deposited into a Mexican bank, you must obtain a letter from your bank, translated into Spanish stating you have funds available in that bank. This letter must have an APOSTILLE from the Secretary of State's office and is not the same thing as a notary seal. The letter should be signed and sealed from a valid notary of your state, but in addition, you must have Apostille from your state secretary's office. You can contact the Secretary of State's office of your home state for more information on obtaining the Apostille.
2. PETITION LETTER: Letter from you requesting a change of your characteristic (from tourist to resident);
3. RESIDENT LETTER: Letter from camp or development manager, or copy of current Mexico electric, water or telephone bill verifying your current address in Mexico .
4. FMT TOURIST VISA: Can be purchased at any Immigration Office or local airport in Mexico for a current cost of 250.00 pesos for a period of 6 months.
5. PHOTOS: Three front and two of the side, in black and white. A specific infantile size is required and you can get these photos only at the Copicentro stationary store in San Felipe or any other shop that is familiar with this size.
6. The necessary "Form #5" (can be purchased in any stationery store in Mexico ). You need three (3) originals for each visa applicant.
7. A current passport.
8. FM-1 APPLICATION: A form which must be carefully typewritten in Spanish. You can obtain this form at any Immigration office. We strongly recommend that the Immigration office or a visa service prepare this form for you (a minimal fee will be charged).
Take all these documents and letters to the Immigration office or visa service. Upon completion of your file, you will be asked to take the "Form # 5" to the bank where the appropriate fees are paid and receipted. They will keep 1 copy, and you will return the rest to the Immigration office. Now you're finished. It will take about 1 month for your file to go to Mexicali and be returned with your new FM-2 or FM-3.
ANNUAL RENEWAL FEES:
FM-3 Visa without working papers is 1,055.00 pesos; FM-3 Visa with working papers is 1,713.00 pesos; FM-2 Visa without working papers is 2,194.00 pesos; FM-2 Visa with working papers is 2,194.00 pesos. The same requirements for money in the bank, etc. are necessary, except for the application and photos.
You can do all the paperwork and running around yourself or you can contact one of the following visa preparation services: San Felipe Immigration Office, Yolanda at yetmaill@telnor.net or Lupita Mora Foudy on Mar de Caribe (577-1804) for assistance in filling out the required paperwork.
THERE ARE 3 CLASSES OF PERMITS: FMT, FM-2 and FM-3 .
FMT: Is a Tourist Visa. If you stay MORE THAN 7 days in Baja (other regions in Mexico require a tourist visa upon entry) you will need a Tourist Visa. The cost is 205.00 pesos. Passport & I. D. required. This can be picked up at any Immigration office or at the airport.
FM-3: is a Visa for temporary residents up to 5 years or longer if desired. You can get your first FM-3 from your local Mexican Consulate in the states. It's quicker and you don't need the Apostille, but you must have your visa book in Mexico at any Immigration Office within 60 - 90 days (exact time will be stamped by the Consulate in your book) after the date your visa was received. If you don't do this, your FM-3 isn't valid and you will need to start over from the beginning.
FM-2: is a Visa for permanent residents. Requirements for FM-2 are the same but you must live in Mexico FULL TIME (residing no less than 9 months in Mexico ).
For further information, concerns, or complaints contact the Secretary of Immigration office,
Sub-Delegado Local Lic. Ramiro Ulises Contreras, or one of the very helpful, English speaking assistants in that office at 577-1083.
The office is located at the Glorieta (traffic circle) on the right hand side of the street as you are heading out of town. If you have any further questions, please email us at and we will try to answer your questions.
Just a helpful hint from long-time returnees: After you get your FM-3, before you leave the country, you may want to get it date stamped at Immigration. This will facilitate the renewal process and late fines if you return later than the one year expiration date.
DIAMANTE DEL MAR
Can foreigners own property in Mexico?
Yes. Any foreigner or Mexican national can establish a Fideicomiso (the equivalent to an American beneficial trust) to purchase real estate anywhere in Mexico, including the Restricted Zone. The Fideicomiso is a 50-year renewable Mexican bank trust allowing the beneficiary to buy, sell, mortgage or build on the land. The trust is indefinitely renewable for another 50 years at any time and can be transferred to another owner/beneficiary with or without the sale of the property.
Can the Mexican government reclaim legal title to my property?
No. Diamante del Mar recently completed the arduous process of acquiring Ejidal Certification from the Mexican government, called 'El Procede', thereby earning legal title to the land. A purchaser of a Diamante del Mar home site will therefore acquire a beneficial interest in a fideicomiso trust that will hold legal title to such home site and allow the purchaser to lawfully own an interest in Mexican coastal land. They will be entitled to the same property rights of a Mexican national and all the benefits of a direct owner, including the ability to lease or transfer his/her property rights to a third party or a pre-appointed heir, much as an owner could in the United States.
Can I get title insurance on the property?
Yes. Title insurance policies are readily available from United States title companies, such as Fidelity Trust, on properties located in the Baja Peninsula that are held through Fideicomiso arrangements.
How much are property taxes?*
Property taxes are much lower in Mexico than in the United States. The current property tax rate, known as the 'predial', is .0065% (just more than 1/2%) of the assessed value as long as the property is used for residential use.
How much are capital gains taxes?*
Capital gains taxes are 35% of the difference between the assessed value at the time of purchase and sale, with adjustments made for inflation and capital improvements. However, if you own real estate in Mexico for 25 months and fulfill the few requirements Mexican law establishes to apply for tax exemption (earning a residence card through FM2 or FM3 status), you could save thousands of dollars in capital gains taxes if and when you sell the property.
Can my property be used as a rental?
Yes. The purchaser of a Diamante del Mar homesite is entitled through the Fideicomiso trust to use their property as rental property. Diamante del Mar will provide full-service concierge services to assist homesite owners in renting their property and managing its upkeep.
* There are many variables related to each individual tax situation. Please consult with a tax adviser regarding your personal situation and filing requirements.
PURUA PUNTA ESTERO
Up until recently owning property in Mexico was reserved for the cash buyer. If you wanted a $200.000 home you had to have $ 200.000 cash to buy it. But since the passage of NAFTA back in 1993 things have been changing, particularly with financing. For the first time in Mexico's history you can finance property in Mexico through an U.S. mortgage company. This is a momentous event in the history of Mexican property ownership surely to open a huge new market place. This new market of buyers will not only increase sales, but will have an impact on property values as well. Now a person can put a down payment on a mortgage, rather then full price out of pocket. Mexico will no longer be the exclusive to the cash buyer.
There are currently several U.S. mortgage companies that have set up this type of financing program. Once the U.S. Mortgage Company has approved your loan, they will go through a Mexican Bank, which will contact a Public Notary to draft the required documents. These U.S. Mortgage companies have alliances with Mexican banks to help smooth out the process. The Public Notary with the Trustee Bank will register these documents. Afterward you make payments to the U.S. Mortgage Company as you would any loan.
This new chapter in Baja's history will make it possible for those who could have only dreamed of owning a vacation home in Mexico, an affordable reality.
Among the most recent firms to offer financing are Metrocity Mortgage Corp., Union Bank and Collateral Mortgage Company.
Leased or Owned Land (reprinted with permission from "Baja Properties News 2000")
Can I own Land as an American Citizen? Yes, as of fairly recently you can own land under a Bank Trust. This reprint below will explain:
The Trust or " Fideicomiso"
The Bank Trust for ownership of Real Property in Mexico.
Article 27 of the Constitution of the Republic of Mexico prohibits foreign ownership of real property within 30 miles of any coastline or 60 miles of either border. This is referred to as the prohibited, or restricted zone.
In 1973, recognizing that many foreigners would enjoy owning property in Mexico, and would bring needed dollars to the country through such ownership, President Echeverria approved the bank trust, fideicomiso, form of ownership, which is available to non-Mexicans. The law governing ownership under a bank trust was further expanded in the Foreign Investment Law of 1989 and 1993.
Properties located within the prohibited, or restricted zone, which includes the entire Baja Peninsula, may be acquired by a foreigner through a Mexican bank trust, which designates the buyer of the property as the beneficiary of the trust. Legal title is placed in the name of the bank selected by the buyer as trustee. The bank administrates the property in accordance with the instructions of the buyer or beneficiary. The buyer enjoys the same rights of ownership, as does a Mexican national. He may build on the property, tear down existing buildings, modify them, rent, lease or sell at any time conforming only to the general laws of the country established for all persons.
The term of the trust is commonly 30 years, but it can go up to fifty and it can be renewed for additional fifty-year periods. In other words, title to the property may rest in one beneficiary indefinitely, provided that it is renewed within the terms established by the law.
The procedure for establishing the fideicomiso, the bank trust, is as follows:
1. Application is made to the Secretary of Foreign Relations for the permit to establish the trust.
2. Upon receipt of the permit, the trustee bank sends instructions to the notary public for preparation of the deed to the beneficial rights.
3. Applicable taxes are paid and
4. The deed is recorded in the municipality where the property is located.
The cost for the permit to establish the bank trust is currently less than US$1000. Annual bank administration fees generally range from $300 to $400. Additional closing cost such as an official appraisal, notary fees, certificates, registration costs, must be paid, however, to obtain a registered deed in the buyer's name. It is wise to request a written estimate prior to beginning the transfer process.
Escrow Offices and Title Insurance.
Title Insurance is now recognized and approved by Mexican Government through the Treasury and specifically by the Mexican Insurance Commission under authorization No. 06-367-I-1.1/27525, dated October 3, 1994 and is the only title insurance available legally. |
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Basic policy coverage provides a purchaser/ lessee of real property, or a lender secured by real property, protection against loss in the event that title to the property is encumbered or defeated by the interests of third parties not otherwise disclosed in the policy. For further information go here.
COLDWELL BANKER BAJA COASTLINE
Can a Foreigner really own property in Mexico?
The first question people usually ask about buying Mexican real estate is whether they can actually do it. The answer is yes... many non-Mexicans have purchased property here. Over 600,000 foreigners already own property throughout Mexico and since the change in the Foreign Investment Law in December 1993, foreigners can now own land in the formerly restricted zones - within 30 miles of the beach and 50 miles of the border - through a Fideicomiso (Trust).
Purchasing Real Estate in Mexico
While it is true that in years past the Mexican government have not allowed foreigners to buy property, this is no longer the case. Although there are restrictions, foreigners can buy property, and they will receive either a simple-fee title or a trust deed allowing them to sell the property or will it to their heirs if they so choose.
In years past, buying real estate was always a cash transaction, but now home mortgages are available to qualified buyers; some of these mortgages are offered by Mexican companies, but some are offered by American companies. Interest rates are generally higher than for loans on U.S. property, and there are other fees attached, but mortgages do allow people without a large lump of cash to buy property.
How it works
Foreigners acquire irrevocable and absolute ownership rights to property in Mexico through a 50-year perpetually renewable and transferable Bank Trust called a Fideicomiso. This Trust is a legal substitute for deeded (commonly referred to in the U.S. as fee simple) ownership and is provided specifically for non-nationals to own property in the formerly restricted zones (border and beach areas.) The Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico; thereby offering powerful protection.
If you take reasonable precautions and work with professionals, you will have a happy ending for your purchase of Mexican property.
Coldwell Banker Baja Coastline is a proud member of A.M.P.I.
What is AMPI?
AMPI is the Mexican Association of Real Estate Professionals, formed in 1956, it now has member in more than 22 cities, plus an International Section. AMPI is affiliated with the national Association of Realtors (U.S.A.), the Canadian Real Estate Association, FIABCI, and the International Real Estate Federation and with the newly formed International consortium of Real Estate Associations, ICREA. Mexico through AMPI is represented on the five member Board of Directors of this new global initiative.
AMPI is the largest Real Estate Association in Mexico, founded in Mexico City, with 20 members. Today has over 1,000 members and represents about 10,000 practitioners through the country. AMPI include: Appraisers, Developers, councilors and Brokers, which are subject to our By laws and adopted our code of ethics. AMPI is governed by the National Board of Directors, which elects a National President for a 2 year term. AMPI has 30 autonomous boards, in most of the mayor areas in the country.
AMPI works together with Federal, State an Municipal authorities, proposing new laws and amendments to existing laws and regulations, directly related to the Real Estate activity. AMPI represents its associates in diverse private and public entities. AMPI is a founding member of the International Consortium of Real Estate Associations. AMPI has a practitioners Registry at the Mexican consumer protection Agency and uses authorized contracts.
Why Deal with a member of AMPI?
AMPI members are dedicated to the highest level of ethics and professionalism. Each year AMPI member must sign a pledge agreeing to operate by the AMPI Code of Ethics. (Similar to those of other national real estate associations). Disputes with an AMPI member can be resolved through its Committee of Honor and Justice which functions on both local and national levels.
Just as in your own country, do not gamble by using someone not a member of the National real estate association.
