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  • How can a citizen from another country acquire property in Mexico for residential purposes?
    If the property that you whish to acquire is located along to the coastline or the Mexican border (the Restricted Zone), you can acquire it through an Irrevocable Trust and Transfer of Ownership Agreement, entered with the fiduciary department of a Mexican bank. If the property is located outside the Restricted Zone you can simply acquire it with just a permit granted by the Mexican federal government.
  • What is the Restricted Zone?
    It is a strip of land of 50 km along the coastline and of 100 Km along the borders of Mexico, where by law, foreigners can only acquire property trough an Irrevocable Trust and Transfer of Ownership Agreement, entered with the fiduciary department of a Mexican bank for 50 years and renewable for another 50 year period. Anywhere else in Mexico a non-Mexican citizen can acquire direct ownership on a property.
  • What is an Irrevocable Trust and Transfer of Ownership Agreement?
    It is a contract by which the seller of the property (trustor), irrevocably transfers the ownership of a property to a fiduciary institution (Mexican bank), granting the buyer (beneficiary), the exclusive right to use it and exploit it for 50 years. At the end of the 50 years period, this can be extended for another 50 years. The beneficiary can, at any time, sell the property.
  • Can an “LLC” or a Canadian “Inc.” acquire property in Mexico through an Irrevocable Trust and Transfer of Ownership Agreement?
  • Can a “family trust” or a “living trust” become a beneficiary in an Irrevocable Trust and Transfer of Ownership Agreement?
  • Could a non-citizen of Mexico acquire real estate for business purposes in Mexico?
    Yes. A foreign individual or corporation can acquire property within the Restricted Zone, via a Mexican corporation or an Irrevocable Trust and Transfer of Ownership Agreement; and directly or through a Mexican corporation, if the property is located outside the Restricted Zone. FMT will be pleased to assist you or your clients in all real estate business endeavors in Mexico.
  • What is the average cost of a real estate closing in Mexico?
    It can range from 5% to up to 6 % of the purchase price, approximately.
  • Tell me more about the escrow services provided by FMT?
    Because in Mexico escrow services are not regulated by law, at FMT we recommend using the services of our US-based and regulated escrow service provider. An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all the terms of an arrangement are met as overseen by the escrow company.
  • Whay it is important to perform a Title Search?
    Before you list or buy a property in Mexico FMT recommends obtaining from the Public Property Registry, a Certificate of No Liens of the property. This document will tell you if the property belongs to the person that is selling it and if it is free of any encumbrance. Nevertheless, we strongly recommend performing a legal title search examination of public records to determine and confirm a property's legal ownership and find out what claims or liens are on the property. A clean title is required for any real estate transaction to go through properly.
  • Tell me more about the closing services provided by FMT?
    The closing (also called the settlement) is the culmination of a lot of work performed on behalf of the buyer and seller by various real estate related professionals. This can include the real estate agents, attorneys for each party, the mortgage broker, the lender, title insurance company, pubic notaries, etc. They each have a vested interest in making sure that your closing happens timely and without problems. Given the number of professionals that could be working together to prepare for the Closing, it is important that all parties involved communicate well. With First Mexican Title, our customers can trust that we do everything in our power to provide the best possible service to the buyer and the seller. It is important to bear in mind that in most cases a closing process in Mexico can take up to 3 months. On closing day, the buyer and the seller complete the legal transfer of the real estate with the representative of FMT, which will be conducting the settlement. At settlement, both, the buyer and seller or their legal representatives, will review and sign a public deed before a Mexican Public Notary and make affirmations as to certain facts, by this, completing the closing process. Settlement can take as little time as fifteen minutes to sign all the documents and transfer ownership. Normally at the end of closing, the seller will receive the funds via wire transfer from the escrow company and the buyer will receive the keys to their new home. FMT will complete the transaction by supervising the recording the public deed with the Public Property Registry that applies and forward the duly registered public deed containing the title to the buyer in about a month's time.
  • Do you need legal and tax advice before purchasing and selling property in Mexico?
    Bear in mind that you are acquiring property in another jurisdiction, therefore, there are special sets of tax, administrative and civil laws that regulate the purchase and sale of real estate in Mexico by foreign citizens. FMT will be very happy to advise you or your clients on these important matters.
  • Why the services of a Public Notary in Mexico is much more expensive than in the US or Canada?
    In Mexico, all real estate transactions must be closed (formalized) before a Mexican public notary, who is a lawyer commissioned by the government for these matters. Furthermore, notaries in Mexico are responsible to calculate, collect and pay to the local and federal governments, the capital gains tax and the property acquisition tax in all real estate transactions. Finally, notaries are responsible to file the public deeds containing property titles at the Public Property Registry.
  • Is it recommended to purchase title insurance in Mexico?
    It is commonly accepted in Mexico that it is not necessary to acquire title insurance due to the scrutiny which a real estate closing goes through in Mexico, however, there are a few that think that extra protection doesn’t hurt anyone. FMT will be please to perform for you the title research required by title insurance companies to issue a title insurance policy.
  • Why non-Mexican nationals must pay capital gains tax when selling a property in Mexico.
    The sale of a real estate located in Mexico generates the obligation to pay capital gains tax to the Mexican federal government, if there is a gain in the transaction, despite the nationality or residency of the seller owner of the property.
  • As a non-Mexican national, do I need to hire the services of a Mexican accountant to advise me on how to proceed with my tax duties when selling a property in Mexico? "
    A Mexican accountant might be able to help you estimate if there is some capital gains tax to be paid in the sale of your property in Mexico. However, bear in mind that Mexican Public Notaries, not only formalize all real estate closings, but also have the last word on all tax related-matters, because they are the only person authorized to calculate, collect from you and pay on your behalf, any capital gain tax to be paid, to the federal government.
  • As a non-Mexican national are there any tax benefits or deductibles I can use to reduce my capital gains tax?
    You need to inform your closing agent, since the beginning of the closing process, that: You and your spouse or partner are Mexican Residents. That you have, or you will have 10 days before the closing date, the original valid Mexican invoices (“facturas”) of any or all the following deductible expenses: Notary fees paid of when you purchased your property. The 2% Property Acquisition Tax (ISABI), paid when you purchased your property. Appraisal fee paid when you purchased your property. Brokerage commission that you will be paying to your broker for the sale of your property. Construction costs on the property. Please bear in mind that expenses in Mexico can ONLY be deducted with valid original Mexican Invoices (“facturas”). If you have any questions related to what a valid original Mexican invoice is, and on how to obtain them, please seek the advice of your accountant.
  • When I will know if I must pay capital gains tax, how much and when?"
    As soon as you send us the information requested for the closing of your property, we will be able to provide you with a capital gains tax estimate, calculated by the public notary, based on the information that you provided us and on the public deed containing the closing of your property, back when you acquired it. The capital gains tax to be paid could be re-calculated by the Public Notary, by request of the seller, through the closing agent, once he or she has provided to the closing agent, the information explained in the previous question, at least 10 days before the closing date. The funds to pay the capital gains tax must be provided to the public notary no later than the closing date.
  • Why capital gains tax is calculated in Pesos, if I paid US Dollars for my property in Mexico?"
    All taxes related to real estate transactions of properties located in Mexico are calculated in Pesos since the Peso is the official currency of Mexico. When calculating the capital gains tax, notaries consider the Dollar exchange rate at the date when you purchased and sold the property, plus other factors like the Mexican inflation rate, etc.
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