Frequently Asked Questions


General Questions

Along the coastline and near the border of Mexico, foreigners can hold title through a fideicomiso (often called a “bank trust”) vs. Mexicans who can purchase this property outright (or “fee simple”). The property is held in a trust through a Mexican bank, wherein the bank is the trustee, you are the beneficiary and you designate substitute beneficiaries upon your demise. The fideicomisos are active for 50 years and are renewable after that. (Do not be confused, this is NOT a “lease”.) In fact, the original fideicomisos were effective for 30 years and many are currently in the process of being renewed to 50-year fideicomisos at this time. The process of renewal is relatively simple and inexpensive. Furthermore, in the event of death, the heirs do not need to go through probate as the property is in trust and they are already designated as the substitute beneficiaries. There is a process that is necessary with accompanying fees, but it is fairly simple.

While the offer process itself is relatively similar, the escrow and title processes are somewhat different. The offer process is effectively the same with the exception that most agencies use a dual-column bilingual format so that the contract is in Spanish and in English, with the Spanish side prevailing under Mexican law. A counter-offer process follows and is very similar to that of the U.S., with the exception of back-up offers and multiple offers.

Once an offer has been agreed to by all parties, an earnest money deposit is placed in escrow with a reputable title company, such as Fidelity National or Stewart Title. These companies will hold the escrow funds (which are 10% of the purchase price for the earnest money deposit and the subsequent 90% funds for the balance of the purchase) until the closing and will disburse these funds according to a mutually agreed upon letter of disbursement signed by both the buyer and the seller.

In the event you have a loan secured by your Mexican property, the lender will require that they either have a mortgage (“hipoteca”) against your property or, more commonly, establish a “fideicomiso en garantia” (referred to as a “guaranty trust). The lender will be placed in first position as the first beneficiary and you, as the borrower, will be on title as the secondary beneficiary. You still have the substitute beneficiary according to your designation.

It is important to note that anybody can be your substitute beneficiary, they do not have to be blood relatives. In addition, you can even have a charity as your substitute beneficiary, but the documentation will be extensive. If you wish to do this, you will need to plan ahead and provide this information to the Notario as soon as possible so that the fideicomiso bank will have sufficient time to review and approve the documentation.

The entire process can be as short as 30 days and most commonly is between 45 and 60 days. If the escrow includes any holidays, please make sure you plan accordingly, as governmental offices, including Notarios, may be closed, thus causing delays.

All of this is coordinated through your Realtor and the Notario Publico. While it sounds somewhat complicated, a good Realtor will make the process virtually effortless for you, only requesting certain documentation that will be necessary to complete the process. Pursue the adventure and enjoy the process of buying your new home in Mexico!

Selecting a Realtor is as important as selecting a doctor, attorney, or other professional advisor or confidant in your life. Purchasing a home is the single most important financial decision you’ll make in your life, so it stands to reason that selecting the professional that is going to guide you through that process is the most important aspect of making the right real estate decisions and getting the proper guidance. When selling a home, the Realtor selection process is perhaps even more critical.

Let’s look at the purchasing side first. Since purchasing a home is a lengthy process overall, from reviewing the market, to previewing the properties, to deliberating and negotiating once you’ve found the right property, to the entire escrow and closing process, a relationship is being formed with you and your Realtor. It is important that you are working with somebody that you trust and feel comfortable with as you’ll be very closely connected with them for months at a time. Often times, the bond that is created with a Realtor will continue on for years after as a friendship can easily be formed during this entire process.

The Realtor with whom you’re working must also understand you and what you’re looking for in a home. A good Realtor will listen to all your needs and wants in your prospective new home and will create a picture in their mind. From that picture they’ll rely on their research materials, such as the MLS, and their connections in the industry, to properly describe your desired home to others and search through all the listings available, weeding out those that don’t fit the primary criteria and alerting you to those which are most likely to suit your needs.

In the home search process, your Realtor should be able to respond to your questions, and/or get you the information from reliable sources that you need to make an informed decision. A seasoned Realtor knows that it’s not about making a sale – it’s about providing you with all the tools to make the proper decision for you. Only then will the sale come. Therefore, a good Realtor will not resort to pressure tactics. However, it is important to keep in mind that while you may be pressured in a particular situation because “another offer is coming” or “somebody else is interested in this property”, it may simply be the Realtor keeping you informed, and not intentionally applying pressure.

From a selling side, experience, expertise, and professionalism would be the most critical elements to consider. While these are valuable in a buying situation, they are essential in a sales side. How many years has the agent been in business or in the area? How are they determining the value of your property – verifiable comps or “from the air”? What type of presence and reputation does he/she or, perhaps more importantly, their brokerage have in the community? Since the MLS is a primary means of marketing a property, are they a member of the MLS and the local real estate board (in Mexico, it’s called AMPI)? Have they sold your type of property before or, in some cases, your price range? What will they do for you in the realm of marketing? Will they be present at showings or are they just going to hand out keys? These are only some of the questions to ask and to have responded to with your satisfaction in order to determine who the best Realtor would be to work with in regard to selling your property. Of course, sometimes it just comes down to a gut level feeling and that’s OK too.

The law regarding capital gains taxes has indeed changed, has always and will continue to change. Mexico is no different than any other country who levies taxes in that it will continue to modify its tax codes to meet its needs. That said; let’s look at what has changed, what has not, and what may continue to be the outlook for change for this aspect of real estate. The terms used herein are not the necessarily the legal terms under the law but are used for our discussion herein.

The modifications that have been made have effectively created three levels of capital gains taxes where there used to only be two. These levels are: total exemption; partial exemption; and no exemption. All areas have been modified, and the partial exemption is the newest category. Let’s look at each.

No Exemption: Simply put, if you don’t qualify for exemption of either type, you must either pay 25% of the gross sales price or 28% of the net gain (that’s 1% less than last year). Deductions that can be applied to get to your net gain include brokerage fees, capital improvements verified with facturas or an independent appraisal, and even an inflationary allowance.

Total Exemption: Total exemption means no tax due at all on an unlimited amount of gain if you resided in the property for five years or more and have the following documentation: FM-3 or 2, working status (with an RFC number, and maybe even with a copy of your tax returns for either FM status), escritura and receipts (such as telephone or electricity). Keep in mind that the exemption, whether partial or total, is intended for residents, thus these requirements are intended to be able to prove residency status to the Notario, and in turn, to Hacienda.

Partial Exemption: The same documentation as above is required, with the exception that it is only needed for a period of 6 months or more. However, only a portion of the value is exempt from taxes. The calculation is relatively complex and is based on an instrument called an UDI. UDIs were a financial instrument created at the time of the devaluation to bring economic balance and structure given the rapid decline of the peso. At this time, the UDI has a valuation of approximately 3 UDIs to the peso (this changes daily). The new tax law reflects that there is a partial exemption of up to 1.5 million UDIs, although this is not as simple as it seems. There is a fairly complex calculation that is involved and will need to be addressed fully in another article. Let it be said that for a full and accurate calculation of your capital gains tax obligation, whether partial or not, you must seek the counsel of a Notario Publico.

It is important to note that the Notarios do not make the law; however, they are empowered by Hacienda to enforce it and collect the taxes on behalf of individuals. The requirements for individual Notarios can vary, although they are attempting to standardize their documentation requirements for exemption to alleviate the need for shopping and consequently getting a different answer depending on the Notario with whom you speak. Also remember that the selection of the Notario is the choice of the buyer – after all, they are paying the bill. AT ANY TIME the tax law can change, so please ask your AMPI Realtor or Notario what the current law holds for you in relation to your capital gains tax obligations.

The partial exemption is based on an instrument called an “UDI”. The law states that you can “exempt” up to 1.5 million UDIs (which rate changes daily). As of this writing, the rate of the UDI was at 3.825206 to the peso, or approximately $5.7M million pesos, or $520,000 USD. However, the exemption is based on a percentage calculation. Below, I’m going to show you two different sales. Both have the same sales price for today, but different purchase prices: one at $5,000,000 pesos (or approximately $455,000 USD) and another at $7,000,000 pesos (or approximately $635,000 USD). The calculations are for foreigners, as for Mexicans they can be different based on the Mexican’s tax base rate. The calculations assume an 8% brokerage fee.

  • $5,000,000 Peso Original Purchase Price:
  • Current Sales Price $9,000,000
  • March 2007 UDI Deduction ($5,737,809) (1.5M UDIs x 3.825206)
  • Amount Exceeding Deduction $3,262,191 (36.25% of sales price)
  • Adjusted Purchase Price ($1,812,500) (36.25% x $5,000,000)
  • Adjusted Real Estate Commission ($261,000) (36.25% x $720,000)
  • Total Gain $1,188,691
  • Capital Gains Tax Due $332,833 (28% x $1,188,691)


  • $7,000,000 Peso Original Purchase Price:
  • Current Sales Price $9,000,000
  • March 2007 UDI Deduction ($5,737,809) (1.5M UDIs x 3.825206)
  • Amount Exceeding Deduction $3,262,191 (36.25% of sales price)
  • Adjusted Purchase Price ($2,537,500) (36.25% x $7,000,000)
  • Adjusted Real Estate Commission ($ 261,000) (36.25% x $720,000)
  • Total Gain $ 463,691
  • Capital Gains Tax Due $129,833 (28% x $463,691)

(All prices listed above are in Pesos) Note that the Adjusted Purchase Price does NOT include any fiscal adjustment that would also be applied since the purchase of the property, which would effectively reduce the taxes to be paid. As to the real estate commission, IVA is not factored in for this calculation.

Now, let’s think about this for a second. In the first scenario, your REAL profit is approximately $3.3 million pesos ($9M, minus $5M, minus brokerage fees). That means that your REAL tax rate is just over 10%! ($332,833 divided by $3,280,000) – remember, that’s all pesos. If EVERYBODY had a 10% flat tax, I think we’d all be pretty happy about it. In the second scenario, it’s the same – just over 10%. While there are still criteria to meet for this, you don’t have to meet the most difficult criteria item, which is to reside in the home for 5 years; only 6 or more months. All things considered, this is not such a bad deal.

As you can see, despite the fact that some think that the 1.5M UDIs is an “exemption” to that amount and then you pay taxes on all the value that exceeds that, this is not the case. So despite the fact that you may have purchased a property exceeding the UDI exemption, the current law does have benefits for you too.

These figures are based on the law as of today and can change at any time. In addition, you MUST confirm all calculations in your particular situation with the Notario Publico in your transaction as each case is different and there may be idiosyncrasies of your deal that may affect your particular situation. As you can see from these examples, owning property in Mexico is still a very good investment.

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Ask a realtor

There are profound differences between a Notary public in the US and the Notario Publico in Mexico. In the US, the public Notary might be a bank clerk, secretary at the office, or practice any other occupation. In Mexico, the Notario Publico must have a law degree, verifiable experience, pass a rigorous exam and is appointed for a lifetime term by the governor of the state. Typically there is a Notario Publico for approximately every 30,000 in population. In Mexico, all legal documents, such as deeds, wills, powers of attorney, constitution of corporations, establishment of trusts and other legal transactions must be made before a notary public in order to be valid. If the document is not notarized by a Mexican notary public it is not legal!

You should think of the Notario Publico here along the same lines as a Judge in the United States. As part of the closing process, the Notario Publico will verify the following official documents, which are required by law for any transfer: A no-lien certificate from the public property registry, based on a complete title search; A statement from the treasury or municipality regarding property assessments, water bills and other pertinent taxes that might be due; An appraisal of the property for tax purposes.
The Notario Publico is also authorized to calculate and collect any Capital Gains taxes generated by the sale. The Notario will also issue an electronic invoice after the sale. Although this may look like “gobbledegook” to you, this electronic file is a VERY important document; it is used to verify your purchase price and set a basis for your capital gain tax should you ever sell your property. Any sales since January 2014 are required to have this invoice or CFDI; otherwise your basis will be zero. So if you purchased a property since 2014 and do not have this electronic invoice, call your Notario now, request it and keep it in a safe place!

The Notario Publico also is in charge of registering your new deed with the public registry, and issuing a preventative notice of the sale with the Registry. Customarily, the Notario fee is paid by the buyer of a property as part of their closing costs. It is important to remember that the Notario Publico is an independent third party to your transaction. He will not be able to advise you on details in your contract such as: price, location, financing, and terms of sale. For that reason, I hope you have already sought the advice and counsel of an AMPI Realtor, who can act as your advocate. Many AMPI Realtors have formed strategic alliances with a Notario Publico liaison.

These bilingual attorneys can assist with many of the above tasks at no additional expense to the buyer. Best of all, they live or die by the concept of “Customer Service”, making them an invaluable part of your closing process! Thanks to Jessica Riedesser at Riedesser y Asociados for help with this answer.

Hi Peter, you sure can, by placing the property in a bank trust, or “Fideicomiso”. Title of 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. There are three parties to the trust: The seller of the property is the Trustor, the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary (Fideicomisario.) The buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public. The Trust is currently for a term of 50 years and can be renewed for additional 50 year terms.

Many people have the mistaken belief that the trust is similar to renting, or a lease, this is NOT the case! The bank holds the property in trust and follows your instructions. The property is NOT an asset of the bank, it is your asset. As Beneficiary, you have the same rights, use and enjoyment as a Mexican National, and can sell or rent your property without restriction, and keep the proceeds. You may also transfer your rights to a third party or pass it on to named heirs. The bank charges the person desiring the Fideicomiso an initial fee of approximately $500 USD for signing the agreement and establishing the Trust and a yearly fee of approximately $464 USD for administering the trust.

You are free to choose which bank you prefer to hold your bank trust. Your local AMPI Realtor will be able to coordinate all the paperwork involved in this process. You will just need to provide photo identification, and fill out a very basic bank form with your personal information and instructions on how you wish to hold the property and who you want to pass it to in the event of your death. I recommend using a bank that will lock in the administration fee, and has a local English speaking representative. You can also request a clause be added to your trust allowing you to attend and vote at the Homeowners meetings without getting a proxy every year from the bank.

Some people complain about the trust process, but there are benefits: As part of the closing process, the bank’s attorneys review the deed and are able to sign on your behalf. It is always nice to have another set of trained eyes review your deed before signature. Also, the trust separates the asset legally, much in the way a “living trust” does in the United States. Finally, in the event of the death of the buyer (beneficiary), the property automatically reverts to the substitute beneficiaries, avoiding lengthy and costly probate procedures.

Did you know foreigners can buy property in Mexico without holding resident status

Although visitors to Mexico can purchase real estate without applying for temporary or permanent residence, holding a resident card will benefit you when it comes time to sell. Claiming the property as your principal residence may exempt you from any capital gains tax on the sale. Obtaining Mexican citizenship will allow you to purchase property in the restricted zone, which refers to properties that are 100 kilometers from the border and 50 kilometers from the coastline, without a fideicomiso, bank trust or a Mexican corporation.

You have found your dream home in Mexico: What is the next step?

From making an offer to closing the deal, a lawyer here in Mexico can guide you through the process and provide sound advice about purchasing real estate in Mexico.

Discuss your plans for the property with your lawyer. Are you buying to retire? Live in Mexico full or part time? Do you plan to start a business or use your property as a rental? These important facts will help your lawyer determine your best strategy regarding the purchase. In any case, be sure to consult your attorney before signing a sale contract or make the contract offer conditional to a lawyer’s review.

Choose a reputable, international lawyer who is governed by and accountable to a professional order in Mexico to assist you will the purchase contract and provide an estimate of the closing costs. If you can not be present for the closing, you may provide the law firm with Power of Attorney to act on your behalf.

Closing The Deal: What does closing mean?

Closing, also known as completion is the final step in executing a real estate transaction. On the closing date, the ownership is transferred to the buyer. The closing date is the day the property becomes yours, and the title deed is signed. The date is previously agreed on by the seller and the buyer but also determined by the notario, as the notario will review the certificates of non-debt and other documents related to the sale of the property.

Who will be involved in the real estate closing?

  • Buyer and the seller
  • Substitute trustee, Your benefactor, will be named in the fideicomiso as a substitute trustee in the event of death, but it is imperative to have a Mexican will as there are no rights of survivorship in Mexico.  
  • The Notario Público (Notary Public) is a licensed attorney, certified and appointed by the government as an official representative of the government. A Mexican notary has much more responsibility than a notary in the US or Canada. They are responsible for ensuring the legality of the title deed transfer and registering the deed in the Public Registry. It is their legal responsibility to verify the facts regarding the property, record the transaction in the Public Registry and withhold fees and taxes. The notario does not solely represent the buyer, in this case, they are a neutral counsel and represent the buyer, the seller, and the government.
  • The Trustee Bank is the Mexican bank authorized by the federal government to act as trustee (Fiduciario). The majority of foreigners buy Mexican property through a fideicomiso which is held in trust at the bank with the buyer as the beneficiary. As a fideicomiso property owner, you have all the rights and privileges of property ownership. You are free to renovate, rent, mortgage or sell. Properties held in trust are not considered assets of the bank.
  • The buyer’s lawyer: It is strongly recommended that the purchaser has legal counsel during a real estate purchase. Not only will the lawyers ensure your investment is secure, but they will do the leg work, and you avoid the runaround to various government offices collecting and verifying certificates, documents paying fees. Let the lawyers at Mexlaw take care the closing.  Dealing with official agencies will be very difficult if you are not fluent in Spanish. Experience and the right connections enable the lawyers to achieve these requirements quickly and efficiently.

Although the state property registries will issue certificates of no encumbrances, stating there are no liens on the property, if a discrepancy is found after the fact, the buyer will have no recourse against the government for any human errors. Coordinating with the bank officers, the notary public, and the seller’s documentation will be supervised by the buyer’s lawyer. Your lawyer will conduct their due diligence revealing any liens, ensuring a clear title.

  • Your lawyer will submit the permit to the Mexican Ministry of Foreign Affairs on your behalf.
  • Research and confirm clear title with title history.
  • Gather non-debt certificates.
  • Set up appointments with the bank regarding your Fideicomiso.
  • Confirm the property is not Ejido land.
  • The title of property or Public Deed with registration.
  • Property tax paid up to date.
  • Active cadastral certificate (survey of the property)
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