Can foreigners purchase property in Mexico? Purchasing real estate on the Baja California Peninsula is a bit different than purchasing in either the United States or Canada. The Mexican Constitution allows foreigners to purchase real estate and take title two different ways. The first, “Escritura” is a fee simple deed and the second, “Fideicomiso” is a Bank Trust. Any real estate within 100 kilometers of the national border and 50 kilometers from the sea is considered to be within the Federal Zone and can only be purchased by foreigners using a “Fideicomiso”. Since the widest point of the Baja Peninsula is approximately 95 miles the entire peninsula is considered a Federal Zone. Return to the top
What is a Fideicomiso? The Fideicomiso (Land Trust) is very similar to other real estate trusts offered in North America. In Mexico the Trust is made up of the Trustee (A Mexican National Bank) and the Beneficiary of the Trust is the foreign owner. Heirs to the Beneficiary are the Sub-Beneficiaries. The trusts usually are written for a period of 50 years with an automatic renewal for 50 years. There is an annual fee to administer the Trust at an average cost of $450 - $650 US dollars. In the event of the Beneficiary’s passing, the property is automatically passed to the Sub-Benificiary without the need for probate action by a court of law. The beneficiaries of the Trust have the same ownership rights as a national without exception. If the beneficiary wants to change the terms of the Trust it can be done at any time. Return to the top
How much are Property Taxes? Properties in Mexico are taxed at a much lower rate than in North America. For example California residential real estate taxes are taxed at an average rate of 1.5% of the property value when purchased. Using this value a home in California valued at $500K US would have an annual property tax of $7,500 US. A home valued at $500K US in Baja California will have an annual property tax of approximately $350 US and if paid in January a 20% discount is offered. For details of the purchase process please refer to the, Steps of Purchasing property in Baja California. Return to the top
What is the purchasing process? Purchasing a property in Baja California is not very different than in other countries of North America. Sale escrow periods are generally between 60-90 days of acceptance of an offer. After both the buyer and seller have come to an agreement (accepted offer) the due diligence period begins. Usually within 5 business days an Initial Deposit is made to the closing agent or escrow company. The buyer and seller are also both required to send the closing agent 2 forms of identification; typically a passport and drivers license. The closing agent will also request a utility bill from the residence of both parties verifying their current residence. The purchase agreement will have a set time period where the necessary physical inspections of the property, title searches and document preparation are made and reviewed by the buyer and seller. Provided everything is in order the buyer makes an Earnest Money deposit and both parties are locked into the transaction unless either the buyer or seller default. At this time the closing agent and notary prepare the Fideicomiso (Land Trust) and supporting documentation to grant the title to the buyer. The buyer will be notified by the closing agent approximately 5 days prior to closing so that the buyer can make the final deposit. Once the final deposit is verified the Notary will ratify the documents and the property will be granted to the owner. The originals of the Fideicomiso will be sent to the state capital for registration and will be available to the buyer in approximately 60 days.