Considering purchasing a vacation home abroad? Or maybe a part-time or full-time retirement home? Purchasing a home abroad isn’t complicated if you have someone on your side to guide you through the necessary processes for purchasing real estate abroad.
There are 5 key factors that are important to consider before buying that second home you’ve been dreaming of.
Follow our tips below to make the best real estate decision and to avoid setbacks or unexpected surprises.
# 1 Notary Public
In Mexico, like the US, we have a "notary public". The notary is a government official who acts as an impartial witness in the preparation of documents and legal papers.
When it comes to real estate, a notary assists in all legal matters related to closing on the home and the final sale contract. It’s his or her responsibility to supervise and ensure that all procedures are completely within the legal framework in order to avoid any type of real estate fraud.
The notary is in charge of numerous things including legalizing the contract, reviewing the property deed and registering the property with the Public Property Registry. This last activity is one that formalizes the closing procedures of the purchase.
# 2 Financing Real Estate in Mexico
One of the most important factors when buying a property in Mexico is acquiring financing.
You’ll be encouraged to know that it doesn’t matter if you are Mexican or if you’re a foreigner, several financial institutions in Mexico offer financing options for real estate and this procedure isn’t complicated.
At TAO Mexico, we offer direct financing for our clients to make home buying a breeze. Our financing is quick, convenient and the primary benefit our clients enjoy is that we don’t require a credit check.
# 3 Closing Costs
Considering how much your closing costs will be is essential.
The largest chunk of the closing expense in Mexico is the Property Acquisition Tax (PAT). This tax is mandatory for Mexicans and foreigners alike. The PAT is typically 2% of the property's purchase price, although this percentage may vary depending on the area the house is located.
You’ll want to add the closing cost to the expense of the notary as well as any permits or certificates. In total, you can consider that closing costs will add up to approximately 5-7% of the property's purchase price.
# 4 Restricted zone
If you’re American, Canadian, or from anywhere in the world, and plan to purchase a home in one of the coveted Mexican beach destinations, it’s important to know that there is a "restricted zone". This zone covers a strip of land that lies within 100 km along the borders and 50 km along the beaches.
Not many people know that as a foreigner, it IS actually possible to purchase property in the restricted area, but it must be done through a bank trust.
The bank trust is a transaction formalized with a Mexican banking institution and is renewable every 50 years. The bank maintains the title of the property, but you, as the buyer, are the primary beneficiary and can use or modify it to your liking. You can also rent or sell it and receive 100% of the profits. Additionally, you can name substitute beneficiaries so that property rights pass to them in the event of your death.
# 5 Best Places to Buy a Home in Mexico
Mexico is a country full of natural and cultural riches that make it an irresistible option for real estate investment.
Of all the incredible places found in our country, beach destinations are the best choice for real estate. Locations like the Riviera Maya, Puerto Vallarta and Los Cabos offer high capital gains and an extraordinary return on investment. These locations are tourist centers that attract thousands of people a year and have a mature infrastructure and high economic development.
Are you ready to buy your next home in Mexico?
At TAO Mexico, we have gorgeous properties in the key tourist destinations in Mexico. We offer comprehensive services, so we’re able to accompany you in every step of the buying process, from showing you properties that fit your needs and budget, to handing over the keys with all the documentation in order so that you can move into your new home.
Contact us today! Our seasoned real estate agents will be happy to assist you and help you make the best real estate decisions.