Buying a property in Mexico is a straightforward although somewhat unusual process. Purchases are made by a Mexican Bank, which acts as the trustee for the property on behalf of the purchaser. The Bank obtains a Permit from the Ministry of Foreign Affairs to establish a Trust (Fideicomiso) for a maximum of 50 years during which time the owner is free to sell on, lease or transfer the property. The trust can be automatically renewed each 50 years and if the property is sold it can be transferred or a new trust can be set up. During the period of the trust the foreigner is considered a Mexican National.
Purchasers are protected when buying, as part of the set up process is an automatic review to check that the property purchase is legal and unencumbered. Permits are obtained approximately 30 days from filing and buying costs including this process are usually around 6% of the total purchase price. There is no VAT just an annual Tax of 0.12% of the purchase price.
Mexico has a Double Taxation Agreement and on rental income there is a flat rate Tax of 25%. Management fees are low ranging from $300 $1,000 per annum. On selling a property Capital Gains are based either on 20% of the total sale price or 40% of the profit whichever is lowest.
Read also - Our guide to Where to buy property in Mexico
