Foreigners may obtain direct ownership of property in the interior of Mexico. However, under Mexican law, foreigners cannot own property outright within the restricted zone. The restricted zone encompasses all land located within 100 kilometers (about 62 miles) of any Mexican border, and within 50 kilometers (about 31 miles) of any Mexican coastline.
 

There are many options available to buy property in Mexico. There are houses, villas, condos and villas inside of resort setting for sale. All of these options make for terrific investments, in addition to places to live.

The reasons for buying property in Mexico can be financial, but they will largely be a personal choice. If you are a regular visitor to the country, perhaps renting is a waste of money. Perhaps you are considering your retirement and would like to establish your future residence as early as possible. In the meantime, you can rent the property out and have some, if not all, of the expenses paid for as it waits for your arrival.

Purchasing real estate in Mexico is only slightly different than doing the same in the United States, but even those small differences can cause problems if not handled correctly.

 

Buying Property in Mexico - Since the 1970's foreigners have been able to buy real estate in Mexico with coastal and border properties which are owned through a trust deed established with a Mexican bank. Foreigners may also directly own rural or urban land in the interior of the country with certain limitations on specific agricultural tracts.
 

The Trust Deed - The Trust Dees which is established by means of a Mexican bank assures foreign property buyers of all rights and privileges of ownership. In 1994 a Foreign Investment Law was passed that allows these deeds to be constituted for a period of 50 years and are renewable upon expiration. This law protects the rights of foreigners and makes sure that the transaction is legal and unencumbered.
 

Title Insurance - As of 1996, Stewart Title Guarantee Company has agreed to underwrite title insurance to our clients, should they wish to purchase it. The cast of this insurance is approximately 1 % of the insured amount. We view this commitment, as a strong endorsement by one of the largest and most liquid Title Guarantee companies in the world providing security in Mexican Real Estate. A few years ago First American Title Insurance company also began issuing title insurance here in Mexico.
 

Taxes - Know as "Predial", and because they have never been considered a source of governmental revenue, property taxes in Puerto Vallarta are very low, the rate is .08% of the assessed value,and  paid every year, which is determined at the time of the sale.
 

The Closing Process - It takes between 30-45 days for the closing process to be completed. The buyer pays the closing cost; with the seller paying any capital gain taxes and real estate fees. It is not necessary for the buyer and the seller to be present at the closing, but by means of a power of attorney can be represented by their Sales Associate.
 

Corporation Ownership - Back in 1994 a change in the Foreign Investment Law now allows Mexican corporations to own property in the restricted area as long as it is commercial property; this applies to even those corporation with 100% foreign ownership. We must keep in mind that commercial properties carry higher water & electricity rates, plus require additional governmental reporting.
 

Property Maintenance - Maintenance and security for condominium owners is handled by the Condominium Owners Association. The fees are paid on a monthly basis. For those homeowners who will be away from their property for any length of time should consider a property management company.
 

Insurance - We have in Mexico readily available at low cost various types of insurance which include property, liability, damage, and earthquake. All types of policies can be issued to pay claims in U.S. dollars.
 

Financing - Real estate purchases in Mexico are no longer all cash transactions, with limited cases of owner financing available. Recently however, U.S based lending institutions have began to offer long term mortgage financing in U.S. dollars for up to 80% of the transaction value.
 

Rental Potential - There exist a very strong rental market for both homes and condos in Puerto Vallarta.