Q & A
Los Cabos Purchase Guide
Foreigners who purchase property in the restricted zone in Mexico which means any property 100km from the border and 50km from the coast, have to buy through a Trust better known as a Fideicomiso.
WHAT IS A FIDEICOMISO?
A Fideicomiso is a 50-year, renewable bank trust granting a foreign Buyer the right to use, enjoy, improve, encumber, rent, sell, and enjoy the property. The foreign Buyer is called the Beneficiary of the Trust. As the Beneficiary, you retain all ownership rights and responsibilities to the property and have the right to sell, lease, improve, mortgage or will the property to your heirs. Essentially, the beneficiary of the property enjoys all the rights he would if ownership were fee-simple that is typical In the United States. It is simply a different form of ownership.
The parties involved with a Fideicomiso are:
– The Trustee = the Fiduciario, Bank or Trustee
– The Purchaser = the Fideicomisario or Beneficiary
– The Seller = the Fideicomiente
CAN I RENEW MY FIDEICOMISO?
A Fideicomiso is issued in 50-yr increments which can automatically be extended by an additional 50 years at the end of that term. Under current Mexican law, at the end of the combined 100-yr term, you will need to apply for new foreign affairs permit to create a new trust.
WHAT ARE CLOSING COSTS IN MEXICO?
Closing costs in Mexico are calculated much differently than in the US. The largest portion is the mandatory 2% Acquisition Tax paid by the Buyer for all real estate acquisitions. Other costs include permits, Notary fees, certificates or no debt, appraisal, etc. Depending on the purchase price, Closings Costs can run anywhere from 3.5% to 5% of the purchase price. All closing costs are deductible expenses when you sell your property.
Feel free to contact us for any further questions!