1. Find a property you love
Whether you're seeking to buy a beach house, a historic colonial home or a modern retreat, start your search by exploring different regions, cities and neighborhoods in Mexico. Once you’ve found a property you love, you can work with a local real estate agent to negotiate a fair price with the seller. Finding the perfect property is key to a successful purchase, so take your time and explore all your options.| Tip: It’s easy to find the perfect property and navigate the luxury housing market with Pacaso’s curated portfolio of vacation homes spanning over 40 markets. |
2. Make an offer
Once you’ve found the right property and determined how much you’ll offer the seller, your real estate agent can assist you in drafting a formal offer letter. It will include details such as the purchase price, terms and conditions. Be prepared to include an earnest money deposit to show your commitment to the purchase. Remember that the seller may choose to counter your offer, so be ready for potential negotiations until you both reach an agreement.3. Agree on terms and sign the sales contract
Once you and the seller have agreed on the purchase price and terms, it’s time to formalize the sale with an official sales contract. This contract will outline all of the purchase details, including the purchase price, closing date, financing terms and any contingencies. Be sure to carefully review the contract with a real estate attorney to ensure your legal rights are fully protected. Once both parties sign the contract, you’ll be officially committed to buying real estate in Mexico. If the property is a Pacaso second home, we handle all of the logistics for a smooth purchasing process.| Tip: Ensure the contract is drafted in both English and Spanish. |
4. Pay a deposit
Once you’ve signed the sales contract, you’ll likely need to pay an earnest money deposit, which is typically around 10% of the purchase price. The deposit is a sign of your intent to purchase the property and is held in escrow by a neutral third party. Once the home sale closes successfully, the deposit is applied toward your down payment. If you fail to complete the purchase for any reason, you may have to forfeit your deposit. Be sure to consult with your real estate agent to understand Mexico's exact deposit requirements and procedures.5. Set up a fideicomiso if in a restricted zone
If you’re buying a property located in a restricted zone (50 kilometers from the Mexican coast or 100 kilometers from a U.S. border), you must establish a fideicomiso, or a bank trust. This allows foreigners to retain property rights in Mexico. A fideicomiso is required for non-Mexican citizens to own property in these restricted areas. Your real estate agent can guide you through the processes of setting it up while ensuring you comply with all Mexican laws and regulations.| Tip: Choose a reputable bank with experience in handling fideicomisos, and ask your real estate agent if there are any specific requirements for setting one up in your particular region of Mexico. |
6. Get permission from the Ministry of Foreign Affairs
Once you’ve established a fideicomiso, you’ll also need permission from the Ministry of Foreign Affairs to complete your purchase. This is another requirement for foreigners buying property in Mexico in restricted zones. Typically, you must submit documentation related to your identity, the property you’re purchasing and the fideicomiso. Lean on your real estate agent to help prepare the proper paperwork and navigate the application process.7. Conduct due diligence checks and title review
Before purchasing, you’ll want to conduct a few due diligence checks. Have a lawyer review the property’s title, conduct a valuation and verify that all necessary legal documents are in order. Once all parties are in agreement, the documents can be notarized. Due diligence checks are crucial to protect your purchase and avoid any potential legal issues.| Tip: Simplify this process with co-ownership. Pacaso conducts due diligence checks on your behalf and takes care of all the complexities involved in an international purchase so you can own abroad with ease. |
8. Sign the escritura and complete the closing process
Once due diligence is complete, you’re ready to sign the escritura, or the deed of sale, transferring ownership of the property to you. You’ll also need to register the property with the local land registry office. Ask your real estate agent for help with this part of the process.9. Pay taxes and fees
After you officially close, you’ll need to pay any remaining costs, like taxes and fees associated with the property purchase. These costs typically include property registration fees, stamp duty and any other relevant Mexican taxes. Be sure to budget for these expenses beforehand so you know you have the funds to cover them when the time comes. If you’re purchasing a second home, it’s also wise to understand what is considered a second home for U.S. tax purposes.| Tip: Ask your real estate agent for a detailed breakdown of the estimated costs involved, and consult with a tax professional to understand your tax obligations as a foreign property owner. |
10. Finalize registration of ownership
The last step to buying property in Mexico is to finalize the registration of ownership in your name. This involves submitting the proper documents to the local land registry office and paying any remaining fees. Once the registration is complete, you’ll officially own your chosen property in Mexico. Be sure to secure a copy of the property title so you have proof of ownership for your records. You’ll also need this document if you decide to sell your property.Where to find properties in Mexico
When searching for the perfect Mexican property, consider exploring popular regions known for their beauty, amenities and way of life. Some popular areas include:- Pacific Coast: Puerto Vallarta, Los Cabos
- Caribbean Coast: Playa del Carmen, Tulum
- Colonial cities: San Miguel de Allende, Guanajuato
Average price of properties in Mexico
The average price of a home in Mexico varies by region. According to Global Property Guide, an average middle class home in Mexico City is around $90,650 while luxury villas fall between $2,000,000 to $4,000,000. Coastal properties, such as those found in Cancún are around $250,000 on average.Taxes and fees you can expect to pay
Whether you’re buying property in Los Cabos or somewhere else in Mexico, it’s important to be aware of the taxes and fees you may encounter. These costs can vary depending on the property’s exact location, value and unique circumstances. The table below outlines some common taxes and fees associated with property ownership in Mexico:| Tax or fee | Amount / % / range |
| Property acquisition tax | 2%-5% of the property value |
| Annual property tax | Varies by state and municipality, typically 0.25-1% of the property value |
| Transfer tax | 1%-3% of the property value |
| Notarization Fees | Approximately 1%-2% of the property value |
| Registration fees | Varies depending on the property's value and location |
Challenges of buying property in Mexico
While there are many benefits to buying property in Mexico, be aware of the potential challenges that may arise. Here are some key areas to consider:- Ejido land: A significant portion of Mexico’s land is classified as ejido land, meaning it is communally owned. Foreigners can’t directly purchase ejido land, but there are ways around this, such as long-term lease agreements or fideicomisos.
- Legal complexity: Understanding a foreign legal system can be challenging, and navigating a property purchase will likely require the assistance of qualified local professionals. It’s wise to work with a real estate agent and lawyer specializing in Mexican property law.
- Avoiding scams: Unfortunately, scams aren’t unheard of in the Mexican real estate market. That’s why conducting thorough due diligence checks is crucial at every step of the home buying process.
