FAQs

In 1917, the Mexican Constitution was drafted and passed into law. In the Mexican Constitution, there was a provision that created what is called the restricted Zone. The Zone is 100km (62miles) from the borders and 50 (31miles) from the coasts. In this Restricted Zone, only Mexicans could own land. This was done for their own protection, and at the time, it made sense.

However, in file 70´s they realized that there was a lot more money outside of Mexico than inside. So, in 1970, a Bill was passed into law, which created a legal loophole. This Bill stated that the trust, called a ¨FIDEICOMISO¨ could be set up, with the foreigner as the sole and exclusive beneficiary. Since a Mexican bank holds the title and must administrate this trust, it satisfies the requirements to purchase land in the restricted zone. The beneficiary (foreigner) could control the land by retaining it, improving it, selling it, etc.). Cancun is 32 years old. Because of the 1970 Bill, major foreigner investment flowed into Mexico and we saw not only Cancun, but also Cozumel, Acapulco, Puerto Vallarta, Ixtapa, etc. take off.

There were however, limitations to the Trust system. For each property you owned, you needed a separate trust. The cost for each trust or Fideicomiso (the Spanish word for trust) is bout 1% to 1.5% to set up (that percentage based on the purchase price of the land). In addition, there is an annual ¨administration¨ fee to the bank of $600-$700, for doing nothing more than holding the deed on your behalf.

In 1994, the newest Law was passed, pertaining to the Restricted Zone. This new law, states that a Mexican Corporation, wholly owned by foreigners, can own the Mexican Corporation and hold all the papers to it. Your Mexican Corporation holds the deed, which means, you get to personally (physically) process the deed- This new law provided for linear form of property ownership within the once ¨Restricted Zone¨. By linear, I mean that you hold and control your Mexican Corporation, and in the same hand, your Mexican Corporation holds the deed. You no longer need to go thought the bank to make request.

An added benefit to establishing this Mexican Corporation system is that there are no annual fees to pay to the bank and your Mexican Corporation can own more than one property. You do not need to form a separate Mexican Corporation for each property, such as is the case with the Bank Trust system. If you should decide to sell your property in the future, you can either sell your entire Mexican Corporation System, or sell just a property from it. Also, after you buy land via the Mexican Corporation system, you are permitted to file a dormancy election, which means your company is ¨asleep¨, until you decide to activate it.

The Mexican Government intentionally made it very easy for foreigners to own land in Mexico. So much so, that in 1998, the Mexican Government noticed that the revenues from the industry of Foreign Investment & Tourism, surpassed the revenues from the Oil & Gas Industry. It should be noted, that in Mexico, the Mexican Government owns the monopoly PEMEX (all of the Gas stations), which controls the Oil & Gas. All of the revenues it collects are from DIRECT sales. However, their taxes from the industry. Foreign Investment & Tourism, is now their main source of income and the Mexican Government welcomes your participation.

Until recently, the only way to own property on a Mexican water front was to form a Mexican Trust, usually valid for 50 years, that was held in a Mexican bank. The bank is the Mexican Trustee and you are the beneficiary. For the privilege of being the beneficiary to this Trust, you pay $300-700 a year in maintenance fees. In addition, you needed and still need (if forming a Trust) to hire a lawyer to do the paper work. The lawyer will charge about $2,000 U.S., and then the bank wil! Charge another $2,000 U.S. for the creation of the Trust. If you wanted to sell your land, you need permission from the bank, and another Trust would be need to be formed. Once again, you would need to hire a lawyer, pay him/her again, pay the Bank, etc… If you wanted to purchase another piece of land, you would need to form another Trust and go through the same process. It is time consuming and costly.

You no longer have to go through all of that. Today you can form a Mexican Corporation. You need at least two people on the board-you and a colleague, family, member, etc. This corporation can be 100% foreign owned. The Mexican Corporation owns the land, but you own the Mexican Corporation. The Mexican Corporation is a Mexican entity. The usual cost for this is between $2,000-$3,000 U.S. to set up.

You don’t have to deal with the annual fees to the bank Trust. In addition, your corporation can own more than once piece of land. You do not have to set up another corporation. Another added benefit, is that with the formation of a corporation, you can get an FM-3, which is temporary resident visa. Valid for one year, but you can renew it for up to five. This helps, especially if you want to bring your car from another country or if you want to bring household items. It can be a true benefit to have this!

Yes, but not in your personal name, you own it under your Mexican Corporation. Keep in mind that you own 100% of the Mexican Corporation, so you do own the land. You do NOT need to be Mexican National or Mexican Citizen to be part of your Mexican Corporation. Your Mexican Corporation is recognized by the Mexican Government, to be a Mexican entity. This requirement needed as a foreigner to own water front property in Mexico.

Some sellers will negociate price and some sellers will not. The main reason is, that they have no reason to. When you choose not to pay their asking price that is your decision and yours alone. You have absolutely no obligation to pay it. However, with the entire (already funded) government infracstructure going into place, the water front properties values are rising.

There is no price per square foot. That is NOT the way to value beachfront property. Beachfront property is valued according to the amount of beach frontage, the quality of the beach (rock or sand), the elevation above sea level, the quality of the trees and foliage, the shape of the lot, zoning, the nature of the neighborhood, the beaches susceptibility to erosion (avulsion) and flooding, stability of the sea floor, proximity to infrastructure, and last but not least the sellers motivation to sell.

Annual real estate taxes in Mexico's Yucatan Peninsula are really quite remarkable. For an average water front lot the real estate taxes will be less than $200 USD per year, and depending on location, may be less than $50 USD per year.

Tax notices are not sent out in Mexico. At your request Mexican attorney can arrange to pick up your tax notice each year pay the tax for you and advise you the amount to remind and take care of the payment on your behalf.

No. Unlike many places where you are required to build within a certain period of time, in Mexico, you may hold your land for generations if so desired.