22 November 2017
In this article, we will go through the costs of supporting a real estate purchase transaction in Mexico. The previous one was talking about those payments that are collected in favor of the state budget, banks and accounting companies. Now we are going to focus on a single one-time payment that will have to be taken into account when buying a property.
So, you have decided what kind of property you want to buy, reviewed the options, selected the appropriate one, and reached an agreement on the transaction price. If the property is located within a 50-kilometer zone of the sea coast or within a 100-kilometer zone of the border of Mexico, then choose the option to buy through a trust or through your own company in Mexico. Both options have advantages and disadvantages.
First, let's focus on the trust. A Bank trust is issued in a Bank for a period of up to 50 years and this registration will cost up to USD 1,500. Each Bank has its own cost. However, it is cheaper than opening your own company in Mexico. The main drawback of the trust is that one real estate object is registered for one trust. If you need another apartment or house, you will have to go through the procedure again. Accordingly, you will have to pay the same amount for registration of the trust again. As a result, if the interest is limited to only one object, we recommend buying through a trust.
If you plan to earn money in the real estate market, buy and sell objects, rent, then you need to choose to open your own company. Financially and in terms of time, it will take within a month and up to 2000 dollars (depending on the greed of the notary). But there are no restrictions on the number of properties. If you buy 2 objects, it is more profitable to open a company. It will be definitely cheaper than 2 trusts.
Separately, we will focus on the costs of a lawyer and notary. Prices for their services are the same on average – the lawyer's fee is 1-3% of the transaction cost, and the notary will cost 3-5%. However, there is a nuance here. For example, if the object costs more than 200 thousand USD, then you must bargain with both a lawyer and a notary. When making expensive real estate, they are willing to make concessions and reduce prices for services.
Thus, we conclude that the transaction for the purchase of real estate in Mexico will cost 4-8% of the cost of the object itself and additionally pay for the registration of a Bank trust or your own company (1500 or 2000 USD, respectively). You also need to pay tax on the purchase of real estate.
In the next article, we will cover the topic of maintaining an apartment or house on a monthly basis. This will be especially interesting for those investors who plan to earn money by renting out their properties.
