When buying a home in Mexico, it can be overwhelming to see the costs for closing. Here is an explanation of why the closing costs are higher than closing costs in Canada.
In this blog about Mexican Real Estate we write about some fees that you should pay on closing for a property in Mexico:
Legal and Notary Fees
Any legal acquisition of property in Mexico must be administered by a Notary (Notario Público en México). A Public Notary in Mexico is a lawyer, selected and authorized by the Mexican government. All real estate purchases must be registered with a Notary, and they are legally responsible to ensure the property’s title is clear and properly recorded with the public registry. Based on the purchase price of the property in Mexico, is the amount of fees that you have to pay to the Notary.
Bank Trust Fees (Fideicomiso)
A Fideicomiso is a constantly renewing and transferable Bank Trust that allows foreigners to gain irrevocable and absolute ownership rights to property in Mexico for a period of 50 years.
Non-nationals can own coastline and border land through this Trust, which is the legal equivalent of fee-simple ownership.
Taxes & Duties
Here are some duties and taxes to pay at the moment of closing: Transfer Tax, Registration of the title deed at public registry and Government closing documents and appraisal (these are required by law and are based on the purchase price of the property).
The Mexican government collects a significant portion of the property taxes upon closing and that is one of the reasons why the taxes and duties are so high upon closing the deal. Note that the fees and taxes are paid to the Notary.
Annual property taxes also known as “predial” in Mexico are exceptionally low because they are computed at a fraction of the value of your home. This tax is paid annually at the beginning of each calendar year. Some States even offer discounts when paying within a certain period of time.
Contact us if you need help understanding your obligations and the scope of Closing Costs, Mexican Real Estate services, Notary Public in Mexico and Property taxes. Maria Campos is a lawyer with a license in Mexico and Canada.