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How to Buy Real Estate in Mexico
How to Buy and Live in Mexico
Tired of the rat race? Ready to live in a country where it's cheaper, safer for your kids, and a great adventure? You can have it all in Mexico, from beaches to inland Haciendas. How do I know? I lived in Mexico for 36 years and raised two children there.
While I lived in Mexico, I sold real estate as one of my businesses. At that time there were no real estate regulations. I qualified because I was honest and could speak Spanish. So I hung up my shingle in Alamos, Sonora, and started to sell.
After a while it was time to move on to a new career (massage therapy school) so I decided to write a book so that others could benefit from what I knew. That self-published book (which was going to make me a fortune) was called The Gringo's Investment Guide: Every legal thing you need to know about buying real estate in Mexico. It took 5 years to sell the first edition, a modest 1,000 copies. Back in those days, there was no internet, which would have been the perfect medium for selling such a niche book.
Finally, it was time to come out with a second, updated edition. I was ready to take it to the printers when my house burned down. Naturally my computer and files burned up, but so did all my back up files. That's right...I knew enough to backup everything, but it had never occurred to me to have a copy of the files in another place.
I took it as a sign to let the book go. To this day I still get inquiries for my book. Then I started squidooing and an idea came to me...maybe I could publish all that great info about how to buy and live in Mexico in a lens!
So here you have it, all the great info I know, links to other great sites, and my own general observations that can help make your adventure a success. I have to caution you, however. I'll answer questions about what I've published but I won't answer questions about whatever your personal situation or real estate challenge might be. I will give you a way to contact someone who CAN answer your questions, however.
I am so happy my first attempt at writing from 15 years ago has discovered a new home. And who knows, maybe this lens will make me that fortune. Enjoy!
Is Mexico Safe to Live In?
I wouldn't want to live in a border town, but the vast majority of Mexico is SAFE. Just like there are certain parts of every large city you wouldn't want to be hanging out in, certain parts of Mexico has areas that you wouldn't want to be in either. If you like your occasional recreational drug, Mexico is NOT a good place to do this. Their justice system works very differently than the U.S. It's also important to get to know your hosts, living with them, not just living amongst them.
Before We Get Started...
I have to brag just a little bit
This lens was published on May 17, 2008. Sixteen days later it made Lens of the Day! Which promptly shot it up into the top 100 lenses, for four days or so. What a rush!
Gringo Guide Tip #1
Don't leave your brain at the border. Know what you are doing, so you can protect your investment.
Mexican Real Estate Considerations in General
Do your research
Whether it's time to get out of the rat race, live somewhere warm, or just experience life from a different perspective, Mexico is a great place to live.
It's currently estimated that there are 1.5 million Americans and other expats living in Mexico. No one really knows for sure. Estimates that it will become 10 million in 10 years is a bit hard to believe, but it would even things out a bit as Mexican workers come up here and Americans move down there!
Here are some considerations to think about when deciding where to live in Mexico:
- Do you want to live full or part time in Mexico? Mexico has beautiful year-round moderate climate in its interior, such as Ajijic and San Miguel de Allende. Or it has fabulous beach towns such as San Carlos, Puerto Vallarta, Playa de Carmen which can be hot and rainy part of the year. It has deserts, rain forests, mountains, beaches. Just about anything to meet your style. Check out this wonderful resource to hear more from expats living in many different places in Mexico: Living in Mexico.
- Decide if you want to live with other expats, mingle more with the natives, or a combination of both. Believe it or not there are tens of thousands of expats living in Mexico who never learn the language or have any interaction with the natives. When I lived and studied in San Miguel de Allende with a Mexican family, they were surprised that I wanted to hang out with them because all of their other American guests had just gone out with other Americans. That's fine if that's your style, but personally I recommend that you learn Spanish and get to know your community. Besides being invited to some fabulous parties, you'll have people who can vouch for you, if you ever get in trouble. My language school in San Miguel de Allende was Academia Hispano Americano but there's lots more schools there, so check them all out if that's the way you want to go.
- Do you have family in the U.S. or Canada that you will want to have visit you? There are many amazing communities in Mexico that are really off the beaten path. If you want to live there full time and have family visit you, this could influence where you live. Your U.S. family has short vacation holidays and no time to slip into the Mexican slowed down pace. They want to get in fast, stay a short time and leave fast. Most beach resorts have airports and lots of inexpensive flights to them (except at Christmas and Easter time). Inland communities can be extremely hard and expensive to get to such as Alamos, Sonora, and San Miguel de Allende, Guanajuato. An exception is Ajijic/Lake Chapala which is near Guadalajara.
- What's your tolerance for different customs? I've seen many an expat fall in love with the cheap living and climate but not the culture. They were going to be the ones who changed everyone to suit them. They rarely lasted long. If you are not tolerant of the Mexican culture and way of doing things....pick a different country or stay home! Two people who have travelled in Mexico for years and still love it are Carl Franz and Lorena Haven who wrote The People's Guide to Mexico (featured below) and have an excellent website with reliable information. It is: People's Guide to Mexico. They know how to appreciate Mexico without being overly romantic about it.
THE Resource Book to Have About Mexico
Carl and Lorena have been travelling in Mexico for over 40 years. They know all the great places to visit and to avoid. Don't leave home without it!
Differences in Mexican and American Real Estate Law
Ah! The bliss of enjoying a beautiful sunset off the porch of your beach home, with a margarita or Tecate in your hand! First, however, you have to navigate the legal system.
Buying and selling real estate in Mexico can be fun and rewarding as long as you understand certain fundamental differences. Don't expect it to be like back home. I was always surprised by people who expected Mexico to have the same money and stamp system as the U.S.!
Below are some of the biggest real estate differences:
- Houses are sold as is. In the U.S., you can have a house inspected and if something major (and sometimes minor) shows up, can demand that it is fixed, or call the deal off. In Mexico, there is no such guarantee and no legal mechanism to protect you, if your house ends up being a disaster. Do your own inspection and ask questions. When was the house built? Wiring and plumbing can be years behind the U.S. codes. What shape is the roof in? Replacing a roof on a colonial house can be extremely expensive. Look for signs of water damage on the walls. If possible look at the roof from outside. Where does the water supply for the house come from? If it is the city, how does the city's system do during dry seasons? Is there a backup water system (such as a cistern) in case of no city water? If there is wood in the house, such as doors, door frames or beams, are they termite free? In general, Mexican homes need ongoing, annual upkeep.
- In general, there is no title insurance. There is a title search done, however, by the realtor and/or notary before drawing up a new title. There are companies that tell you they can sell you title insurance but it is not needed.
- There are few mortgages to be had. Again, there are American companies offering mortgages for beach properties, but they are fairly expensive. Most deals are either cash or financed by the seller.
- There are no escrow companies. Escrow companies hold your earnest money while papers are being finalized for closing. Without this service, handing over earnest money or commissions to realtors prior to closing is very risky. Many realty businesses have set up their own accounts to act as escrow accounts. Check with your realtor to see if he or she offers this service. An alternative to an escrow account, is to draw up a Buy/Sell Agreement in the U.S., clearly stating monies paid and what is going to happen. In the event of a disagreement, state what action will occur (negotiation? litigation?) and in what state.
- There is a false market for buying and selling in Mexico, that everyone agrees to more or less. In general, actual value of Mexican property is less than the foreign dollar price. It works like this: An American buys in dollars. During the time that American owns the home, the peso might devalue, which effectively erodes the purchase price of his home. By selling in dollars to another foreigner, however, this protects the investment. Mostly this system works, but occasionally it can bite a seller in the "nalgas." If you are aware of this "false market," however, you can avoid potential pitfalls.
- There is very little regulation of realtors or real estate agents in Mexico. Sonora is currently the only state to offer regulation, however, everyone who is selling real estate in Sonora is not currently licensed. Ask for referrals from happy buyers. Don't just assume that a charming realtor who speaks great English, is giving you a straight deal. By knowing the basic steps of acquiring a title, you can demonstrate to a realtor that you aren't to be fooled.
Three Different Ways to Hold Title in Mexico
The first two are legal, the third is not
Before you get to lie on the beach, there's still more leg work to do.
There are two ways to legally buy property in Mexico. There is a third way that was used in the past, before Mexico reformed its laws about foreigners owning property. It is illegal and doesn't protect your financial investment.
- If you own property in the restricted zone, the property may be held in trust by a bank, with yourself listed as the main beneficiary. The restricted zone is 60 miles from any Mexican border and 30 miles from the coast. The rights of the trust state that you may do whatever you want to your property, just as though you were the titled owner. For more on trusts, scan down a few more modules.
- Own property directly in your name as long as it's not in the restricted zone or ejido land. Many people live in beautiful inland cities such as San Miguel de Allende. You can title the property directly in your name, and you can also have a trust created for the property. When you own property in Mexico, you have all the rights as any other Mexican citizen. If you ask the American government to convene on your behalf for your property, the Mexican government can take the property away. It's written into their Reform Law. You can't own agriculture land, supposedly, but there are some exceptions made. Ejido land, by the way, is communal property owned by a type of commune. Some ejidos can now sell their property, but be sure to check with a lawyer to be sure.
- The third way that people have bought property is called "prestanombre," or borrow-a-name. It is illegal. Many decades ago, before the real estate laws were reformed, the only way a foreigner could own property was to title it in a Mexican's name. The Mexican always honored the agreement, because they are gracious, accommodating people. The problem was that they started to catch on to the free gift, when the owner died. So the heirs lost out. Or the heirs had to fight in court to get their property or literally buy back the property from the prestanombre. Times have changed. Don't use a prestanombre no matter what.
The Mexican Property Forfeiture Clause
The clause that makes you pause...
This is serious stuff. The Civil Code of Mexico requires that all title work for foreigners who own property include this phrase:
"Foreigners who acquire properties of any kind in the Mexican Republic agree, because of such action, to consider themselves as Mexican nationals with regard to these properties and not to invoke the protection of their governments with respect to such properties, under penalty, in case of violation, of forfeiting to the Mexican government the properties thus acquired."
I'll bet this was created when Mexico lost half its territory to the U.S.
Mexico has had a stable government for a while but it still is a nation with a great deal of poverty, and people who are prone to revolt.
The communist party almost succeeded in winning the presidential election last year and you never know what sweeping reform might occur with such a president.
I know many Americans who invested all of their money into Mexico and lost it when the peso devalued.
Keep all of this in mind, when you invest.
Gringo Guide Tip #2
Don't invest in Mexico what you can't afford to lose.
All About Mexican Trusts
Your rights and duties
Below are some important consideration to know about the mechanism of a trust:
- The trust (called a fideicomiso) has a time limit of 10, 20 or 30 years and can usually be extended. To set up a trust costs a lot of money. If you are buying a home that is in trust already, be sure to check how much time remains on the existing trust.
- One of the best benefits of the trust is that you may assign a substitute beneficiary, essentially your heirs. In the case of your death (sorry!), your heirs only need to provide a death certificate and the property is transferred over to your name. No probate needed!
- If you hold a property with a spouse or partner that ends for whatever reason, it is easy to get the person off of the trust. Ideally you should set the trust up so that it says y/o which means "and/or.
- There is a yearly fee with the trust. Check with your bank and how they bill. Some don't bill at all, others bill from several different branches (all for the same fee). Some bill quarterly, every six months or once a year.
- If for some reason, you don't like the bank that holds your trust, you can request switching banks, without occurring major taxes.
- If at all possible, make a point to get to know your trust department in person. Then, if there is a problem, you are a face for them, and not just a name on a piece of paper.
- Strictly speaking, it states in the trust that you must stay current on your yearly fee or perhaps forfeit the property. Banks rarely want to take this action. They figure that eventually the owner will sell the property and that's when they will collect.
- Anytime you want to change something about the trust, whether it's to add or change a substitute beneficiary, sell the property or notify the bank of the death of the beneficiary, you will need to create a carta de instrucciones or letter of instructions. The bank then sends a letter to a notary that you choose (or they can choose one for you) who will draw up a new title with those changes. This will occur fees for the bank, the notary, and the Registry office but not the big taxes such as Capital Gains.
- One final note about trusts: Officially the bank is the owner of the property. If someone squats on your property (or in one case, tried to plant marijuana on a property so as to be able to confiscate it), you have a powerful ally that can act on your behalf. I've often wondered if a person declared bankruptcy in the U.S., if they would have to declare their Mexican property, because strictly speaking, the bank is the owner.
Gringo Guide Tip #3
A notario or notary in Mexico is much more than a notary in the U.S. A notario is a specialized lawyer who has the right to draw up titles. He or she is liable for inconsistencies in any document.
Information about Buying, Renting and Selling in Mexico
This straight forward, informative guide helps potential second home buyers, investors and renters easily understand the nuances of Mexican property, mortgages and escrow. Aimed at baby boomers and retirees who want to discover an inexpensive spot to spend their leisure days safely in the sun.
Getting Title to Your Dream Property in Mexico
The steps are almost the same for a trust or titling directly in your name
You could do your own titlework. Mexico, however, is a country of networking systems. A real estate agent brings a whole platoon of relationships that can speed the process along. My recommendation is to hire a real estate agent to work for you as buyer's agent. Make it clear that they are working for you and that you will recompense them for their time. You will be well taken care of, if you do.
So why bother knowing the steps to get a title? Because then you know the steps are done right and your real estate agent will stay on his or her toes.
Plan on 6-8 weeks for transferring a normal title. It might be less, but there can't be a single holiday in that time.
Below are the steps for titling a property. Some of them only apply to trusts and some of them are universal. The universal ones are in green, while the steps for the trust are in red. The exception to this is #5 which is for establishing the title directly in your name only or for establishing a new trust.
- Draw up an earnest agreement between yourself and the seller. This isn't legally necessary but it goes a long way to establishing certain gray areas that come up. At what point does possession of the property take place? If there are payments involved, how and when are they paid? If there was a down payment, when and under what circumstances would it be returned? Get it all out in writing to ensure an easy transfer of title.
- Get papers from the seller. These include a copy of the title and plat, property tax receipt for the current year, and most recent water bill. If the seller doesn't have a title, but has the title number, date of authorization, notary's name, number and address, and recording number, date, and place. If there isn't a plat on hand, an engineer can draw one from the colindancias or property description contained within the title history, and will visit the property as well. There can often be discrepancies with the plat and the actual property. If the difference isn't a lot, let it ride and let the engineer "fix" it. If it is a lot, it needs to be discussed with the seller.
- If the property is in trust, get a letter of instruction from the seller for the bank instructing the bank to transfer the title to you.
- Gather the papers you need to present for creating a title. You need notarized copies of your passport and current Mexican visas. In Mexico, always get more copies than you think you'll need. You need to submit your vital stats including: name, nationality, date and place of birth, occupation, marital status, and current address.
- Apply for a permit from the State Department for owning property as a foreigner directly in your name. This is not a step that you need if you are acquiring someone else's trust. However, if you are creating a trust for the first time, you will need to do this step. If more than one person will be on the title, each person much apply for an application. Part of the information supplied on the application are vital stats, location of the property, notarized copy of your visa AND passport, a plat of the property, and a letter from the Appraisor's Office stating the property is not in the restricted zone.
- Get the paperwork establishing the title search. From the Clerk and Recorder's office request proof of no liens on the property. There is a fee for this document that is paid at the Treasury office. At the Treasury you can also ask for letter that states the assessed value of the property. This is one of the three ways, the transfer tax is calculated (the other two is the selling price and the bank appraisal).
- If needed, get a power of attorney for yourself or the seller. If either you as the buyer, or the seller can't be present for signing the title or other documents, have a power of attorney made, designating someone to sign for you.
- Get a copy of the severance agreement that the seller made with his/her employees. You might continue working with them, but their severance rights start over again with you.
- Get a bank appraisal. This is an important document since almost every major fee and tax incurred in a title transfer is based on this appraisal. It's called a bank appraisal because banks are appointed to handle obtaining this important document. The actual appraisal is done by an architect or engineer working with the bank. At some point, you'll be asked what the selling price of the property was. Sometimes the bank appraisal is a lot less than the actual selling price (remember the false market?). State that the selling price is the same as the bank appraisal. Some appraisors are lenient, using your description of the property and some are very strict, visiting the property for themselves. They take into account the type of building material used, the general condition of the property, location, and current building rates. Bank appraisals are only good for 6 months, so it's best to get it right before you're ready to have the notary do the paperwork. The fee for a bank appraisal is based on the value of the property.
- Get a letter of instruction from the bank holding the trust, for the notary. Essentially all paperwork above is delivered to the trust holding bank, who reviews it and then instructs the notary to draw up a new title for the trust.
- Sign at the notary's office. Do not pay the notary at this time. And do not pay the real estate fee or commission. Why? Because there are important steps after signing that must be done. Once paid, the urgency to get things done can be lost by all. Usually, possession of the house is taken at this point.
- Pay the Transfer Tax at the Treasury office.
- Seller has to pay Capital Gains, if required. Get a copy, if possible.
- The new title is registered at the Clerk and Recorder's office. Another fee is incurred.
- Upon delivery of a registered title, pay the notary and real estate agent.
Mexican Wills and Probate
When do you need one?
If you own your property directly, you will need to make a will and your heirs will need to probate it upon your death. If you have a trust, make sure you have listed substitute beneficiaries, so that your heirs will be singing your praises upon your demise.
Below is some general information about wills and probating. Consult a Mexican lawyer of good reputation, for more specific details.
- One will per person. It sounds obvious but it's amazing how your brain doesn't work logically when dealing with another language! Even if your property is in two names (say yourself and your spouse), you need one will for each of you.
- If you die without a will, the property will go to your spouse and your children. If you have neither of those, it goes to your parents. If you're thinking, "Great! that's who I wanted to leave it to anyway, so why make a will?" think again. It really delays probating without a will. Nothing is more difficult for your grieving heirs, then to have to deal with difficult legalities in a foreign country.
- Mexico will accept an American will, after it's been probated and with appropriate translations. The problem with this lies in the fact that some probates in the U.S. can take years. The Mexican property then lies unattended and unused, decreasing its value. Then the weary heirs get to probate all over again. Whoopee!
- Probate is done by a judge who examines the will, decides the validity of the heirs, rules in favor of the heirs, and then passes the findings on to a notary, so that he/she may draw up a new title. All normal fees in title transfer are incurred except for Capital Gains Tax. A very straight-forward case, can be done by a notary, without a judge. The judge is free, however, and a notary will charge you for probating. A good probate can occur in 2-3 months.
- There are several different types of Mexican wills to choose from. Some are "public" made verbally in front of a notary, with three witnesses and two interpreters. This "open" form is the preferred form for probate judges. This type of will is recorded at the Clerk and Recorder's Office. A Closed Will, is one written by you, signed on every page and sealed in an envelope. You need to provide three witnesses testifying that you are you. The notary types dates and verification on the envelope and seals it with wax. You can keep it then or take it to the Clerk and Recorder's Office for recording. Please don't think that documents don't get lost. They do all the time, so make backup copies and give them to your heirs. A written will doesn't have to be in Spanish. Be sure to include legal descriptions of your property, not just a street address.
- You might consider transferring title of your Mexican property to your heirs, prior to dying. They don't have to probate at all then, or if you have a decline and can't make any decisions, they can make legal decisions about the property. They can give you a power of attorney to make decisions while you are still alive and kicking.
- Go Back to Table of Contents
Gringo Guide Tip #4
If you own your property outright, you need to have a will. If you have a trust, you do not as long as you name a substitute beneficiary.
Pay fair, play square
Mexican labor is incredibly inexpensive compared to the U.S. You'll find many people wanting to work for you. Expats hire Mexicans to clean, cook, launder, garden and of course fix and build their homes, cars and appliances. As a general rule, Mexican employees are loyal, hard working and reliable.
With a few tips and pointers, you can help the Mexican economy and spend your time doing things other than cleaning and home maintenance, like bird watching! (unless of course you love doing those things!).
- Pay the going rate. Americans can be either really stingy or overly generous with their employees. The government sets a minimum wage, but depending on the area (which is most of Mexico, actually), this minimum wage doesn't meet basic cost of living. Check around and see what your American and Mexican neighbors are paying, and strike a fair balance.
- Free healthcare is available to everyone. Mexican Social Security does charge employers to cover insurance premiums. My suggestion is, if an employee is working for you for more than 3 months, get them insurance. It's not too expensive and the alternative is that some domestic help expect the employer to cover medical expenses (and they are supported by the law, depending on how long the employee has worked for you.)
- You must get Workman's Comp for construction workers. There is a stiff fine, if you don't. And Social Security has a 7 year retroactive policy, so to hide a construction job for the short term isn't a good idea. Hiring a contractor to take care of Workman's Comp, isn't cheaper for you but it is easier. And if the contractor doesn't handle Workman Comp correctly, he's liable instead of you.
- Blue collar workers, work 5 and 1/2 days a week. They are not to exceed 48 hours a week or they get paid for a full 7 days. Traditionally Sunday is their day off, but it is possible to have a worker take another day off. If they work on Sunday, however, they get an extra 25% salary.
- There are annual, paid legal holidays, paid vacations, and Christmas bonuses owed the employee depending on how much time he or she has worked for you. Holidays fall under legal government and traditional. For example, May 5th is a government paid holiday, while Mother's Day is a traditional holiday that everyone takes off and expects to be paid for. My advice, go along with custom. Employees get 6 paid vacation days, in the first year of employment and it creeps up incrementally every year after that. Christmas bonus is the equivalent of 2 weeks of work. For an employee working less than a year, the amount is prorated.
- Keep a record book of vacations taken, salaries paid, and Christmas bonuses. Have your employees sign the record book each time they are paid. This protects you down the road when it is time to let someone go.
- Take care of severance when it's time to part or you sell your home. Severance is not owed if an employee has worked for you less than 30 days or if you have a contract in place with a starting and stopping date. If you have no contract, then severance after 30 days is equal to 3 months pay. Every year of employment is an additional 20 days salary, and any unpaid bonuses, holidays, or vacations.
- You can't pass your employees on to a new buyer. You must take care of their severance at the time you sell your home. And if you are buying a home, make sure the seller has done so by requesting a copy of the signed document showing that the employee has received his/her severance.
- If an employee chooses to leave, you do not owe severance. Also if your employees don't show up for work for 3 consecutive days, have no justification or have failed to notify you, they are considered as having quit. There is a proper form for initiating termination this way, so consult a lawyer on this one. Other reasons to not pay severance are immoral conduct, misrepresentation of work skills, and threatening or menacing the employer. Remember that the government is going to listen more to the poor, Mexican national, then the well-off foreigner, so get proper documentation before taking this route.
Gringo Guide Tip #5
Mexicans will rarely say no to your face. Learn to read the subtle difference between "yes!" and "not interested but won't tell you that."
Taxes, Taxes, Taxes
Before and after you buy your property
Sit back and enjoy sipping a margarita, while reading a scintillating conversation about taxes!
In general, Mexico has structured their tax system to favor the poor. If there is an exchange of money, then the government will collect a tax. Annual taxes such as property taxes are very low so as not to be a burden on the large population that has a small cash flow.
Below are taxes that you are responsible for as a buyer, as a seller and as a homeowner in Mexico. That would include U.S. taxes as well.
As a Buyer:
- Traslacion de Dominio. Transfer Tax. This is a city/county tax paid for at the Tesoreria or Treasury. It's based on the bank appraisal and is paid after signing on the title but before registering the property.
As a seller:
- Impuesto Sobre la Renta. Capital Gains Tax paid at Hacienda, the Mexican IRS. If you have established residency in Mexico, and changed your status from tourist to Visitante (FM3) and can prove that the home you are living in is your primary home for more than two years, you can waive the Capital Gains. If you can't prove the above, the Capital Gains is 30% of the profit made on the home.
Living in Mexico:
- I.V.A. (pronounced "eeeba") Mexican Sales Tax. This 15% tax is on everything including services, bank appraisals, food (except certain staples), and products.
- Prediales Property Taxes. Owed every year in January, February, and March, these taxes are generally quite reasonable unless you have bare land. Even a shack thrown up on a bare lot will bring down the price quite a bit. If a property has not paid its taxes for five years and been abandoned, you can file for ownership of the property simply by paying up the back taxes. You won't get a bill for property taxes. It's assumed you know enough to go down to the city treasury to pay them. Be sure to take a copy of the prior year's taxes or the Numero Catastral or property tax number, as sometimes the names are incorrect. Not to worry about this detail: If you show you've paid the taxes, that's what counts.
- Mexican Income Tax If you earn money in Mexico or own a business that is making money in Mexico, you are expected to pay income tax to Hacienda. The U.S. also taxes you on your world-wide income, however, you can deduct what you pay in Mexico as an expense. For more information about taxes in Mexico check here.
Tips for U.S. Taxes:
- Keep good records. Everything you spend to get title to your property, as well as capital gains tax for selling your home, can be deducted when you sell your home and have to pay capital gains in the U.S.
- You can rollover the sale of a property in the U.S. into another purchase in Mexico without paying capital gains. And vice versa. There is a time limit for purchasing again after selling, to qualify for this. Check with your accountant.
- Go Back to Table of Contents
Another Take On Getting Title in Mexico
This book is dryer than dry, but it does have reliable information. Make sure you get a recent edition as laws continually change in Mexico
"How To Buy Real Estate In Mexico" is a simple guide to buying real estate in Mexico written by an American licensed to practice law in Mexico with over 20 years of experience.
Making a Living in Mexico
There are many ways to earn a living in Mexico. It doesn't take much to help supplement your income. Mexico is business friendly. It's a relief to have a small business in Mexico and be encouraged by the government, instead of penalized such as in the U.S.
Below are some of the easiest way to make a living.
- Maintain an internet business. This actually allows you to live anywhere in the world. See the recommended book below for the definitive way to get started.
- Coaching or consulting over the phone. With free or low cost internet services such as Skype or VOIP such as Vonage this a viable option.
- Artists and writers can work in Mexico, and not incur Mexican taxes. As long as they are selling their work in the U.S.
- Professional services such as medical massage therapy, bodywork, acupuncture, yoga and chiropractic works great in large expat communities. I offered massage therapy for almost a decade in Alamos before moving back to the U.S. I worked primarily on Americans who usually paid me in dollars. Although less than what I would have made in the U.S., it was more than the going wage in Mexico. Although, you'll here me advising you to pay taxes on what you earn, I can't say that I did! The key here is that you are offering something that is not being offered by Mexican nationals. It is easy to have a quiet business without paying taxes, BUT nothing is a secret in a Mexican community. Make one person mad and they could report you to the Mexican IRS and immigration. It is possible to apply for a change in status that grants you the right to work.
- Hotel, Bed and Breakfast, Real Estate, Gift Shops. Many Americans have opened businesses in these areas. They bring their marketing skills to reach potential customers back home and in the expat community.
The Groundbreaking Book for Living Anywhere while Still Working
With the advent of better internet services throughout most of Mexico, creating an income while living anywhere you want is definitely an option. This book will guide you to that lifestyle. It's for people who think outside of the box.
Gringo Guide Tip #6
There are no personal liability laws in Mexico so you don't have to worry about getting sued. However, you don't get to sue someone who is negligent, either.
Living Under Mexican Laws
Aka Birth, Marriage, Divorce and Death
Here are some interesting facts about living under Mexican law:
- If you give birth in Mexico, your children will have dual citizenship. Then all your properties can be in their name. You'll have to register your children at the nearest U.S Consulate to establish their U.S. citizenship.
- Want to get married to a Mexican national? You'll have to get permission from the Department of the Interior to do so. It can take a while (3-5 months) for the permission to come through. Getting married in a church does not count with the Mexican government. You must also get married civilly. At the time of marriage, you will choose if you want to be married under separate or joint property. Marrying as two foreigners doesn't require permission from the Mexican government. Check in your state if it is accepted as legal. Homeland security has changed up the laws a bit on this.
- A voluntary divorce in Mexico takes some time but is easy to do. With a good lawyer, it can be done in about 8 weeks. Homeland Security is now requiring that divorce decrees state what last name the wife will have after divorce. I found out the hard way that this can affect your Social Security. 20 years after my Mexican divorce, I now have to go to court to change my name (which changed on everything but my Social Security card) because Social Security won't accept my Mexican divorce papers, which don't state that my name changed back to my maiden name.
- If you die in Mexico, do you want to be buried in the U.S.? Embalming and cremation are offered in larger cities but not in smaller towns. If a person isn't embalmed or cremated, they must be buried within 24 hours. If you plan on living in Mexico, till death do you part, decide how to handle this so that your heirs aren't struggling to figure it out. It's rumored that Howard Hughes died in Mexico, but his employees flew him back to the U.S. as "gravely ill" so as to avoid the extensive paperwork needed. It's recommended that you get medical evacuation insurance in the event of a serious illness. If you choose to be buried in Mexico, your mourners can hire a mariachi band to play at your funeral!
- It's required that you register at the city hall, as a foreigner living in Mexico. If the U.S. government wants to find you for any reason, they will check these records first. You should also register with the nearest American Consulate, providing family addresses to contact in the event of an emergency.
- Mexico legal system is based largely on the Napoleanic Code. What does this mean exactly? That you're guilty until proven innocent AND that cases are decided by judges not juries. If you think you might be arrested in the near future (up to no good, are you?) you can actually get a document from a lawyer, that does not allow the police to throw you in jail. You'll still have to face a judge, but you're saved for a while.
- Get Mexican auto insurance for your vehicle. It's expensive but the alternative is even more so. If you get in a wreck with a Mexican, you'll most likely, as the foreigner, be considered the guilty party and have to pay for damages and liability. Very few Mexicans carry adequate auto insurance. Sanborn's is a reliable company that I recommend.
- If you get in trouble, it's who you know, more than a bribe, that will get you out of trouble. Take time to meet the Mexican community. Invite influential people to your home and make an effort to know them. You can count on them to help you in the event of a run-in with the Mexican legal system.
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Mexican and American Cultural Differences - A bit tongue in cheek...
What differences in the two cultures do you know?
Gringo Guide Tip #7
When a Mexican introduces you to someone they won't say your name. You role is to shake hands and say your name in full. Just think, you'll never have to worry about remembering a name!
Raising Kids in Mexico
A little known secret: Mexico loves, adores, and cherishes children. If you've got one of those unruly kids, consider living in Mexico. They are completely tolerant and love them unconditionally.
I raised two children in Mexico and have many friends who have done the same. Below are some pointers and benefits for raising your children in Mexico:
- Children stay innocent longer. Three years ago my son, at the age of 11, was accused by a 4th grader of sexual harassment. The setting? A bowling alley. The incident? After she got a strike, he sang her a song, "That's the way, you like it.." When questioned what his intentions were, he looked bewildered and said, "Doesn't she like to get strikes?" It seems that age 6 and 7, U.S. children are pretending to be teenagers. Not in Mexico.
- Prepare your children for living in a world wide commerce. Children easily pick up a second language. There are more business opportunities growing every day in Mexico, which like India has a growing middle class. Living in a different culture "frees" you from your own culture and opens your eyes to many new opportunities.
- In general, Mexico is safer for children. If you aren't in Mexico City, Guadalajara or other areas of high density, your children will be watched over and care for by an entire community. Mexico has very little tolerance for child abusers. There's a freedom for children in Mexico, that no longer exists in the U.S.
- There are plenty of schooling options. From private or public school to home schooling, you can create a great education for your children. Mexico has great universities as well. I home schooled my daughter to 8th grade using the Calvert Home School system.
- It is highly recommended that you take an empowered stance about your children's health care. Mexican doctors are great for children's fevers and flus. And they have a vaccination system similar to the U.S. (if you go that route). But they will prescribe antibiotics for absolutely everything. Becoming informed about alternative solutions such as homeopathy can really make a difference.
- On the other hand, health care such as orthodontics, is a great deal cheaper.
- Mexico is profamily. Almost all entertainment and social events are multigenerational. Children naturally learn the benefits of staying connected to their parents, grandparents and extended family.
- If you are a single parent, or want some great help with your kids, Mexico is the place for you. Fabulous and inexpensive nannies, housecleaners and other helpers can make raising children fun and affordable. If you are single and don't have an extended family near you in the U.S., I would head to Mexico in a heart beat (assuming you can be flexible about work).
- Mexicans have the best children's birthday parties in the world! Mexicans are generous when it comes to celebrating their children. Live music, pinatas, food galore and happiness are just a few of the ingredients of a fiesta for kids. And did you know, Mexico has a Dia del Nino or Kid's Day on April 30th. Party!
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Links to People Living Their Dreams in Mexico
- Realtor Liliana Carosso
Have a question about Mexican Real Estate? Ask Liliana.
- Solipaso Ecolodge
Fabulous ecolodge run by Americans who raised their children in Mexico.
- Rancho Palomar Guest Ranch
Interested in birding, hunting, horseback riding, exquisite cuisine or hanging with a native born naturalist? Consider a vacation at this premiere guest ranch.
- La Puerta Roja Bed and Breakfast
Started and run by American Teri Arnold, this bed and breakfast business is currently for sale.
- Sierra Madre Motorcycle Adventures
Run by Richard Schneider, he is definitely living his dream with this unique business.
The not so pretty sides of living there
Mexico is a land of beautiful, natural resources. However, there are a few sides to Mexico that aren't so great. Better to know about them now, then be sorry later.
- Mexico is not so great for the disabled. There are a few concessions in some of the bigger cities, but even those are inadequately maintained (as is a lot of Mexico's infrastructure).
- Mexico is not great on handling trash. Everywhere you go it seems you'll see plastic bottles, plastic bags, and diapers littering the view. Remember when styrafoam was banned in the U.S.? Guess where it went...Mexico. It's used everywhere and then dumped on the sides of the road. In many areas Mexico is behind the U.S. socially by about 20 years. Eventually they'll get the trash situation better managed, just as the U.S. has done.
- All the bad chemicals that were banned in the U.S. went to Mexico. To get on top of a malaria or dengue outbreak, Mexico will openly spray highly toxic chemicals in the streets or even from airplanes. When I first lived in Mexico, they had a rural plan for controlling mosquitoes by spraying DDT inside all the homes. They openly stated that it only hurt the mosquitoes and nothing else. The only way I could stop them was to tell the government sprayers they couldn't enter my home while my husband was gone! The neighbors weren't so lucky. If you are chemically sensitive, Mexico is not the place for you.
- Alternative health care is scarce with few options. Antibiotics are still the number 1 remedy pushed by doctors in Mexico. They prescribe it for everything. Healthcare is getting better, throughout Mexico, with the best physicians studying in the U.S.
- Organic is best found in your own backyard. Organic is not marketed as an option. Certain expat communities do offer vegeterian, vegan and organic menus as the result of local interest, but for best results plan on growing your own food. It's great to do, even if you don't want organic food.
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The Most Important Thing
If things get too expensive for you in the United States, you can live well and inexpensively in Mexico. A good place to sit out a recession!
Answers to Legal vs Traditional Holidays
The legal holidays are:
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Glossary of Mexican Real Estate Terms
Spanish first, followed by English
Bonus (as in Christmas bonus)
Carta de Instrucciones
Letter of Instructions
Carta de No Adeuda
Letter of Non-debt
Certificado de No Gravamen
Certificate of Non-liens
Contrato de Compra Venta
Corredor de Bienes Raices
Real Estate Agent
El Codigo Civil
Civil Law Book
State Treasury Office
Ministery of Finance (Mexican IRS)
Impuesto Sobre la Renta
Capital Gains Tax
Property Tax Number
Mayor and County Comissioner (also President of Mexico)
Promesa de Venta
Agrarian Reform Board
Office of the Clerk and Recorder
Secretaria de Gobernacion
Department of the Interior
Secretaria de Relaciones Exteriores
Transfer Tax (county)
A Gratuitous Plug for What I'm Doing Now
After 8 years selling Mexican real estate, I moved into massage therapy and then energy healing. Below is my blog, the definitive guide to your energy self. By the way, this is a great vocation to have, that allows you to move anywhere in the world.
- Science of Energy Healing
Energy is the operating system of your body. And just like your computer, it has upgrades to achieve new levels of power and speed. This blog explores all aspects of your energetic nature.
- Crystalline Consciousness Technique
Learn a vocation that you can use to earn a living in Mexico (or anywhere in the world?). If you like helping people, this is a good choice.
If you aren't completely overwhelmed with information, you might have a question or two. Fire away and I'll do my best to answer.
And check out below the guestbook..there's a glossary and the answers to the legal holiday quizz.