Buying in Mexico

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Mexico Home Buyers Tool Kit

The U.S. State Department estimates that there are twice as many people buying a home in Mexico today than there were just a decade ago. Many are buying in new waterfront resorts targeted to Americans in popular destinations like Puerto Vallarta, Cancun, Sonora and the Baja Peninsula.

The appeal is more than just the thought of permanently toasty weather. The cost of living, from housing to health care, is significantly lower in Mexico than it is in the U.S. That makes the country especially attractive to retirees on fixed incomes, as well as to younger telecommuters and others with portable jobs fleeing high-cost U.S. cities. Increasingly available creature comforts like high-speed Internet access are making the country more attractive to Americans.

Buying in America as well south of the border has its risks, however, so keep these thoughts in mind:

1. Beware of high-pressure sales tactics. Even the fanciest resorts sometimes participate in aggressive sales

tactics, offering discounts on meals or popular side trips if you'll listen to a real-estate pitch.

Some good advice: Walk away from anyone who pressures you. If you get roped into signing a deal,

remember that you have five days under Mexican law to cancel the contract and get back your deposit money.

2. Obtain title insurance. By Mexican law, foreigners can't own real estate outright within 100 kilometers (about

62 miles) of a border and within 50 kilometers (about 31 miles) of any coastline. Of course, that's just where

Americans most want to live. So the Mexican government allows foreigners to buy through bank trusts, with

the bank holding title to the property. That generally works well, unless there's a challenge to the title.

Although title insurance is more readily available than it was a decade ago, it isn't offered on every property.

If you can't get it, pass on the deal.

3. Check your finances. Often, Americans are lured to Mexico by its comparatively low cost to buy or build a

house. But they overlook other costs, which can be much higher than they are stateside. In general,

acquisition fees are high, about 6%, and include a mandatory real-estate transfer tax, a fee for a

government-appointed notary to handle the transaction, and a bank appraisal fee. And while Mexican

property taxes tend to below, capital-gains taxes on the sale of investment property can reach 35% -- a

pretty big bite. For more information, check out Tom Kelly's excellent book, "Cashing in on a Second Home in

Mexico" (2005, Crabman Publishing).

Source: http://www.realestatejournal.com/columnists/housetalk/20070122-fletcher.html

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