Real estate transactions in Mexico have historically been all cash deals. Recently, the Mexican market has been opened up to financing. There are different types of financing offered through the many financing companies available. They can also help you with second home tax breaks in the U.S.Peninsula Grand Cozumel offers a 10% discount on any cash deal, as well as financing directly through the developer. Bancomer and Laredo National Bank also offer 3 other options to finance your condominium.
Credit Score: 650 Pts. (Fico Score).
Minimum Age: 18 años.
Annual maintenance Trust Fees and Insurance Premium are included in the monthly payment through and Escrow Account
How can a foreigner own property in Mexico?
Foreigners, including U.S. citizens, are allowed to buy property in Mexico. However, some Cozumel Real Estate can be found in “restricted zones”. These zones, known as zona federal and prohibited zones, include the coastline – and that means the coastline of Cozumel too. Foreigners are not directly allowed to buy property in these zones. However, you can buy property indirectly in these zones, through the fidei comiso (bank trust) method set up for this purpose. The trusts last 50 years and are automatically renewable at the end of this period. You are the primary beneficiary of the trust, and in practice these means almost all the benefits of ownership, including the right to name an heir.
A bank trust is not a lease. The Mexican government established the trust agreement as a way of protecting foreigners interested in owning property in Mexico. The reasoning was that by making ownership pass through the trust process, there would be an automatic review of the transaction to ensure it was legal and unencumbered. The bank is required to check ownership, insurance and indebtedness of the property, providing further protection to the foreign owner.
The Buying Process
The exact buying process will vary in each case, but you will follow a process similar to the one that follows:
Submit a purchase request
Submit a letter of intention, including price, unit type, discounts, and payment plan
A deposit of 10% is paid and cancellation penalties are set
A trust (fidieo comiso) is established
A public notary is appointed to handle legalities such as an official appraisal of the land and complete history check of the seller (The Notary Public will ensure that all documentation and permits are in order so that the transaction can proceed)
Payment is made at the time when the deed is signed over to you.
Note: On average, you can expect the process to take up to 3 months from the time the initial sale agreement is drawn up and
the deposit is paid.
Can I rent my condominium?
Yes. There are a variety of property management companies on the island. Many people buy Cozumel real estate purely for financial reasons. Cozumel is a very popular tourist destination, with more than 2 million visitors visiting the island each year. The people who come for diving, golf, yachting and other water sports all need somewhere to stay, so property owners can make good money from rental. The average rate for a weeks stay in a beach front condominium is $2100. Purchase property in Cozumel, stay when you visit and rent it out the rest of the year; arrange accordingly, and the property can pay for itself.
How much does property go up every year in the Caribbean?
The average appreciation rates on Mexican property have been 15-20 percent in the past 5 years, and even higher in certain luxury developments. Beach front and residential resort properties have the most demand with average appreciation of 15-20% per year. Purchasing these types of properties in preconstruction increases substantially the potential appreciation. All along the Yucatan Peninsula, including the island of Cozumel, there is a shortage of high-quality real estate. Condos and houses in new developments are in high demand and sell rapidly.
Do I need title insurance?
No. Title insurance is the buyers decision, but is not required to purchase property in Mexico. At the present time there is no general use of title insurance in Mexico, although some American companies are providing coverage in some resort areas of the country (Stewart Title for one.) Title insurance guarantees your investment, and is issued after a complete historical search has been completed successfully. Regarding escrow, it is the Real Estate Company who acts as a “holding agent” for the involved parties, and for this reason there are few escrow companies in Mexico.
How will property ownership in Mexico affect my U.S. taxes?
Once you have purchased your home, the use you give it will ultimately determine the tax consequences regarding the IRS. You may list is either as a vacation home, strictly as a rental property, or as a principal residence. Each option has several advantages when filing your taxes, so it is recommended to consult your tax advisor to understand the details surrounding each choice.
Once in Cozumel, how do I get to the mainland, and where can I go from there?
Cozumel now enjoys the services of passenger ferries which arrive and depart from Playa del Carmen almost every hour. Once on land the Mayan Riviera offers limitless travel opportunities, with non-stop routes to Cancun, Tulum, Merida, and Costa Maya. The Yucatan Peninsula is an internationally recognized tourist zone, principally for its Mayan ruins of Uxmal and Chichen Itza, as well as for its ecosystem and its unique natural formations.
What is a Public Notary?
A Public Notary is perhaps the most important person you will deal with when you purchase property in Mexico. The Public Notary has the authority to witness and certify important business documents which require absolute authenticity. The role of a Public Notary is appointed directly by a State Governor, and have many requirements. A Public Notary must be Mexican and at least 35 years old, must have a degree in Law, pass a rigorous exam, and have 3 years work experience at a Public Notary office to be considered for the position. As mentioned earlier, the public notary will ensure that all documents and permits are in order so that the transaction can proceed.