Navigating Real Estate in Cozumel Mexico: A Guide for Foreign Buyers in 2024
How to Buy Real Estate in Cozumel Mexico as a Foreigner? Are you harboring dreams of living abroad, vacationing regularly, or perhaps retiring in Mexico? If so, the prospect of purchasing a property might be on your mind. But can you, as a non-citizen, buy real estate in Mexico? Specifically, what about acquiring land near the beach or on the picturesque island of Cozumel? These are common questions for those contemplating a move to Mexico, and here’s everything you need to know.
Can Foreigners Own Property in Cozumel Mexico?
In short, the answer is yes, foreigners can own property in Mexico. However, the location of the property will determine the purchasing process.
Mexico designates a “restricted zone,” encompassing all land within 100 kilometers (62 miles) of the country’s border or 50 kilometers (31 miles) of an oceanfront. Since Cozumel is an island, the entirety of its land falls within this restricted zone.
Property within the restricted zone can still be acquired by non-Mexican citizens, but the process involves ownership through a Mexican corporation or a trust agreement with a Mexican bank (known as Fideicomiso).
For properties outside the restricted zone, direct purchase is possible.
Buying Mexican Property in the Restricted Zone: Trust or Corporation?
If your dream is to own a piece of paradise near the beach or border, you’ll need to decide whether a trust or corporation is more suitable for your situation. Let’s delve into the pros and cons of each option.
1. Buying with a Trust (Fideicomiso de Zona Restringida)
A Fideicomiso is a trust for real estate in a restricted zone, commonly used and facilitated by a Mexican bank. Here’s a breakdown:
- Residency not required.
- Beneficiaries can be designated for inheritance purposes.
- Property not in your name, protecting against personal debts.
- Potential tax exemptions for residents.
- Initial bank fees and annual costs.
- Can extend the buying process.
- Trust renewal every 50 years.
Best for: Foreigners interested in personal property.
2. Buying with a Corporation
A Mexican corporation is considered a Mexican citizen under the law, enabling property purchase in the restricted zone. Consider the following:
- Property title is in the corporation’s name.
- Potential tax savings for commercial purposes.
- Establishes a legal income source in the country.
- Requires an accountant.
- Need residency for active corporation involvement.
- Restricted payment options for company expenses.
- Capital gains tax may apply upon property sale.
Best for: Foreigners with residency aiming for commercial property or business ownership.
FAQs How to Buy Real Estate in Cozumel Mexico as a Foreigner?
Here are answers to frequently asked questions about foreigners owning property in Mexico:
1. What’s the history of Mexican laws on foreigners owning property?
In 1917, only Mexican citizens could own land, but the Foreign Investment Law in 1973 allowed foreigners to purchase outside restricted zones. The current law from 1993 permits non-Mexican citizens to buy property in restricted zones through Fideicomiso or a corporation.
2. What is the restricted zone in Mexico for property buying?
The restricted zone includes land within 100 kilometers (62 miles) of the country’s border or 50 kilometers (31 miles) of the oceanfront.
3. What are the risks of buying property in Cozumel Mexico?
While buying property in Mexico has become safer due to more liberal laws, risks include verifying ownership, language barriers, varying trust rights, and property condition issues. Our experienced team at Karen Cozumel Realtors ensures your interests are protected throughout the process.
4. How do title deeds work in Mexico?
In Mexico, property ownership is substantiated through a legal instrument known as “escritura,” meticulously drafted and authorized by a notary. The notary, a state-appointed attorney, holds a pivotal role, acting as a neutral and responsible figure overseeing the interests of all parties involved in the real estate transaction. Importantly, the buyer has the prerogative to select the notary.
Our dedicated team, in collaboration with the chosen notary, is committed to ensuring a comprehensive due diligence process. This proactive approach aims to prevent potential issues and discrepancies, safeguarding the integrity of the transaction. By meticulously verifying the correctness of the escritura before recording, we mitigate the risk of additional time and costs, providing you with peace of mind throughout the property acquisition
5. Understanding Financial Commitments: Property Taxes and Insurance
One of the appealing facets of investing in property in Cozumel, Mexico, is the significantly low cost of property taxes, especially in comparison to the high property taxes often experienced by our foreign investors. Let’s delve into the financial aspects you need to consider:
Property Taxes in Cozumel: A Low-Cost Advantage
In Mexico, property taxes are notably low, presenting a compelling advantage for prospective buyers. Unlike the substantial property tax burdens faced in some countries, Cozumel offers a refreshing change with its budget-friendly property tax rates. This financial relief is particularly enticing for foreigners customed to hefty property tax bills in their home country.
Navigating Insurance Requirements
While property insurance is not mandatory in Mexico, it is highly advisable to safeguard your investment against unforeseen circumstances. Property insurance can cover damages caused by natural disasters, theft, or other incidents, providing valuable protection for your asset.
- Property Taxes: Enjoy the benefit of remarkably low property taxes, offering a cost-effective advantage for property owners.
- Insurance: While not obligatory, considering property insurance is a prudent choice to protect your investment.
Our experienced team at Karen Cozumel Realtors can guide you through the intricacies of property taxes and insurance, ensuring that you make informed decisions aligned with your financial goals. Feel free to reach out to us for personalized assistance tailored to your specific needs.
Invest wisely and confidently in Cozumel’s real estate landscape, where your financial well-being is complemented by favorable tax considerations.
Buy Property in Cozumel Mexico with Confidence in 2024
Ensuring a smooth property acquisition in Mexico, whether within restricted areas or not, hinges on placing trust in reputable real estate professionals. When engaging with real estate experts, inquire about their possession of a professional state license known as “matricula.”
At Karen Cozumel Realtors, our seasoned team, proficient in multiple languages, is committed to transforming your vision of owning property in paradise into a tangible reality. It’s noteworthy that our entire team possesses a valid State license (matricula) for our state, Quintana Roo.
We proudly stand as the sole company on the island currently (december 2023) holding this state license as a collective entity.
Reach out to us today, and let us usher you through each phase of the process with unwavering confidence and ease. Your dream property in Cozumel awaits, backed by a team with the expertise and credentials to make it a seamless reality.
Buying restricted Mexican property using a trust (Fideicomiso de Zona Restringida)
A Fideicomiso de Zona Restringida is a trust for real estate property located in a restricted zone. It’s the most commonly used option. To get a Fideicomiso, you will enter into an agreement with a Mexican bank of your choice which will become the trustee that holds the title of the property (since you can’t).
You become the beneficiary of the trust which typically enables you to use, improve, sell, rent, mortgage, and will the property as you’d like. The trust rights you receive will depend on the specific wording of the trust agreement. In most cases, the bank is given no responsibility for the property so trustees have the freedom to do whatever they want with it.
An experienced real estate agent can set this up for you in a seamless process.
Find your dream home in paradise and ensure your interests are protected!