Purchasing a Vacation home in Puerto Vallarta
If you are buying real estate in Puerto Vallarta, a few regulations must be taken into account. For starters, there's a restricted zone. The restricted zone, is the area withing 50 km of the coastline or 100 km from the border of Mexico. All foreigners are prohibited to buy real property within this zone by the Mexican Constitution.
Foreigners can get property rights in this restricted zone when you are the beneficiary of a bank trust. Property rights give you the right to enjoy, give away, sell, use or improve the property. you will need an approval from the Ministry of Foreign Affairs for the trust. This permit can cost up to $1100. You will also need a permit of this Ministry if you want to buy a property that is not in the restricted zone. A bank trust is not required when you buy your property here. Your investment has to be registered too and that will cost somewhere between $285 and $330.
Be aware of people who will try to sell you “ejido” land, this agricultural land can only be sold by the Mexican government.
The trust will be granted for a period of 50 years, and you will be able to renew it after this period has ended. When you are depending on a bank trust, the bank will legally own the property but you as the beneficiary will be accountable to fulfill the terms of the trust. When a trust needs to be established you will have to pay a fee of about $500. The annual fees can be different one bank to another, so take a look around before you decide which bank you will go to. It is possible that you could pay multiple years at once and get a discount. When you are no longer satisfied with your bank, you will be able to move your trust to another finance company.
When you buy property rights through a bank trust, this must be handled by a lawyer and all documents need to be in Spanish according to Mexican law. Translation services will be offered to you.
Usually a 10% (or more) deposit is required when you buy a property in Puerto Vallarta. It can be hard to place this deposit in an escrow account, because they are not used very often in Mexico. In Puerto Vallarta you can find escrow services at Stewart Title. Sometimes there is a penalty clause is in your contract, try to avoid this. A penalty clause is not necessary if you have a deposit in escrow or trust.
An interim agreement or promissory agreement includes everything it would include in a US contract like, the price you agreed upon, chattels, the original deed from the seller and all the conditions to which you both have agreed. A letter to Telmex, the phone company is needed too.
When the bank trustee has signed the deed in front of a Notary Public, i.e. a lawyer, you'll have to pay your purchase price and you are the property rights are yours. The Notary Public usually charges .25% to .20% of the purchase price. This can all be taken care of in 45 days, if everything goes well.
You will have to pay a minimum of 5 percent of the purchase price on transactions exceeding $250,000 for closing costs.
The property taxes will be much lower than what you are used to in the US. This varies from state to state.
A Federal Maritime Zone fee will also be charged if your property is located within twenty meters of the highest tide mark.
In Puerto Vallarta the value added tax is 15%.