González Calvillo, S.C.
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Certain restrictions apply for the ownership of real estate by foreigners, whether entities or individuals (including the investment made through Mexican entities in which foreign investment participates): (i) they have to agree before the Ministry of Foreign Affairs to be considered, with respect to those assets, as Mexicans, and waive protection of their foreign government; (ii) they may not acquire direct ownership of real estates for residential purposes in a strip of 50km along the beaches and 100km along the borders, indirect ownership may only be acquired through a special trust. These restrictions are only applicable to the ownership of real estate, no restriction applies to occupancy through other means such as a lease.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on lending for the purchase of real estate by foreign companies; nevertheless, the guaranties normally requested to secure the payment of the loan would have to be granted, comply with and be recorded in accordance to the domestic law where the real estate is located. The foregoing, in the understanding, however, that the purchase of real estate is subject to the restrictions established on section 1 hereof.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Real estate acquisition needs to be formalized before a Mexican Notary Public, and the public deed issued thereby registered with before Public Registry of Property (PRP) of the location of the real estate. Any guaranty over such real estate to secure loans also need to be registered before the corresponding PRP. Costs associated include Notary Fees and expenses (generally paid by buyer), registration duties with the PRP (payable by buyer), local land acquisition/transfer tax (payable by buyer) and federal income tax (payable by seller). Except for federal Income Tax, all other fees, expenses duties and taxes are determined locally and thus vary from State to State.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Yes. Under Mexican laws, real estate owners must pay a local property tax (impuesto predial), which may be paid on a yearly or bimonthly basis, the foregoing tax is determined by local authorities and thus varies from State to State. In strict sense, under Mexican law property tax has and is recommended to be paid by the owner; however certain structures may be implemented to recuperate the cost thereof to assimilate triple net type lease structures.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
In principle no; however, local State Congresses have approved laws and programs under which local authorities may be allowed to grant private investment incentives associated with the development of new projects in their States that generate new local jobs, which incentives generally entail deductions on the payment of local taxes, including property tax. The granting of such benefits is discretional and vary from State to State and are contingent on the magnitude/size of the project.
How is the ownership of Real Estate evidenced in your jurisdiction?
Ownership over any real property located in Mexico is first evidenced with the public deed issued by the Notary Public formalizing the transaction that granted ownership or created the security interest over the real estate, but most importantly and finally with the title ownership registrations before the local PRP or the certificates issued by National Agrarian Registry (RAN), the latter when dealing with ejido land (special agrarian land ownership regime). Title ownership needs to be in all cases verified with the information that appears on record at the real file (folio real) or agrarian file (folio agrario), held by the local PRP or RAN as appropriate. Best title to a real estate will be recognized to that which appears as owner in the referred folios.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
It is not possible. The PRP and RAN are public registries, and anyone may consult the information that appears in the relevant real or agrarian files.