Despite what you may have heard, owning real estate in Los Cabos, Mexico, as a foreigner is possible through a special legal instrument called "fideicomiso" (fide camiso in Spanish). Here's a simple explanation:

In Mexico, there are certain areas, known as "restricted zones," where foreigners are not allowed to own property outright. Los Cabos is one of these restricted zones. However, to enable foreign ownership and encourage investment, the Mexican government created the fideicomiso system.

In 1973, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the “restricted zone” which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast. This Law permitted ownership through a land trust or “Fideicomisco”.

What is a fideicomiso?

A “Fideicomisco” is a Mexican Trust that allows a foreigner to buy and own property in the restricted zones like Los Cabos. The Mexican Government issues a permit to a Chartered Bank of your choice doing business in Mexico. This allows the bank to act as the Administrator for the owner of the property. The bank acts as the “Trustee” for the Trust and the Owner is the “Beneficiary” of the Trust. The “Beneficiary” rights are very similar to Living Wills or Estate Trusts in the U.S. The law authorizes Mexican banking institutions to act as trustees. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy, and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer the title to a qualified owner.

Your control over the property:

Even though the bank technically holds the legal title, the foreign buyer has full control over the property. They can use, rent, sell, or pass it on to heirs as they wish. It's important to note that the bank's role is primarily administrative, and they do not have the right to use or sell the property.

The duration of the fideicomiso:

The fideicomisco is a Trust Agreement with the Bank, and therefore considered a contract that must have an end date. This is the reason for the 50-year term. A beneficial owner can renew the trust for an additional period of 50 years within the last year of each 50-year period, and this process can be continued indefinitely, providing for long term control of the asset.

Peace of mind:

The fideicomiso system is well-established and widely used, giving foreign buyers peace of mind knowing that their investment is protected under Mexican law. Many people refer to the trust arrangement in Mexico as a lease agreement, but this is not true. The home or property that you buy will be put into a trust with you named as the beneficiary of the trust – you are not a lessee. You have all the rights that an owner of the property in the U.S. or Canada has, including the right to enjoy the property, sell the property, rent the property, improve the property, etc.

Yes! You allowed to buy without citizenship or residency, and buying in Mexico actually makes getting temporary or permanent residency easier if that is something that you desire.

Financing is very complicated and can be expensive in Mexico. Interest rates average 7-10% per annum plus thousands of extra USD in closing costs. For this reason, we offer limited financing options for resale homes. However, there are many sellers who will finance the homes they are selling for a much more reasonable interest rate. For new resort projects, Developers will often offer financing as an incentive to take advantage of pre-construction pricing. Some sellers will also offer to carry a portion of the sales price back usually for 3-7 years with a balloon payment.

It is very challenging for foreign buyers to obtain a mortgage directly from Mexican banks. Some banks might offer mortgage products to Americans or Canadians, but the terms and conditions can be restrictive and carry very high interest rates and down payment requirements. Due to the limitations and complexities of securing a mortgage in Mexico, many people opt to purchase properties in Los Cabos with cash. If you have the financial means to do so, this can greatly simplify the buying process and remove the need to deal with mortgage-related issues. Some people also borrow against their homes in their native country to come up with the cash needed to purchase in Cabo.

In some cases, buyers in Los Cabos might explore seller financing options. This involves the seller acting as the lender and allowing the buyer to make payments directly to them over an agreed period. While this can be an alternative, it's essential to approach such arrangements with caution and ensure all terms are thoroughly understood and legally documented. Angelique has the expertise and experience to help guide you and help you navigate the intricacies of buying in Mexico. Please contact her to discuss all of your financing options.

Los Cabos and the Baja peninsula has some of the most desirable climates and weather in the entire world. In late August through early October weather is less predictable and does carry a chance of wind, high heat/humidity, thunderstorms, and heavy rain. Although it is rare, Cabo can also sometimes experience a hurricane nearby. However, it only rains an average of 10 days total in Los Cabos during the entire year. Mostly in the “hurricane” season, you will have some hot and windy weather, and occasionally a power outage to deal with. Some people decide to buy special shutters to protect their homes, or purchase special insurance to help protect themselves in case something does happen.

One of the things that is unique about Angelique is that she is passionate about getting to know her clients’ desires, and finding what they are looking for. She spends hours each day familiarizing herself with all of the homes on rhw market, and new developments. Knowing the inventory of properties in the region so intimately, she is able to find clients what they are looking for. If it’s not listed yet, when it comes up, she is always ready.

That being said, the region has a very diverse range of price points, and Angelique is always finding the best deals. If your budget is $300,000 or $30,000,000, there is a place for most everyone in Cabo.

Property Taxes

Property taxes are very low in Los Cabos, BCS, and average about $300-500 USD per year for a home. The Mexican tax system has been subject to comprehensive tax reform legislation enacted principally in 1986 and 1988. Although this tax law is subject to change we have supplied this information to better help our customers understand the basic tax laws with the emphasis on your real estate purchases and sales. Taxes are always to be considered in your real estate transactions and this is even truer when as a foreigner it is possible that two countries may claim tax jurisdiction over you and your property. Various taxes and procedures with regards to your transactions are calculated somewhat differently here in Mexico, with the key points being; can you claim as a tax resident? When is a property subject to tax? And to know exactly what taxes you can be subject too. YourCabo Real Estate feels it is very important to always consult with a local tax consultant or Notario for up to date information.

Understanding the tax laws of Mexico is an extremely important part of real estate ownership in Mexico. Angelique can help answer all your questions, and direct you to the correct information.

Purchasing Taxes:

The transfer tax in Mexico is at the rate of 2% of the purchase price. It could be said that the most important thing that we can stress is to always properly record your purchase price at full value and pay this tax. It is not a good idea to save a little by recording a lower purchase price as this can often be heard as a suggestion but should never be considered. If a lower sales price is registered, basically the seller will avoid some of their 30% capital gains tax and in the future when it comes time for you to sell, you will be forced to pay a higher amount of capital gains tax that is not necessary. Pay the 2% tax and avoid the 30% tax.

Inflationary Credits:

As soon as you have paid your 2% acquisition tax you are now eligible to receive an inflationary credit for every year you own your property. This credit will be added to your base purchase price when you sell your home and can be very substantial in some cases.

Capital Gains Tax Exemption:

Mexico provides its residents with a tax incentive for residents that sell their personal residences. The law states that after 2 years of ownership you may sell your personal home and be capital gains exempt. This tax exemption is for Mexican Nationals but also applies to some foreigners with their primary residence here in Mexico.

It is not necessary to have a special Immigration Visa at the time of purchase of the real estate. When you have decided you want to stay for extended periods of time, you may consult your local Mexican Consulate Office on Temporary and/or Permanent Visa applications. This may help to mitigate the Capital Gains Taxes when you sell your property.

Yes! Angelique has a solid list of trusted partners that she can recommend for renovation projects, home repairs, and more. This is just another benefit of working with Angelique, as building these local relationships has taken years, and can be invaluable to buyers that want to update or flip properties.

Living in Cabo is like living in a dream. The weather is near perfect, the people are charming and amazingly hospitable. The way of life is much slower, less anxious, and more joyful. It is surprisingly safe, and crime is very low. The scenery is some of the best in the world and no matter your interests or hobbies, there is always something to do, explore, and enjoy. The Mexican culture is rich, and the diversity of food is amazing. Begin your journey of living your Cabo Dream today!