People who rent property in Mexico far outweigh the number who buy. This is because property prices are much higher than average incomes will allow people to afford, and although mortgages are now being proffered by Mexican banks (a few years ago they were virtually unheard of), at an average of 15% a year, they are expensive by current US and European standards. Property prices in Mexico have also risen substantially in recent years. To compensate the higher cost, cost of ongoing ownership is also relatively low in Mexico (maintenance, taxes, etc). Housing prices vary greatly, but an new construction 2 bedroom, 1 bath home will cost around $3,240,000 pesos or about $300,000 US dollars. Depending on quality and location this can rocket into the high 5,000,000 peso range or drop to low 2,000,000s.
Real Estate in México City is somewhat different than what the average person might expect in a city of this size. There are many upscale neighborhoods and homes and many inexpensive and less desirable areas and homes. What is missing is an adequate and affordable middle-class market. Much of the real estate activity in México City is due to relocation by large corporations which is taken care of through subsidies or even provided by the employer. The suburbs surrounding the downtown area offer the closest example of middle-class housing, but are outside of the main part of the city. In these cases, driving time must be considered.
Mexican Law provides for private ownership of land by foreigners, and its law is very specific about the way in which land rights should be transferred from seller to buyer, and also what type of lands are not eligible for public ownership. A Notary Public can guide buyers through the details. For a detailed guide to buying a house.
For such a large investment it is usually wise to hire a real estate agent who will find listings that meet your needs and arrange appointments. Advertisements can be found in the yellow pages of the phone book or on-line, but make sure that you are comfortable with your agent because a good agent can help you save a lot of money. The agent should have several years of experience living and working in the area. They should have an in-depth understanding of the locality and its neighborhoods. All of the major franchises, such as Century21, REMAX, Coldwell Banker, as well as regional and local independent agents are available. Property is also often 'marketed' by word of mouth and through networking. Tell people what your looking for and listen for promising leads.
Real estate can also be researched on-line to give you an idea of the market and offer a better understanding of what features and areas you are interested in. A couple of websites that will help acquaint you with a variety of homes are:
There are also a variety of costs and charges when buying purchasing a home:
Acquisition Tax: This Tax is paid on the sale value of the property and is equivalent to about 2% depending on the State in which you buy. This tax is paid whether the property is sold, transferred, donated, placed into trust, split off or merged.
VAT (Sales Tax): No Value Added Tax (Sales Tax) is payable on residential property. Commercial Property transactions are liable to VAT at the current rate in addition to the Acquisitions Tax.
Appraisal Tax: The Tax Authority may choose to perform a commercial appraisal of the property after you purchase it. If the appraisal value is more greater than 10% of the price you paid for it, you will be asked to pay 20% tax on the difference between the two amounts. This sum is due within 15 days of the date of the appraisal report.
Registry Fee: In order to have the Public Records updated, a 1.3% fee (based on the value of the transaction) is paid by the buyer.
Public Notary Fees: You will be required to pay fees for services provided by the Notary Public. These are about 1.5% of the transaction value, plus the cost of the official appraisal (as described in Valuation section, for tax purposes).
Foreign Office Permit: Your permit from the Mexican foreign office will cost around US$150.
Service Fees: If you are buying a house in a gated community, or an apartment, be sure to check on the annual service fees, and have these put in writing. Service fees can range from US$100 a year to US$1000+ a year, depending on location, number of houses or apartments in the enclosure and amenities offered.
Title Insurance: When you buy property in Mexico, you would do well to consider purchasing Title Insurance. Rates are based on the sale value of the property and are charged at around US$5-US$5.50 per US$1,000 of the value.