Buyer FAQ
Buying real estate in San Miguel de Allende — closing, fideicomisos, taxes and the process end to end.
Is financing available?
The Short Answer
Yes, but generally speaking, it’s not a good option because it complicates the process and is expensive. However, there are some alternative options that might be a possibility.
To learn more about financing, see The In-Depth Answer.
As a buyer, what costs should I expect?
The Short Answer
As a rule of thumb, we advise buyers to expect up to 6% of the purchase value for closing costs. Often, the costs end up only a little over 5%, but they can go as high as 6.5% for more expensive properties.
To see a breakdown of these costs and for more details, see The In-Depth Answer.
Do I have to be in San Miguel for closing?
The Short Answer
No. However, you will need to give someone a Power of Attorney (POA) so that they can sign on your behalf, in person, on closing day.
If you are a buyer, there are some occasions where someone can sign on your behalf as gestor oficioso with no POA required, but a seller always has to have a POA.
A POA can be completed both within and outside of Mexico.
To learn how to create a POA and for more details, go to The In-Depth Answer.
Are asking prices negotiable?
Yes, asking prices are always negotiable.
A buyer usually offers below the asking price, but when there are competing offers, the buyer may offer above the asking price.
Knowing a little about the current market can help you make a better offer.
Realty San Miguel regularly publishes the current trends in our Market Update. In a booming market, the actual sold price may average just 2% - 3% below the asking price, while in slower times the actual sold price may average closer to 10% below the asking price.
If you would like to receive our Market Updates, send us an email from any of our email forms and check the “Receive Market Updates” box.
Can you show me properties listed by other agencies?
Yes, any of the Realtors at Realty San Miguel can show you any property you may find on any other website. We are all active members of our Realtor association (AMPI).
In addition, Realty San Miguel has now integrated the MLS directly into our search engine. So if you're using our property search tool, all of the MLS listings, even listings belonging to other agencies, will show up in one convenient place.
We recommend that you meet and get to know one of our agents. They will show you properties that best fit your needs, vs. only showing you their own listings, or only Realty San Miguel’s listings. They have often seen many other listings, have a good idea which ones would suit your needs, and can give you an opinion on how well the property is priced.
Are property taxes expensive?
No. The annual municipal taxes on property are very modest here in San Miguel de Allende. For median home values they amount to just a few hundred dollars a year. If you pay before the end of January there is a 15% discount. This tax is called the “predial” and the office that does the assessments is the Predial Office.
Do I need a permit or bank trust to purchase a property?
Every foreigner purchasing a property in Mexico needs an SRE permit. This permit comes from the Secretaria de Relaciones Exteriores.
However, purchasing a property in San Miguel de Allende does not require that the property be held in a bank trust; you can hold the fee simple title.
Who pays the sales commission?
The seller pays the sales commission. This cost is not something that the buyer needs to worry about.
Can you manage my property?
Several agents within Realty San Miguel do provide property management services. Ask one of our agents to introduce you or give you their contact information. When it comes to property management, these agents are working independently of Realty San Miguel.
How can Realty San Miguel help me if I'm still months away from buying?
It's never too early to connect with one of our agents. Some clients purchase a property on their first trip to San Miguel, but many are still navigating all of the decisions of retirement and/or an international move, and we know that this is a process that can last many months and possibly require several trips.
Even if you are months away from making a decision, it would serve you well to meet with one of our agents and let them give you a tour of various areas that are a potential fit for your needs and desires. Then, as you continue to visit our website looking for prospective properties, you’ll have a better idea of the specific areas you may want to live in and already have a relationship with someone who is happy to answer your questions as they come up.
We want to be a part of your process and provide you with the most accurate and up-to-date information along the way.
Do I need a Mexican bank account to purchase property?
No, it’s not necessary to have a Mexican bank account to purchase a property. However, for ongoing maintenance, paying maids, gardeners, property managers, and more, it will make your life easier.
What is the purchase process?
The process to purchase property in San Miguel is fairly straightforward.
After you have chosen the property you like the best, a written offer to purchase is prepared by your agent and presented to the seller’s agent. This offer includes the offered price and other details such as the length of time the offer is valid, a request for inspection, the preferred notario, deposit requirements, escrow requirements, the closing date, and so on.
The seller may counter on the price, the closing date, or any of the other terms specified. Although some offers to purchase are immediately accepted, some will go back and forth a few times between the seller and the buyer before the two parties come to an agreement.
When the offer to purchase is accepted, both the buyer and the seller will sign the original offer with the annotated revisions or, a new version, which includes all of the revisions, will be drafted and signed by both parties. Although some buyers and sellers go to closing using this original offer to purchase, it is not unusual that one or both parties request that the notario draft a more formal Contract to Purchase based on the final offer to purchase, and both parties will sign again.
Once the Contract to Purchase has been signed, an escrow account is opened, which requires all parties to also sign the escrow agreement.
The next step is the inspection. A specific number of days are usually specified for the buyer to complete the inspection and make the deposit. Generally, our agency tries to facilitate the inspection and receive the results before the buyer transfers the deposit.
Once the inspection report is received and accepted, the buyer will transfer the deposit to the shared escrow account. This amount is usually 10% of the purchase price plus half of the escrow fees.
It is the buyer's 10% deposit that signifies that the property is officially "under contract" and can no longer be shown to other potential buyers.
However, before this deposit is made, the property can continue to be shown. If a competing offer comes in at this stage in the process, in most cases it will be held as a back-up offer in the event that your deal doesn't go through.
While the inspection and deposit are being completed, the notario will simultaneously prepare and ask you to sign the permit required for foreigners to purchase a property in Mexico. This permit is most often referred to as an SRE permit.
As the closing date approaches, your agent will also be working with the notario to finalize your closing costs and calculate the total amount of money you will need to transfer to the escrow company to complete the purchase. The final transfer will include the remaining 90% of the property price, your closing costs, and an extra amount to cover fluctuations in the exchange rate. Generally speaking, this final transfer must be received by the escrow company three to five days before closing.
It is not until the day before closing that the notario can "fix" the exchange rate which will be used at closing and which is necessary to calculate both your exact closing costs and the capital gains tax of the seller. Once these final figures are "fixed," the agents involved will draft the distribution of funds document that both the buyer and the seller will sign at closing.
At closing, the seller's agent or representative is required to present several documents. The first is proof that any domestic employees who were working at the property have been properly terminated and paid the required severance. This is to protect the buyer from inheriting any previous employee disputes or liabilities.
In addition, property tax receipts and utility bill receipts are also presented as paid. If these bills have not been fully paid, adjustments will be made to each party's proportional share and will be added or subtracted to the distribution of funds.
Both the buyer and the seller will sign the new deed, as well as a “know your client” form required by the notario.
Once the transaction is completed and the new deed and distribution of funds has been signed by all parties, the notario securely sends these documents to the escrow company and authorizes the distribution of funds according to the agreed upon terms.
Before you leave the closing, you will receive a simple copy of your new deed. It will take from three to eight weeks for you to receive the deed after it has been accepted and recorded in the public registry.
We like to say that although the closing process isn’t rocket science, it does include several hoops to jump through and frequent rule changes. Our agents not only stay up to date on these changes, but they are also well trained in the whole process, and work with our in-house closing specialist to make the process as smooth as possible. You can rely on our experienced team to answer your questions and protect your interests from start to closing.
Should I do a property inspection?
Even when a property is being sold in “as is” condition, we generally recommend having an inspection done just to ensure that you aren’t unknowingly inheriting a major issue.
The exception would be if you are buying a property with the intention of doing a total or major renovation, where much of what is existing will be upgraded anyway.
Can I rent my house via Airbnb?
Yes, it’s possible.
Do note that the city of San Miguel de Allende requires an annual permit and liability insurance, and collects fees of about $45,000 MXN yearly.
Most clients use a facilitator ($100+/- USD) to handle the permit process.
If you’d like, one of our rental agents can point you in the right direction or connect you with a facilitator.
Should I register the deed in more than one name?
Whether or not to put your spouse, partner, or children on the deed is really an individual choice and usually based on your existing financial planning criteria.
However, in general, the more people named on the deed who have resident status in Mexico, the more tax exemptions will apply. Additionally, if the value of your sale goes beyond the exemption amount, the more people on your deed, the lower your capital gains tax will be when you sell your property
Unless you have good reason to not name those close to you as an owner, we generally recommend also putting your spouse or partner on the deed as an owner, and occasionally, your children.
However, be cautious when putting minor children on the deed. To sell a property where a minor child is one of the owners requires approval from a judge and is rarely approved.
Why is a permit from the government necessary to purchase property in Mexico?
For any foreigner to purchase a property in Mexico, they must have a permit from the federal government. The permit proves that you are in the country legally and documents your status. The permit also states that you will be treated like a Mexican national in the ownership of the property.
The notario will obtain the permit on your behalf, but there is a cost of a few thousand pesos for the processing. It is often referred to as an SRE permit because it comes from the Secretary of Foreign Relations or Secretaría de Relaciones Exteriores.
The permits are property specific so it is impossible to obtain one until you have a property under contract. In addition, an SRE permit is required to have before closing. All of our agents are very well versed in this process and can help you if you would like to connect.
How do property inspections in Mexico differ from those in the US or Canada?
Property inspections in San Miguel are a somewhat new part of the buying process. For many years properties were only sold in “as is” condition. Then Realtors begin recommending that an inspection be done to make sure that buyers weren’t unknowingly taking on any major problems.
Today, inspections are common but are still not on par with the U.S. Although most inspectors will find major problems, they may not find every detail as a U.S.inspector would. A buyer can negotiate with a seller concerning defects in the house, but it is advisable to expect that only major issues will be addressed, while minor defects will likely need to be corrected by the buyer independently.
Inspectors here do not carry insurance, and it is unlikely they will offer any compensation for something they missed.
The good news is that plumbing, electrical, and painting repairs can be completed at a fraction of the cost compared to in Canada or the US.
Can I pay my closing costs with physical cash?
In most cases, but not all, the notario will accept cash for the closing costs. If you want to pay your closing costs in cash, talk to your Realty San Miguel agent, who will coordinate with the notario.
Can my 401K or LLC purchase property?
The short answer is yes. However, we rarely recommend this way of purchasing property, and most clients end up choosing to hold the title in their name.
The most important reason is that there is no homestead exemption from capital gains for a foreign entity. So when it comes time to sell, your 401k or LLC will be taxed at the maximum capital gains rate and you will pay up to 35% on the gain or up to 25% on the whole transaction.
Additionally, the paperwork necessary to purchase as a foreign entity is somewhat excessive and requires all documentation of the 401K or LLC to be notarized and apostilled.
What precautions should I take when doing a wire transfer?
To ensure that you are not a victim of fraud, once you receive the wire transfer instructions, which you will need to send your deposit and final payment to the escrow company, talk to your agent over the phone and verbally confirm any wire transfer instructions before wiring funds.
The wire transfer instructions will not change between the time of your initial deposit and closing. Do not accept any change in instructions received via email or text.
Since I am purchasing in USD, why do I pay the closing costs in MXN (pesos)?
In theory, a buyer can pay their closing costs in USD. However, the notario has to pay all of the fees involved and the acquisition tax in Mexican Pesos (MXN), so they are going to have to exchange your dollars for pesos. And they generally use a fairly unfavorable dollar to peso exchange rate, hedging against a sudden and substantial change in the rate.
Therefore, it is almost always in the buyer's favor to pay all of the closing costs in pesos. On the day of closing, the escrow company will exchange your CAD or USD for the amount of pesos (MXN) necessary to cover the closing costs and according to the exchange rate of the day.
How do I give someone a power of attorney?
The In-Depth Answer
Creating a power of attorney (POA), which gives someone else the authority to sign for the purchase or sale of a property on your behalf, requires several steps.
1) We always recommend that the POA be drafted by the notario who will close your transaction, or one of the attorneys in his office, so that the language used will be acceptable to the notario when it's time to close.
2) If you are in San Miguel de Allende, the notario’s office can draft the POA for you and you will just have to go into their office to sign it. The document will be in Spanish, but if you do not speak Spanish, a translator will be called in to translate it for you on the day you sign. For both buyers and sellers, it will probably include language giving the person with the POA the ability to sign not only the deed but also the distribution of funds from the escrow company.
3) If you are not in San Miguel, after the document has been drafted by the notario, it will be sent to you and
a. if you are American or from a country that signed the Hague Convention, you will have it notarized and apostilled
b. if you are Canadian, from a non-Hague Convention country, or live near a Mexican embassy or consulate, you will take it to the Mexican embassy or consulate and sign before a consulate representative.
4) For buyers who are outside of Mexico and did not sign the application for a SRE permit while in San Miguel, the POA will probably also include giving someone else the authority to sign the SRE permit application on your behalf.
Why do I need to transfer more money than the exact closing costs?
The short answer is because of the fluctuations in the exchange rate between US or Canadian dollars and Mexcian pesos. You will normally pay all of your closing costs and acquisition tax in pesos, but the exchange rate between MXN and USD or CAD is notorious for its occasional significant fluctuations. Any changes in the exchange rate that occur between the time that you sign your Contract to Purchase and the date of closing have to be factored into the final closing costs.
Let's say your closing costs in pesos when you signed the Contract to Purchase were estimated at $510,000 MXN. If the exchange rate was 17 to 1 at the time, this would equal a total of $30,000 USD.
But, if by closing or even a couple of days before closing the exchange rate jumped to 16.5 to 1, the dollar amount would have also jumped to $30,909, costing you $909 USD more than you had originally calculated. Of course, this same dynamic can work dramatically in your favor as well. If the exchange rate went to 17.5, then your closing costs would be $857 USD less than you had originally calculated.
It's for this reason that we normally ask buyers to send an extra $1,000 or more, depending on the purchase price, to cover any changes in the exchange rate. The money that is not necessary will be wire transferred back to your bank account.
How does escrow work?
Escrow is a financial account that is shared between buyer and seller in which funds cannot be distributed without the consensus of both parties. In Mexico, the money is held in an account protected by a legal trust agreement.
The earnest money, or deposit (generally 10% of the transaction value), the balance due prior to closing, and the closing costs are sent to and held in this account.
At closing, the buyer and seller approve the distribution of funds to all parties involved in the transaction. Once the transaction is complete, the notario sends the distribution of funds document to the escrow company and authorizes the release of the funds. The escrow company transfers the funds accordingly and sends proof of the transfers to the notario and agents involved.
Who chooses the notario we will use for closing?
In theory, it is the buyer who has the right to choose the notario they want to work with. If you work through Realty San Miguel, we have notarios that we recommend and prefer to use.
However, sometimes sellers who will be subject to substantial capital gains taxes "shop around" their sale to various notarios until they find one that gives them the most favorable tax results. When this is the case, a seller may specify that they want to use a specific notario when the house is being shown. Sometimes, this issue doesn't come up until they are negotiating an offer.
Bottom line: although technically speaking the buyer chooses the notario, it is not uncommon that the choice of notario becomes a point of negotiation between the buyer and the seller.
How do I obtain a resident visa?
The main categories of resident visas in Mexico are residente temporal (temporary resident) and residente permanente (permanent resident). Both require either proof of a minimum monthly income or a fixed amount of money in your bank account. For most people who can satisfy this financial requirement, they are not hard to obtain.
The process must start outside of Mexico in a Mexican Consulate. You first set your appointment online, and then show up in person to submit your application. The approval process is usually less than 30 days, and in some Mexican Consulates, it can happen the same day. Once you receive approval, you have a few months to bring your approval letter to the immigration office in San Miguel de Allende. There, you will be issued your photo ID visa.
Some of our clients have completed the process after arriving in San Miguel by making their appointment in the Mexican Consulate in Laredo, Texas. They take the overnight bus from San Miguel to Laredo, go to their appointment, receive their approval letter the same day and then return to San Miguel.
Although the resident visa process is fairly simple, each Mexican Consulate handles cases a little differently, and the rules over the past few years have changed frequently. Realty San Miguel recommends that you meet with one of our agents, who will connect you with a visa specialist. These specialists will be up to date on any rule changes, make the appointments for you, and help you gather the required paperwork. Their fees are generally very reasonable, typically only a few hundred USD, and well worth the time and trouble you'll save if an important rule has changed.
Do I need a will in Mexico to purchase property?
It’s not necessary to have a Mexican will to purchase a property in San Miguel de Allende. However we highly recommend obtaining a Mexican will soon after you purchase.
If a property owner dies without a Mexican will, it can take months or years of costly legal work to probate the property so that the heirs can receive the title in their name(s). If the property owner has a Mexican will, the process is reduced to a few weeks or months, depending on the situation.
It’s important to note that a will from another country will not apply to your property in Mexico unless it has been translated and apostilled, and even then, the process of the will going through the Mexican courts will be longer than if the will was created in Mexico.
Does San Miguel have an MLS?
Yes, the Realtor Association (AMPI) in San Miguel de Allende does have an MLS. In fact, the property must be listed in the MLS before it can be shared in AMPI’s Wednesday network meetings, or presented via the agents’ email group.
Every property listed by Realty San Miguel is uploaded into the MLS so that the other 240+ agents in AMPI can have access to it.
What is required to open a Mexican bank account?
To open a Mexican bank account, you have to have either temporary or permanent residency (residente temporal or residente permanente). Either one is fairly easy to obtain for those who are of retirement age and have a source of income in their home country. If you qualify, it is always best to apply directly for residente permanente, which is good for life. Residente temporal, on the other hand, requires renewal and increases the cost over the long run.
Word of caution: if you are a US citizen and have more than $10,000 USD in foreign bank account(s) at any time during a year, you will be required to file an FBAR report to the US Treasury the following year. Penalties for non-compliance are excessive. For this reason, many property owners avoid holding more than $10,000 USD in their Mexican bank accounts.
If you’re ready to apply for a visa, Realty San Miguel can recommend visa specialists to help you, so feel free to connect with one or our agents.
How long does it take to receive the registered deed?
It normally only takes between three to five weeks to receive the registered deed.
However, since San Miguel de Allende is a small town and the public registry has limited staff, occasionally there are delays. Sometimes they are running several weeks behind, for example, when one of their employees is out on maternity leave and there is no one to replace her. For this reason, we often tell our clients three to eight weeks.
Which lawyers can close a real estate transaction?
How do I pay my property taxes?
The city has made it relatively easy to pay your property taxes (el predial).
Your first option is to pay online by going to the San Miguel government website here: https://pago-predial.sanmiguelallende.gob.mx/simprecad.php You’ll click on your type of account (urbana or rústica), which is indicated at the top of your predial form. You’ll then be asked to enter your “numero de cuenta”. This number is also at the top of your predial form, but note that you’ll need to start with the first letter, and add the rest of the digits. There should be 10 in total. From there you can pay through the banks provided, or print the bank info and pay at your preferred bank.
Your second option is to go to one of the predial cashiers in town, located within these buildings: Municipal Administration Building of San Miguel, Blvd de la Conspiración 130, from 8:00 a.m. to 4:00 p.m. SAPASMA en Prolongación de Alcocer No. 2, from 8:00 a.m. to 3:15 p.m. (enero y febrero) Municipal Palace, Principal 8, Zona Centro (in the Jardin) from 9:00 a.m. to 8:00 p.m.
How much is IVA?
In Mexico, IVA is a value added tax (Impuesto al Valor Agregado) that functions much like a sales tax in the US. The tax rate is 16% and is added to the purchase of any product or service, with the exception of food and drugs. It is not charged on your real estate transaction, but is added to the fees that the lawyers, notarios, and real estate agents/agencies charge for their services.
Can I pay for a property with (physical) cash?
There are buyers who occasionally pay a portion of their purchase in physical cash. However, since anti-money-laundering laws were updated in 2014, notarios are required by law to document how each payment (or partial payment) is made - bank transfer, cash, or cashier's check, etc.
There is a legal limit of how much cash can be used, and that amount seems to be increasing with time. In 2023, the limit was $800,000 MXN. Paying cash beyond that amount triggers an automatic reporting to SAT (the Mexican equivalent of the IRS).
Many sellers will continue to live in Mexico after their sale and are open to receiving part of the purchase price in physical cash. However, those who are moving to another country are usually not willing to accept any portion of the purchase in cash.
If you want to purchase using some physical cash, talk to one of our agents to make sure you are within the legal limits and that the notario who will close the transaction is in agreement.
What is a notario?
A notario in Mexico is very different from a notary public in the US. In addition to having a law degree, a notario has completed additional legal studies specifically related to the work and responsibilities of a notario, and has even competed for the title. They are appointed by the governor of each state based on population.
Unlike regular attorneys, they are the only ones authorized to sign off on and record real estate transactions, last wills and testaments, and other legal documents. Their records are kept in their office for life and are property of the state.
By law, notarios are required to be neutral in every transaction.
What is an SRE permit?
For any foreigner to purchase a property in Mexico, they must have a permit from the federal government. The notario will obtain the permit on your behalf, but there is a cost of a few thousand pesos for the processing. Realtors call it an SRE permit because it comes from the Secretary of Foreign Relations or Secretaría de Relaciones Exteriores.
The permits are property specific, so it is impossible to obtain one until you have a property under contract. In addition, an SRE permit is required to have at closing. All of our agents are very well versed in this process and will help you if you would like to connect.
What is the MLS?
MLS stands for the Multiple Listing Service, which is standard in the U.S. and Canada, and makes all listings easily accessible to every agent who is a member of AMPI, the local professional association.
Realty San Miguel has now integrated the MLS directly into our search engine. So if you're using our property search tool, all of the MLS listings, even listings belonging to other agencies, will show up in one convenient place.
What is an apostille?
An apostille is a document authorized by international treaty that authenticates a legal document signed in one country for use in another.
In the US, it is easily obtained from the Secretary of State in each state (or the equivalent) or through an online service.
Can I have a document notarized online?
I know of a few clients who have been successful with having a document notarized online for leasing agreements and some banking documents.
However, if you need a document notarized and apostilled for closing on a property, you will need to check with the apostille service that you are using - in most cases, the apostille service will require you to be there in person to notarize a document. The notario might require you to be there in person as well.
Does Mexico recognize a document that has been notarized in the US or Canada?
To be recognized by Mexico, a document notarized in the US or Canada also has to be apostilled or notarized at a Mexican Consulate.
Are there any tax deductions for renting my house?
We are not experts on taxes, so we recommend that you talk to your tax advisors. Keep in mind that potentially, you'll be dealing with two tax jurisdictions - Mexico's, and that of your home country.
Many find it helpful to ask other homeowners how they handle their rental income and expenses both here in Mexico and in their home country.
What is IVA?
IVA is a value added tax that Mexico collects on ALL sales for products and services, with the exception of real estate, food, drugs and medical care. It is similar to what the US and Canada charge as a sales tax.
As it relates to your real estate transaction, IVA is not charged on the sale of your property, but is charged on the fees and commissions that the lawyers, notario, and real estate agents/agencies charge for their services. IVA in Mexico is currently 16% and has been for many years.
How much is the commission on a sale?
In San Miguel de Allende, most agencies charge 6% commission plus IVA (value added tax). With few exceptions, it is the seller who pays the real estate commissions.
Once paid, the commission is usually split equally between the seller's agent/agency and the buyer's agent/agency.
How can I get a will done?
A will is generally hand written in your first language and then the Notario will translate it to Spanish and have you sign it. Compared to the US or Canada, they are fairly inexpensive and only cost a few hundred dollars (normally less than $500). Most notarios provide a simple fill-in-the-blank format that is suitable for our clients who just own one or two properties and who will leave the properties to family members.
See also "How do you recommend we make a will?" in our FAQ section or connect with one of our agents for more help.
Do I have to purchase my property in a bank trust?
No, in San Miguel de Allende you do not have to purchase your property in a bank trust. In San Miguel, foreigners can purchase their property and hold the title in their name.
Bank trusts are only required for foreigners who purchase properties within 50 kilometers of the coastline or within 100 kilometers of a land border. Owning a property within a bank trust can greatly increase your closing costs. In addition, the annual fees for maintaining this trust range from $500 - $1,500 USD per year.
Foreigners buying property in San Miguel will enjoy the advantage of not having to purchase within a bank trust in order to buy property here.
Do I have to be in San Miguel for Closing?
The In-Depth Answer
No, it is not necessary to be in San Miguel for the closing. However, you will need to give someone a power of attorney (POA) so that they can sign on your behalf, in person, on the day of closing. These powers of attorney are usually drafted by one of the attorneys in the notary's office and, unless otherwise specified, allow the person with the power to also sign off on the distribution of funds from the escrow company.
A power of attorney executed in San Miguel is fairly straightforward, costs less than doing one outside of Mexico, and only requires a day or two's notice to the notary to draft it for you.
If you are a buyer, there are times when someone can sign on your behalf as an officious agent without requiring a POA. a power of attorney, but a seller should always have a power of attorney. A power of attorney can be given to a trusted friend or family member; some clients prefer to give the power of attorney to one of the attorneys at the notary’s office.
Whether you signed in or out of San Miguel, we recommend that your real estate agent work with the notary or one of his attorneys to draft the POA for you so that the notary will accept the language as is on closing day.
A power of attorney written by a notary in San Miguel will be in Spanish. When you go to the notary's office to sign, there will be a translator to translate the document for you if you don't speak Spanish.
Completing a POA from Outside of Mexico
If you're outside of Mexico, you'll want to have someone from the notary's office draft the document. Often, it will be sent to you in English on one side and Spanish on the other.
Once you receive the document, you have two options:
Option #1: If you live in the U.S. or a country that signed the Hague Convention, you can print out the POA document provided by the notary and take it to any notary public in the U.S. (or your country) and have it notarized. Once it's notarized, you also need to get that document apostilled and then overnight mail it to your agent or the notary.
If you live in the U.S. near a Mexican consulate, you can also simply go there and have them notarize the document.
Option #2: If you live in Canada or another country that is not a party to the Hague Convention, you will need to go to a Mexican Consulate. You will take the document that the notary sent you and have it validated. Each Mexican consulate has different rules and deadlines for validating a document. Some consulates will want to rewrite the document and ask you to come back in a few days to sign it. Others will actually use the document that you take. Check with your Mexican Consulate nearest you for requirements.
If you are a buyer, in addition to giving someone power of attorney to sign on your behalf at closing, you can also give a POA permission to have someone in San Miguel sign on your behalf to obtain your SRE permit and sign for the distribution of funds at closing.
Work closely with your agent, who can guide you through this process.
Is financing available?
The In-Depth Answer
Financing for foreigners is available in Mexico, but it complicates the process and is expensive. For example a "good" mortgage rate is around 12%. Additionally, it can increase your closing costs by 2% to 6%, which is on top of the regular closing costs of up to 6%. Although a lender will occasionally provide a loan with as little as 20% down, most require around 40% down.
Here are a few alternatives:
Most of our clients who need financing choose to refinance or obtain a second mortgage on a property they own in the US or Canada to have the cash they need to purchase in San Miguel de Allende. The process of obtaining financing is much easier outside of Mexico and the interest rates are much lower.
Occasionally there are sellers who are willing to finance with an interest rate similar to mortgage rates in the US or slightly higher. On a few occasions we have seen sellers willing to finance for 7 to 15 years, but most sellers are only willing to do some type of "bridge" financing for one to five years. It may be an amortized loan only for the term, amortized payments based on a 20 year loan with a balloon payment due at the end of the term, or an interest only loan with a balloon payment due at the end of the term. Additionally, most sellers will only finance for 50% or less of the value of the property. This means the buyer needs to have at least 50% of the purchase price to put down.
As a buyer, what costs should I expect?
The In-Depth Answer
As a rule of thumb, we advise buyers to expect up to 6% of the purchase value for closing costs. Often, the costs end up only a little over 5%, but they can go as high as 6.5% for more expensive properties.
Normal closing costs consist of:
- the appraisal, transfer, and legal fees, as well as the acquisition tax that is associated with and charged by the notario, all of which add up to about 6%.
-$300 to $500 USD for the buyer's half of the escrow fee.
-$400 to $500 USD for each foreigner named on the deed to receive their SRE permit (required to purchase).
-Perhaps a few hundred dollars more if one or more of the buyers need someone to close for them with a Power of Attorney (POA). If you get a POA here in San Miguel, the cost is usually less than $500 USD. If the Power of Attorney is signed and notarized outside of Mexico and requires an apostille or a trip to a Mexican consulate, the cost will increase, but will probably still be less than $1,000 USD.
- An extra $1,000USD - $2000 USD for your final transfer to cover any fluctuations in the exchange rate, which will affect that portion of the closing costs that are paid in pesos. Unless there are huge changes in the exchange rate between the date that the property was put under contract and the closing date, the majority of this amount is returned to the buyer.
How do I authenticate, or apostille, a document when I’m outside of Mexico?
An apostille is a certificate that authenticates all of the following:
- the signature of a public official (e.g, a notary public) on a document for use in another country.
- the capacity in which that public official acted, and
- when appropriate, the identity of the seal or stamp which the document bears, e.g. a notary public seal.
Apostilles are usually provided by the Secretary of State (or equivalent) of the state where you signed the document. Apostilles are accepted by all of the countries that signed the Hague convention, which include both Mexico and the U.S.
There are at least two ways to get a document (such as a power of attorney) apostilled.
1. It is possible to do it yourself. First, find a notary public to sign and seal the document. Then you either send it or carry it into the Secretary of State Department (or equivalent) in your state. They will verify the document, which is actually verifying that the notary public that you used is licensed and is who they say they are. This is usually done by attaching a verification page from the State Department.
The fee in this case is typically $10-25 USD for the apostille and a small amount for the notary, typically $2 - $25 USD.
2. Depending on where you live in relation to your state's State Department office, it may be easier, faster and perhaps cheaper to use an apostille service. An apostille service will often come to your house or meet you in a public place and notarize your document and then send it to the State Department on your behalf. Apostille services charge a fee of $300 USD and up.
Whether you are completing this process yourself or using an apostille service, search the internet with the word apostille and the name of your state. Several options will come up. If you are pressed for time, get on the phone and talk directly to the State Department or an apostille service. We have seen State Department websites that say their turnaround time is only 7 days, but when talking to them on the phone we find out that they are running three weeks behind.
Since Canada is not a signatory of the Hague Convention, which authorizes the use of an apostille, Canadians and other citizens from non-Hague Convention countries need to have their POA authorized at a Mexican Embassy or Consulate.
How do you recommend we make a will?
In Mexico, wills have to be written in Spanish and signed in front of a notario. The cost is fairly economical compared to a will in the U.S. or Canada.
Most notarios provide a simple fill-in-the-blank form that is suitable for clients who own just one or two properties in Mexico and who plan to leave these properties to family members. The will format identifies you, your heirs, an executor, and substitutes, in case an heir precedes you in death and/or a named executor isn't available or declines the role.
Most notarios require you to hand write the will and then they will translate it to Spanish. When it’s time to sign, they will provide a translator to read it back to you before you sign. The handwritten copy will be kept in the
notario´s records.
To avoid conflicts between the terms of your Mexican will and a will you already have in your home country, we recommend that your Mexican will clearly state something along these lines, “This will only pertain to my property in Mexico." Your notario may already have a clause of this type in their standard form.
It should also be noted that a Mexican will doesn’t cover bank accounts. You will need to name the beneficiaries of your Mexican bank accounts with the bank when you set up your account(s).
Whether your situation is simple or more complicated, connect with one of our agents who can help you or connect you with a specialized attorney.
What documents are needed to rent a home?
The documents listed below will need to be provided to the agent representing the owner or the renter.
For Renters:
• ID
• Some kind of proof of the financial means to pay the rent
• Some landlords also do a standard background or credit check before they will rent to you.
For Owners
• ID
• Proof of ownership (usually a copy of the deed)
• Telmex or CFE bill that corresponds to the property.
What is the capital gains exemption?
The Short Answer
Similar to the homestead exemption in the U.S., the capital gains exemption discounts the amount of capital gains taxes you’ll owe.
Sellers have to meet several criteria to qualify, and the amount of the exemption is based on a Mexican financial index which fluctuates over time.
To learn more about these criteria and other details of the capital gains exemption, see The In-Depth Answer.
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