Just a few years ago, the forecast was bright for overseas buyers looking to snap up a beachfront property in Mayan land. Mexico appeared to be on the verge of changing the law to allow foreigners more direct ownership of land. Alas, that proved too good to be true. A bill enabling international buyers to claim prime properties in the Latin American country’s so-called “restricted zone” was approved in 2013 by the legislature’s lower house but has since stalled in the Senate and it looks like the status quo will remain. Dr. Harold Dutton, professor at the Institute for Research on Public Policy and Government at the University of Guadalajara, said that lifting the restriction would require a constitutional change, meaning that half of the state legislatures would have to approve it. Mexico has 31 states, plus the Federal District. "At this moment, I see that being very difficult," said Dutton. "Mexico has this sort of double talk about foreign ownership. We are very nationalistic." The sponsors of the bill could not be reached for comment. Foreigners looking to buy real estate in Mexico need a permit from the Department of Foreign Affairs. In order to purchase in the “restricted zone” — within 100 kilometers (about 62 miles) of national borders or 50 kilometers of coastlines — they need a bank trusteeship, known as a “fideicomiso,” according to the department’s website. The bank holds the deed to the property, while the buyer holds the rights over the land for a maximum of 50 years. The owner has the right to name heirs and substitute beneficiaries within the trust. Fideicomisos can be renewed multiple times for 50-year periods. The trustee bank may change from the original permit, but the primary beneficiaries must remain the same as in the first fideicomiso or a series of taxes could be imposed, says the Settlement Company, a consultancy based in Baja California Sur that handles closings throughout Mexico. The current cost to obtain a permit to establish and register the fideicomiso is about $1,500 plus annual administration fees that range from $350 to $500, and closing costs. The bill that would have eliminated this ownership structure now seems an ocean away. “We will be on the fideicomiso for the foreseeable future,” said Linda Jones Neil, founder of the Settlement Company. Resort destinations such as Cancún, Los Cabos and Puerto Vallarta offer bargain prices for luxury real estate. According to Mexico City-based consulting and research firm Softec, as of 2014, a square foot of property in Cancún cost less than $279, compared with $465 per square foot in Miami. “Mexico is the Wal-Mart of beach properties,” said Gene Towle, managing partner at Softec. Mexico’s overall real estate market was hit last year by the introduction of a 35% capital gains tax on the sale of properties of around 3.5 million pesos or more (about $250,000 at the current exchange rate), which has made some would-be sellers reluctant to put their mansions on the market.
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