READ before making a decision to invest or live in Mexico!

Below is a list of good resources:

Books:

Live Better South of the Border by "Mexico" Mike Nelson
Send 16.95+$4.00 shipping to Roads Scholar Press 2022 Amy Street Mission Texas 78572-022 tel 800 321 5605
http://www.amazon.com/exec/obidos/ASIN/1555913946/moveamericabooks/107-0857510-6263709

Official Guide to Living and Investing in Mexico
Lawrence International
1770 W State St #129 Boise Idaho 83704 tel 800 341-2510 then enter 27 for credit card order. 15.00 plus shipping 2.50 in U.S.

Choose Mexico
Howells and Merwin, Gateway Books, Box 10244, San Rafeal Ca 94912
credit cards 800 6690773 for info 415 4545215 price 10.95 plus shipping 1.90

Insightful books on Mexican people

I would appreciate it if others added their recommendations!

Distant Neighbors, Alan Riding

The Mexicans: A Personal Portrait of a People, Patrick Oster

CHILDREN OF SANCHEZ
ISBN: 1111628963
Author: Lewis, Oscar
buy at http://www.addall.com

Mexico, Places and Pleasures
ISBN: 0060911891
Publish Date: October 1984
Author: Kate Simon
buy at http://www.addall.com

SUBSCRIBE TO:

MB (nee Mexico Business) http://www.mexicobusiness.com

The MexicoFile: $39.00 a year.
Simmonds Publications, 5580 La Jolla Blvd, Suite #306, La Jolla, California 92307. Telephone 1800 5MEXFILE. Editor: David Simmonds. web site: http://www.mexicofile.com. email: inf@mexicofile.com

Another Day in Paradise: a newsletter for ex patriots in Zihuatanejo
http://www.zihua-ixtapa.com/~anotherday/

INFORMATIVE Web Sites:

General travel info:

http://travel.state.gov/americansabroad.html
http://travel.state.gov/tips_mexico.html
http://www.mexpatriate.net

Real Estate:

http://www.offshorelife.com/gowrong.html
http://www.ricardobarraza.com/legal/legal.html
http://www.lawmexico.com

Medical info:

http://travel.state.gov/medical.html

Zihuatanejo has over 70,000 people. There are banks, ATM's, a large grocery store in addition to the local market, one movie theater, one bookstore (books all in Spanish), video stores, computer consultants and local ISP's as well as Prodigy service. There are property managers, real estate agents, tennis courts, two golf courses, aerobic classes --but no decent gym -- bicycle paths, and marinas.
Critical and chronic illnesses as well as dental problems are to be avoided as health care service is deficient. There is a Red Cross, who perform similarly to paramedics, at least two MD's who attend to foreigners, and reliable emergency transport/airlift to hospitals out of the area. We have an consul from the State Department, Ms. Elizabeth Williams.
The only community service organization I am aware of for expats is the Rotary Club.

Real estate:

It may be much cheaper to rent a property than to buy one, as one is not completely responsible for the very costly maintenance necessary in a tropical environment. I spend well over ten thousand dollars a year in administration, maid and night watchman, and maintenance for my beach front condominium. On the other hand, you may have to spend thousands to furnish a long term rental property, as some have nothing more than a sink!
Expect to have to pay for your real estate purchase in full as mortgages are not available in most cases.
You will acquire a very illiquid investment. It can take many years to sell a property. The appreciation is not nearly as predictable as the U. S. real estate market.

Real estate agents can show you properties, negotiate prices, and serve many other functions. I hope they can help in supplying factual information on market values, as there is no way to establish sale prices except the personal knowledge of such agents. I do not know any other way to get a handle on the market. Owners often set prices based on nothing more than what they hope to get, not on appraisal systems such as are commonplace in the United States.

Before initiating a purchase, I highly advise three things:

1. Hire a reliable structural engineer to evaluate your property as discovery of 'vicios ocultos' (the things you find out about in the United States vis a vis a termite report and from a housing inspector) are ultimately incumbent on you!!!

I have now had experience with three notaries and in future will be using only: Notarias Asociadas 2 y 18, Lic Julio Garcia Estrada and his son Dr. Julio Antonio Cuauhtemoc Garcia Amor, Edificio Oviedo, Ignacio de la Llave No.2, Despacho 4, 5, &6. Acapulco, Guerreo. Telephone: 82-08-37, 83-75-22. Fax 82-21-34. These notaries are the most respected in Acapulco, and Dr. Amor is bilingual. His website is:

http://www.acabtu.com.mx/notaria2-18/garcia-amor.html

and their email is: acaazul@delta.acabtu.com.mx

It seems a foregone conclusion that speaking passable Spanish is a necessary ingredient for a satisfying assimilation into the local community. You can hire a tutor. If you do not speak Spanish, it is even MORE imperative that you establish a network of trustworthy (de confianza) souls, the foremost being your property manager/administrator and your maid. This individuals should be long time residents of Zihuatanejo in order to know 'all the players.' and how the system works.
I was most fortunate to have such individuals in my life since my advent in Zihuatanejo, so that whereas I made innumerable errors at significant emotional and financial cost (invariably ignoring their discreet advice!) in dealings with non trustworthy people, my home, it's care, and it's rental clients were invariably impeccably cared for.

My property manager/administrators name is Ing. Oscar Montero Butzman, a civil engineer, and lifetime resident of Zihuatanejo. His email address is: ozzy23@prodigy.net.mx
Another property manager/administrator speaking English of impeccable reputation and lifetime resident of Zihuatanejo is Carmen Nunez, email address carmenzi@prodigy.net.mx
Day or night, no matter what the problem, you can reach these persons.

Hiring a maid. The legalities of hiring an employee will be explained to you by your property administrator. They receive social security payments, vacation days, an annual bonus, annual wage increases, etc. Discharging a maid or gardener should be done with the assistance of a lawyer or property manager, as there can be serious legal consequences to summary firings. Your property manager will suggest to you the proper salary, which depends on the job description and hours she works. Please be careful to make sure you both understand the responsibilities she is to undertake beyond cleaning your house: e.g. cleaning of common areas outside your property, laundry, iron, cooking, child care.

HELPFUL INFORMATION TO KNOW:

Asesoria & Consultoria en Inversiones Turisticas
Ricardo Barraza & Associates
Plaza Tropical Av Tulum #192 Suite 59 S.M.04
Cancun Quintana Roo Mexico CP 77500
http://www.ricardobarraza.com

If you own real estate, used for housing, (apartments,
houses, etc.) and fulfill the few requirements the law
establishes to apply for tax exemption, you will
save thousands of dollars in Capital Gains taxes if
and when you sell the property.
In México "CAPITAL GAINS TAX" is part of the tax known
as IMPUESTO SOBRE LA RENTA, "ISR" which taxes
individuals and corporations INCOME.
The tax exemption benefit is given only to individuals
who live in México for more than 182 days a year, such
as Non-Immigrants (Visitante no Inmigrante),
Immigrants (Visitante Inmigrante), Permanent Residents
(Inmigrados), and Mexican Citizens.

A foreigner without -at least- a non-immigrant status
(FM3) will pay higher income taxes and/or not receive
the tax exemptions given to Mexicans and foreigners
whoFULFILL THE FOLLOWING REQUIREMENTS:
1.- Have a telephone line or bank account, for at
least 2 years previous to the sale.

2.- Own the property for at least 2 years previous to
the closing date. (This is proven with the telephone
bills and/or bank statements), and
3.- Have an FM-3 visa (Non-Immigrant) or better
migratory status that proves that you have lived in
the country of México for more than 182 days, a year,
for 2 years previous to the sale.

Your FM3 visa will have an entrance and exit page,
which Immigration will stamp every time you enter and
leave the country. You should be able to keep a record
of the number of days you stayed in México.
If you do not have a telephone or bank account, you
can also use electricity or gas receipts. All
documents should show the address of the property and
must be in your, your spouse, parents or children's
name.
Your stay in México does not have to be consecutive.
You can leave and come back as long as you stay more
than182 days in one year.The General Population Act
establishes the requirements that must be met by
foreigners who wish to obtain any of the migratory
statuses described by the Act.(Tourist, FM3, FM2,
permanent resident, citizen, etc)

If you fulfill the above requirements, you WILL BE
EXEMPTED FROM PAYING CAPITAL GAINS TAXES WHEN SELLING
YOUR REAL ESTATE.

Other acts that exempt one from paying the tax are:
1.- Donations to your spouse, parents or children.
2.- Inheritance* (It is important that you name death
beneficiaries and that their names are included in the
deed).
3.- Selling, for the first time, regularized land
(ejido land that has been deeded).
4.- Bona Mobilia* Personal property that is not real
estate. (Restrictions apply).
WHO PAYS CAPITAL GAINS TAXES?
If you are one of those owners who, every time they
come to México, you do it on a tourist VISA, it will
be hard to qualify for tax exemption, since a tourist
card allows you to stay in the country for periods of
only 180 days at a time. Besides,airport immigration
will request that you return the Tourist card to them
when you leave México, which will leave you with no
record of the amount of time you have stayed in the
country.
Tourists, who have purchased real estate and wish to
sell it, will have two options when paying their
income tax (capital gains tax)

· First Option: 20% of the total sales price.
Example: if you are selling the property for
$100,000.00 USD, you, as the SELLER,will have to pay
$20,000.00 USD in taxes.
· Second Option: Mexican law provides that foreigners
can opt to pay 40% on the amount that represents the
difference between the purchase price and the selling
price.
Example, if you purchased your home for $100,000.00
USD and today you sell it for 120,000.00 USD, then,
you will pay 40% of $20,000.00 USD or $8,000.00 USD.

The second option is generally better, if you have
owned the property for a number of years. The original
purchase price shown in your deed is updated
(inflation, value growth, etc). and is used as the
actual purchase price.

If you know, based on the information you have read so
far that you do not qualify for tax exemption, request
that your attorney or real estate agent help you
figure out which option is best for you. Your attorney
should obtain an estimated tax to pay, before you
decide to list your property for sale.
At closing, the notary issuing the deed, will also
calculate and collect all applicable taxes, including:
transfer tax, property registration tax and capital
gains tax.
I hope that this article is as clear as possible. Of
course each case should be analyzed individually. A
real estate attorney or professional real estate agent
will help you find the best legal way to help you save
on taxes. A few hundred dollars investment now could
mean thousands of dollars savings in a future
transaction.
IMMIGRATION
Once you want to live in Mexico for more than six
months at a time you need to apply for your
immigration
papers, or FM3. The FM3 is easy to obtain; you can do
most of the paperwork yourself. The FM3 grants
nonimmigrant status and is applied for through the
local immigration office in Cancun.
The FM3 needs to be renewed on a semiannual or annual
basis. After holding your FM3 for 5 years you can
then apply for your FM2. The FM2 grants immigrant
status and is applied for through the Mexico City
immigration office. These papers can take awhile to be
processed and you will probably need professional
assistance.
We can refer you to an attorney who can assist you in
obtaining these papers.
The privileges of both a FM2 and FM3 are the same;
however, there are a few differences that you do need
to be aware of. With an FM2 you are only allowed to keep
a foreign plated car for 5 years, after the 5 years
the car will need to be sold out of the country. With an FM3
you can keep your foreign plated car for as long as
you hold your nonimmigrant status. When you have an FM2, you
can not leave Mexico for more than 18 months total in
a 5-year period. There is no such rule with your FM3
papers, you can come and go as you please.
You may apply for your FM3 visa at your nearest
Mexican consulate office in the U.S. or you can wait
to apply when you get to Mexico. It is just as easy to wait
until you come to Mexico. There are English speaking
people in the immigration office here in Mexico and there are
local attorneys who will be more than happy to help
you for a small fee. You will need original or certified
copies of your birth certificate and marriage license
(if applicable). You will also need to document the
minimum income requirements. You will need to show
$1,000.00 U.S. dollars monthly income for each month
you stay in Mexico.You can provide paycheck stubs, or 3 months bank
statements showing reserves or a letter from social
security showing your retirement benefits.
The reasoning behind this is to verify that you can
support yourself without working for the length of
your stay.
You will also need to provide an address for where you
will be living and proof of the address, such as
phone, electric bill, or the deed to your property. You will
need to obtain passport photos and have your documents

translated from English to Spanish. In some cases a
visa holder is allowed to obtain work in Mexico.
You will need to find an employer who will sponsor you
and ask for your permission to work in Mexico. The
biggest deciding factor when immigration is granting
permission for employment is whether or not you are
taking a job away from a Mexican National.
Your FM2 or FM3 can also help you to avoid capital
gains taxes when selling your property. Once you have
purchased your home, your immigration papers will need
to have the address of your property. If someone
proves they were living on their property for two
years in Mexico, they can avoid paying any type of
capital gains. Warning, please apply for your immigration
papers early. It can take up to eight weeks to receive
your completed documents. Do not let your tourist visa
papers expire prior to receiving your FM3.

You are allowed to bring your car across the border.
However, there are a few rules you need to follow.
Once you reach the border you will be stopped at a check
point about 20 minutes inside of Mexico. There you
will need a certified copy of the car title or a certified
letter from the lien holder that you have permission
to cross the border into Mexico. You will also need a credit card;
there is a small fee that must be paid on a credit
card. You will then receive your blue and white tourist visa and
a sticker to place in the window of your car. The
sticker is to let the Mexican officials know at a glance that
your car is legal.You will also need to put on your border papers a list
of everyone who will be authorized to drive your car
while in Mexico. Tourist visas are good for 6 months. So
make sure when asked "how long will you be in Mexico?"

you receive all 6 months on your visa.
This way you will have enough time to reach your
destination and apply for your immigration papers.
Then you will go through a border check where they have the red
light green light system just like the airport. If you
receive the red light you will be stopped and your car and
belongings will be inspected. Be prepared to pay a
duty tax on any electronic equipment you bring across the
border. Computers are a big question laptops are
acceptable to bring in; used stand-alone computers are
not allowed to cross the border. New computers in the
original box are "said" to be acceptable to bring
across the border, but you will have to pay tax. You
can buy computers down here for a reasonable price with all of
the latest software. Remember to be patient and
understanding when dealing with the locals and any
type of border or check point official, the fastest
way to slow a Mexican down is to raise your voice.

HISTORY ON BUYING IN MEXICO
In 1917 despite all of the sparring between the
Mexican government and the Mexican rebels, Carranza
got a convention together in Queretaro to formulate
political and social goals. The result was the
constitution of 1917.
The constitution, among other things, gave communal or
ejido land to every Mexican village. This land was
given by the government to the villages for use only
and could never be sold away to the highest bidder.
All land was to be either communal land for use only or owned
by Mexican Nationals only. This law was greatly placed
in effect for the past problems with the Spanish, French
and Americans, controlling both land and waterways in
Mexico. In 1973, a constitutional amendment known as
the Foreign Investment Law allowed foreigners to
purchase property anywhere in Mexico, except in the
restricted zone. The restricted zone, stated in
article 27, is 50 km (32 miles) from high tide and 100 km (64 miles)
from any border. The largest problem with this
amendment is that most of the foreigners wanted to
purchase specifically in the coastal and border areas.
In January of 1994 NAFTA had been finalized and President
Bill Clinton gave a multibillion-dollar loan to
Mexico. In succession with NAFTA Mexico passed another
amendment to the constitution that foreigners could
now own property in the restricted zone with a bank trust or
fideicomiso. The trust system circumvents the
constitution allowing foreigners to legally own in the restricted
zone.

How does a Trust deed work?
The bank (know as the trustee) holds the trust deed
for the person or persons purchasing the property
(know as the beneficiaries). This property is not part of the
bank,s assets and cannot be subject to any lien or
attachment for any bank obligations The beneficiaries has all
ownership rights to the property and may sell, lease,
mortgage or pass on to their heirs as desired under
law. A bank trust is not a lease.

The Mexican government established the trust agreement
as a way of protecting foreigners interested in
owning property in Mexico. The reasoning was that by
making ownership pass through the trust process, there

would be an automatic review of the transaction to
ensure it was legal and unencumbered. The bank is
required to check ownership, insurance and indebtedness of the
property, providing further protection to the foreign
owner. In the past numerous foreigners have purchased
property, illegally and with liens unknowingly. At
that time there was no way to protect the foreigners
because there was no check and balance system. With
the new laws and the influx of professional real estate agents
your transactions are now safe and protected. Please
do not purchase property without a professional agent.
Many people are lured into "cheap beach front
property", remember anything that seems too good to be true
probably is.

A trust may be granted and extended in 50-year
periods. If you purchase property currently held in a
trust deed, a new 50-year period can be established or the
existing trust deed may be assigned to the purchaser.
Trusts are renewable at any time by simple application with
the bank. It was never the intent that these
properties pass back to the government at the end of the trust period.
This is a common misconception and fear of most
buyers. In fact at the end of the 50-year period the owner has
an additional 10 years to renew the trust with the
bank.

Trustee Fees
There is a fee of approximately from $354.00 US
dollars to $ 600.00 US dollars to open your trust
account and an annual fee as long as you have the trust. You need
to check with your real estate agent on actual fees to
set up the trust as they can vary from bank to bank. This
fee pays for the paperwork and government reporting on

your behalf. To open your trust account you will need
your accepted offer for purchase, a photo ID and 10%
of the purchase price of your new home. At that time you
will also receive wiring instructions, to wire the
remaining money into the bank when you return home. Do not give
anyone any money that is not being handled by a bank
escrow representative. You should sign a bank contract
with a banking official at the time you put down your
deposit. Your real estate agent with help you with
setting up your escrow account.

Taxation
Property taxes are very low in Mexico as a whole. The
property tax known as predial is .1% of the assessed

value. Taxes are paid annually, with the assessed
value determined at the time of sale. If you purchase
a property of $100,000.00 US dollars your annual tax
rate would be $100.00US dollars. The reason taxes are
so low is due to the fact that they have never been a
source of revenue for the Mexican government.

The Closing Process
The closing process takes between 30 to 45 days. While
you are waiting to close yourreal estate agent is
working with the bank to set up your escrow account,
with the notary to prepare your legal deed and closing

papers and to check if there are any liens or problems
with the title of the property. Closing costs are paid
by the buyer and are usually about 6% of the purchase
price. 2% sales tax to the Mexican government, 4% to
other closing costs, such as title search, attorneys fees,
filing of all legal documents and closing deal. Ask
your real estate agent. for a good faith estimate of the closing
costs for your purchase. The seller is responsible for
his or her capital gains tax and any real estate fees owed on
the property at the time of sale. The buyer does not
have to be present at the time of sale. However, a power of
attorney will need to be given to your real estate
agent. to help to execute the closing process for you.

The Notary
The notary is a government appointed official that
helps to close and educate you through the closing
process. The notary represents a high level of legal standing
and their services are required for the transfer of
real estate property. The Notary is the attorney of record and the
unbiased, official representative of the government. A notary has a fiduciary responsibility to both parties and sanctions the contract from a tax and legal point
of view.
A notary must first be an attorney and then must take
special instruction in real estate law to become a
notary. Once he has finished his instruction the attorney must
then be appointed by the government. This "Notaryship"can also be taken away by the government should he not
follow the rules and regulations. Your real estate
agent will refer you to a Notary that we know and trust.

PROPERTY OWNERSHIP THROUGH A CORPORATION
This is a question that is very frequently asked. In
1994 change in the Mexican Foreign Investment Law
allowed a Mexican corporation to be 100% foreign owned. You
are also, in a corporation, allowed to own title, with
out a bank trust, in a restricted zone. This is a great
benefit for foreign business owners. However, this is
not the answer for everyone. Commercial property carries
higher water, electric and phone rates. You also are
required to do additional government reporting and tax
payments. You can not own a single-family residence in
a corporation. The government had cracked down on
purchasing property in a corporation unless it is
actually for business use. The trust deed is just as safe and less
problems with the government.

Maintaining Your Property
Many property owners leave their property for some
time during the year. If you have a condo you pay your monthly fees and they will maintain your property area. Homeowners should consider hiring a property
management agent to handle the upkeep and bills of
your home while you,re out of town for any length of
time.

Insurance
There are various types of insurance in Mexico. You
can receive health, life, auto and property insurance.
The rates are relatively low and should be purchased for
your piece of mind. Our sales agent can help you to
set up your insurance policies and can refer you to a
reputable insurance company.

Financing
Real estate transactions in Mexico have historically
been all cash deals. Recently, the Mexican market has
been opened up to financing. There are different types
of financing available. We offer a choice of finance
companies which finance in Mexico. They can also help
you with second home tax breaks in the U.S. As your
Real Estate Company we would also like to help and
educate you on the financing of your home so feel free
to ask any question necessary. Ask our sales agent to set
up an appointment with the mortgage representative to
help handle all of your financing needs.

EJIDO PROPERTY IN MEXICO

Most of the people purchasing property in Mexico are
looking for that "really great deal" Beach front
property for really cheap! People need to be educated and realize
if something looks to good to be true "it probably
is".
Many years ago in Mexico most of the land was owned by
Hacienda owners. The Hacienda owners owned a
majority of the land and offered work to the local
people for minimum pay. The revolution changed all of
that.
During the Hacienda the rebels over threw the Hacienda
owners. The government parceled up the land and
gave a piece to each of the local Mexican families.
The land was to be used to raise their families or
farms or whatever they chose to do with the land. However, the
land was only given to them for their use, they did
not own the land. This land is called Ejido land. Ejido land
could be taken back by the Ejido Association at any
time they saw fit for numerous reasons. Ejido land is not
allowed to be sold except under certain rules and can
never be owned by a foreigner. A Mexican must ask permission
from the Ejido Association for the permission to sell
to another Mexican. If granted, it is acceptable to sell
it, if denied they cannot legally sell it. Many
foreigners own Ejido property both knowingly and unknowingly. Many
foreigners have purchased ejido property, without
legally being able to own it and they do not even have title.
Many foreigners purchase this because it is much
cheaper to obtain and some of the property is beach front. The
reason it is so much cheaper is because the foreigner
does not gain title to the property, the title must be
in a Mexican,s name. It is also cheaper because it is
illegal to sell. It is illegal to promote, sell or buy ejido
land. Make sure you know exactly what you are
purchasing and are working with your agent and a local notario. Some
of the ejido property is in the process of changing
and becoming regularized (or privatized) and will be
available for sale once the process in completed.