First Choice RealtyGuide to San Carlos
Chapter Eleven: Becoming a Year-Round Resident
The FM3 Visa (Rentista). For foreigners, such as USA and Canadian citizens, who plan to make Mexico their retirement home residence for more than 6 months a year, an FM-3 visa is required. Although you may do this yourself it is often easier to hire someone to help you get through this process.
Procedures for Obtaining or Renewing an FM3 visa
When you are ready to apply for an FM3 Visa, you must get all your papers together and be prepared to make several trips (hence the reason to hire someone to help you), to Guaymas. It takes several weeks from initiating the process until you finally have your new visa in your hands.
Go to the INM Office: Mexican SG-INM office (Secretaría
Gobierno Instituto Nacional de Migración)
Address: Boulevard Garcia Lopez and 9 th Street,
Guaymas
How to Find the INM Office
Take Highway 15 to Guaymas. In Guaymas, Highway 15 changes to Blvd. Garcia Lopez. Drive on Garcia Lopez about 1/2 block past 9 th Street and park. The INM Office is on the right hand side of the street on the second floor, over an auto parts store. It’s on the south side of the Blvd., across the street from the Coca Cola bottling company.
Forms and Required Documents
STEP 1 Obtain these forms and fill them out
Go to the INM office to obtain this form (If applicable):
- Proof of Marriage: Constancia de Subsistencia de Vinculo Matrimonial
- Go to a stationery store and buy this form:
Form 5 SHCP:
You will need to buy 3 copies of Form #SHCP5 for each applicant.
Buy these from the stationery store in San Carlos next to Evie’s
Coffee shop, or go to the Orti-Mart in Guaymas, on 9th
Street No. 186. Tel 222-3755. This little store is half a block
south and half a block west of the INM office.
STEP 2 Gather all the required documents
- Passport - Original and 1 complete copy (including blank pages.)
- 6 Passport Photos (4 x 4 cm), 3 copies front view and 3 copies side view, without glasses or earrings. You can get these at Ley’s Plaza Photo Shop.
- Tourist Permit for first time FM3 applicants ORIGINAL and 1 copy
- For renewal applicants, take your current FM3 book
- Your current paid property tax bill –1 copy OR Your house trust (Fideicomiso), the entire document, -Original and 1 copy
- Recent paid utility bill, such as water or electricity which shows your place of residence 1 original
- Current foreign bank statement(s) with account number and current balance, verifying that you, or you and your spouse are “a person of independent means” (rentista) with a monthly income of at least $1,000 for an individual or $1,500 combined income for a married couple - 1 copy
- Constacia de Subsistencia de Vinculo Matrimonial . This is a signed testimony of two Mexican citizens who know you. Get their signatures and attach to the form a copy of their official identification (voter’s card, driver’s license, or passport.)
- SHCP-5 Application form for FM3 or Renewal–3 copies per person
- The office staff at INM will help you to complete the SHCP-5 form giving: your physical description, name, citizenship, birthplace, current address, former address, occupation, reason for immigrating to Mexico, names of your parents, including mother’s unmarried name, and the names and addresses of two Mexican citizens who know you.
STEP 3 Return to the INM office with required documents and photocopies
When you have completed the forms and gathered all the required documents listed above, return to the INM office. When your paper work has been accepted by the INM office, you will sign the forms and you will get a receipt as a temporary FM3.
STEP 4 Go to a bank to pay the fee
You will be sent to the bank (the closest bank is HSBC on Serdan and 10th (inside the VH store) to pay a fee of approximately $100.00 (1014 pesos) and receive a receipt. Present the bank clerk 3 copies of the SHCP-5 (the FM3 form). The bank will stamp the forms, keep 1 and give you back 2.
STEP 5 Return to the INM office
Take the bank receipt and FM3 forms back to the INM building. From this point, it will take them a week or two to process your new visa. Call their office after about 10-14 days to find out if it is ready. (Hint: If you try to obtain or renew your visa during the month surrounding the Easter or Christmas holidays, the process will take much longer.)
STEP 6 After about 2 weeks, pick up your Green Book from the INM office
Upon your return to the INM, you will be issued your Green Book, the FM-3 Visa. Each person must be fingerprinted and sign the Visa at this time.
It will no longer be necessary for you to return to the border every 6 months to renew your All of Mexico vehicle permit. You will renew the vehicle permit once a year at the border
Advantages of the FM-3 Visa (Rentista)
You do not have to give up your citizenship. You continue to pay taxes in the USA and you are not subject to income tax in Mexico.
You can continue to drive a car with foreign plates (e.g., USA), and use your USA driver’s license. You do not need a Mexican driver’s license unless you buy a vehicle in Mexico. A Mexican vehicle permit at the border will require Mexican plates and the owner must have a Mexican driver’s license.
For foreigners, who plan to make Mexico their retirement home for more than 6 months a year, an FM-3 visa is required.
A new resident, during the first year of their newly issued FM3, can import their used household goods without paying a tax at the customs office at the USA-Mexico border. Make advance arrangements with the Aduana in Guaymas.
A person with an FM3 or FM2 is entitled to buy health insurance from the Mexican IMSS agency, an inexpensive government backed insurance program.
The FM3 visa is technically a 1-year visa, which you may renew once a year for a total of five years. At the end of that time, you will have to go through the entire process again in order to obtain a new FM3 visa.
Foreign Vehicle Permit Renewal
When you have an FM-3, you no longer have to make a special trip to the border to get your vehicle permit renewed every 180 days. When you leave Mexico turn in your permit. When you return, get the permit renewed, and your vehicle permit is good for one year, or until you leave Mexico.
Buying Property in Mexico
Q. Can I own property in Mexico?
A. Yes and No.
Formerly foreigners were not allowed to own property in Mexico, but since a new law went into effect in 1993, they can buy residential property. Under a different set of regulations, foreigners can own property for commercial use. Foreigners cannot buy property in the “restricted zone” outright, but they can buy it through a trust arrangement with the bank.
Yes, with restrictions:
Owning Property within a Restricted Zone
Restricted Zones: The restricted zone is the area within 100 kilometers (62 miles) from the border or 50 kilometers (31 miles) of the coastline.
Foreigners cannot buy property within the “Restricted Zone” except through a Bank Trust (called the Fideicomiso) authorized by the Mexican Government. The trust is with a Mexican bank. The bank becomes the legal owner, but only in trust. There will be an annual fee for the bank’s services as trustee. The Fideicomiso is established for a 50-year renewable term.
Financing the Real Estate Purchase
Cash Transactions: Mexican Banks do not issue mortgages, so this makes it harder to purchase property. Most real estate deals are made in cash. Typically, the buyer has his money transferred by wire from his American or Canadian bank to the Mexican bank.
Seller Financing: Sellers or real estate dealers may be willing to finance the purchase. Paying the seller or representative before the buyer holds the actual title to the property is a very risky business. It is far wiser to require that the title (or beneficiary trust) be transferred into the buyer’s name at the time of closing.
USA Bank Financing: Recently some USA loan agencies or banks have begun to issue mortgages for a vacation home in Mexico.
The Procedure for Purchasing Real Estate
A prospective buyer must follow these procedures:
Real Estate Agent: Anyone can sell real estate in Mexico but it is advisable to work with a registered real estate agent. “Real Estate Professionals” are registered with the state under the Sonoran Law for the Registry of Real Estate Professionals. The difference between a registered professional and someone just setting up business in real estate is a difference in authority to conduct business, not necessarily a difference in ethics and accountability. The buyer must still be vigilant. Buyers are often cautioned, Buyer Beware. This is for good reason.
Notario Publico: Through the agent, the property will be evaluated by the Notario. All real estate transactions must be processed through a Notario Publico. The Notario Publico is not at all comparable to a notary public in the USA or a notary in Canada (except Quebec). The Notario Publico is an attorney first and is appointed by the Governor. For all intents and purposes a Notario is the governor’s representative in all real estate transactions. His duty is ensure that the real estate transaction transfers ownership correctly and that the property is free and clear of all liens and encumbrances.
Property Appraisal and Transfer Tax: At the time of the sale, there will be a transfer tax of 2% of the greater of the sale price or the property tax value, Public Registry fee, Appraisal fee, Government Code, Signatures, Second Testimony (for foreigners only), Certification of documents and a Notario fee plus IVA. The entire transaction fee will be @ 6% of the sales price. (The appraised value is often lower than the sales price.) The Notario will conduct an appraisal and make sure that there are no unpaid bills, taxes or other claims against the property. (In the USA and Canada there is usually a property inspection including the condition of the roof and a pest inspection. This does not happen here. You need to do your own inspection.)
Bank Trust Fee
Through your broker, have the bank acquire the property for you, the buyer. The bank becomes the legal owner, but only in trust. The trust is called a “fideicomiso.” An annual trust fee must be paid to the bank. The bank holds the title. The purchaser will have all rights to and use of the property. The trust is for a period of fifty years and may be extended for another 50 years at the end of each 50-year period.
Title Insurance is available in Mexico.
Problems Encountered by Home Buyers in San Carlos
I have personally known American buyers who have run into major difficulties in buying property here, and I will try to generalize from what I know to say that there are three common kinds of problems.
First: Buying a trailer space, condo, or time-share does not give you title to the property. It is an agreement with the owners of the space or condo. If the owners go bankrupt or change their mind about the deal, the buyer loses. If the condo management decides to increase the annual management fee, the condo owner has no recourse. Time share offers lure many victims. Buying a condo or time share before the property has actually been constructed presents extra risk.
Second: Debts Against the Property
- Contractors’ Bills: If a contractor has not paid all his bills, his employees, and his employees’ Social Security payments, then the new owner will be held responsible for those debts against the property.
- Household Employees: If the previous owner or the real estate agent listing the property had employed a maid, gardener, watchman, or worker working on the property, that worker could make a claim. The common claim is that when the worker was discharged (when the owner moved out) the employer did not pay the required severance pay, vacation pay etc. In this case, the new property owner has to pay the claim. In a sense, the property owes the employee, not the person who sold the property.
- Taxes: If the previous owner has not kept up his tax payments (sometimes for property that has sat vacant for years) the new owner must pay the accumulated tax debt. However, property taxes in Mexico are very low.
- Assessments for Utilities: When buying a lot, be sure the water & sewer and the electric lines have been installed and the assessment already paid by the original owner.
The brazen illegal practices of some people selling and renting property in Mexico are almost beyond belief. Someone could offer to sell you property they don’t even own. That happened to us one day. We had been talking to the owner of a lot that we wanted to buy for parking. One day, a man drove up, took his for sale sign out of his trunk, and planted on the lot in question. He said he was the real estate representative and began to negotiate a sales price. The true owners didn’t even know this man. Renting also has its pitfalls since the rental may not live up to the glowing description of the agent. Take your time to learn all you can about a property before you buy.
Property Inheritance
The owner who holds a fideicomiso is the beneficiary of the property until he sells it or dies. The fideicomiso document includes the name(s) of the heir (beneficiary) who will inherit your property after death. Upon the death of the owner, the property passes automatically to the spouse and/or children. A Mexican will is not necessary for the property to pass to the heirs, but a Mexican will is desirable. One advantage of the fideicomiso is that the property transfers seamlessly to your heirs without having to deal with Mexican probate and transfer tax.
Selling Your Real Estate: Capital Gains Tax Payments to MexicoWhen the owner or his beneficiaries sell their Mexican property, they must pay a capital gains tax if he/she has made a profit.
Does a property owner need a Mexican will?
(Disclaimer - Do not take my word for this, see a lawyer. The following information is based only on my understanding gained from newspaper articles.)
If the only assets held by a foreigner in Mexico is property held in a fideicomiso there is no need for a Mexican will. The property passes automatically to the heirs when a notarized and apostilled death certificate is presented to the institution that holds the trust. The heir, if living elsewhere, does not need to come to Mexico to claim the inherited property. However, the heir will require an agent with the appropriate power of attorney to have a letter of instruction written to the bank requesting the transfer of the title. The heir must supply all of the requisite documentation to prove who they are, where they live and name their heirs. Nevertheless, I would advise anyone who inherits property to check the situation in person as soon a possible. Should the heirs sell the property, they are subject to capital gains taxes in Mexico.
Apostille
Apostille is a French word which means a certification. It is commonly used in English to refer to the legalization of a document for international use under the terms of the 1961 Hague Convention, Abolishing the Requirement for Legalization by a consular officer of Foreign Public Documents.
With this certification by the Hague Convention apostille, the document is entitled to recognition in the country of intended use, and no legalization by the embassy or consulate of the foreign country where the document is to be used is required.
In other words, when a document is to be used in a foreign country, it may be necessary to authenticate the notarization or certification. Foreign countries often require documents to be authenticated before the documents will be accepted in the foreign jurisdiction. An "authentication" certifies the signature and the position of the official who has executed, issued or certified a copy of a document.
The sole function of the apostille is to certify the authenticity of the signature on the document; the capacity in which the person signing the document acted; and the identity of any stamp or seal affixed to the document.
The United States of America is a signatory to this convention but Canada is not. Canadians, to have the equivalent of this type of document recognition must have the documents certified by Canadian Foreign Affairs and then take the document to the Mexican Embassy or Mexican Consulate. Foreign Affairs does not charge a fee for certifying the document but the Mexican Embassy/Consulate office does charge a fee. Bring small bills and change as the Embassy/Consulate never has the ability to make change. Remember to go to the Embassy/Consulate very early in the day as you will be asked to come back to get your document(s). If you are fortunate you may get the certified document back the same day.
Mexican Wills
USA and Canadian wills are accepted in Mexico once they have been probated in the home country. This does not, however, eliminate probate in Mexico. A USA will, to be probated in Mexico, must be officially translated into Spanish before it can be officially registered by a notary. It is advisable to enter the will into the official record book and have it registered at the recorder’s office.
A Mexican notary can assist in drawing up a Mexican will. If you have assets outside of fideicomiso it is important that you have a Mexican will. Mexican wills are registered documents and must be notarized.
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