Foreign Ownership
 Foreigners can invest in property along the coast with certain restrictions. Article 27 of the Mexican constitution, states that “foreigners cannot own property within 100 kilometers (60 miles) of the border and 50 kilometers (30 miles) of the coastline."
The Mexican government does provide two ways to allow you to own Puerto Vallarta real estate. One way is a Mexican Trust, called Fideicomiso in Spanish; the other way is to form a Corporation.
Mexican Bank Trust or Fideicomiso
There are three parties are involved in a Mexican trust. The first is the owner of the property, the second is the bank which acts as the trustee and the third is the foreign beneficiary, the person who will receive the benefits of the trust, in this case, the owner of the property.
A Mexican trust does not give direct ownership to the foreign beneficiary. The bank, or trustee, holds the trust deed to the property in order to act on the foreigner’s behalf. The trust does provide the foreign buyer with all the rights and privileges of ownership. As the beneficiary, you have all rights to the property including the ability to remodel, lease, mortgage, pass on the property to your heirs, or sell the property at any time.
 The Foreign Investment Law, a Constitutional amendment created in 1973 and amended again in 1994, allows the Mexican trust to be established for a term of 50 years and is renewable any time during its existence, forever. The Mexican government established the trust system as a protection for foreigners interested in owning property in Mexico.
The Mexican trust process requires the bank to check ownership, insurance, and liens against the property, thus ensuring valid ownership and a real estate property free of debts.
The costs to establish a Fideicomiso trust vary from bank to bank. However, the range is approximately $1,000 to $1,500 U.S. dollars for the Mexican trust set up and percentage of the value each year for maintenance of the trust. These fees are paid directly to the bank that has your trust.
Bank trusts are established by a Mexican Notary, following the receipt of a permit by the Minister of Foreign Affairs. The entire process is usually completed by the notary as part of the closing procedures.
The Closing Process
 Once your offer to purchase has been accepted a deposit is required. This is can usually be anywhere from 10 to 50% of the price. This money is held by your attorney, notary, real estate agent or escrow account. These funds are held during the closing process. The balance is payable upon the receipt of the trust deed.
To obtain the Mexican trust deed, the notory will:
Ensure the property is free of debt by obtaining a non-lien certificate and tax statement from the treasury. The property is also checked for outstanding utility bills and municipal taxes.
Obtain a permit from the Minister of Foreign Affairs to establish the Mexican trust deed.
Prepare all documents for both buyer and seller.
Once the above has been completed, the notary will present your representative with a statement of remaining funds due. Once paid, he will present the legal transfer papers to be signed by the seller.
The entire closing process takes 30 and 60 days.
Closing costs
 Closing costs are paid by the buyer. These cost are based on the value of the property purchased. They include a transfer tax (ISAI) of 2%, an average of 2% for legal Notary fees, a registration fee of 1/2% of the assessed value of the property, fees for the tax certificate, title search fees and property appraisal, as well as miscellaneous office expenses.
The Seller pays all capital gains taxes and real estate commission fees. Capital gains taxes are 35% of the difference between assessed values at the time of purchase and sale, with adjustments made for inflation and capital improvements.
If you decide to sell your property, you can be eligible for a one time exemption from capital gains tax if you establish residency for 2 years after your purchase prior to selling.
To establish residency, you must have an FM3, Resident Tourist Visa, and all the utility and phone bills in your name for 2 years. FM3 Visas are issued by Mexican Immigration. You can request the forms required from Immigration. It usually takes 30 to 45 days to obtain an FM3.
The Mexican notary or “Notario”
Mexico designates certain attorneys as Notaries. Their services are required for the legal transfer of real estate. They are an unbiased, official representative of the government and have a fiduciary responsibility to both parties and sanction the contract from a tax and legal point of view.
Property Taxes
Property taxes are very low in Mexico. The property tax, or "predial" is based on .08% of the assessed value, paid every bimester. The assessed value is determined at the time of the sale.
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