10 Top FAQs about San Miguel de Allende Real Estate

As our offices are located in the bustling heart of San Miguel de Allende, they’re always buzzing with questions from curious passersby and active buyers and sellers. That got us thinking: Why not compile the top 10 most frequently asked questions and answer them right here for everyone’s benefit? Whether you’re scratching your head about closing costs, on the hunt for the perfect neighborhood, or navigating the ins and outs of property taxes, you’ve come to the right place. This blog is your go-to guide to all things real estate in San Miguel de Allende!

The questions we’ll cover are:

  1. What are the typical commissions and closing costs involved in San Miguel de Allende real estate transactions?
  2. Which neighborhoods in San Miguel de Allende are best for investment or living?
  3. What should I be aware of regarding location and potential negatives when buying property in San Miguel de Allende?
  4. How is property tax calculated and paid in San Miguel de Allende?
  5. Do I need a special permit to buy property here as a foreigner?
  6. Is getting a mortgage common when buying property in San Miguel de Allende?
  7. Is an escrow account used in real estate transactions in Mexico, and how does it work?
  8. How long does it take to buy a house here from start to finish?
  9. I’m thinking of buying a property to rent out. What should I know?
  10. Can I keep house hunting if I’m only here for a short visit?

 

Top 10 FAQs about San Miguel de Allende Real Estate

1. What are the typical commissions and closing costs involved in San Miguel de Allende real estate transactions?

Answer:

  • Commission Fees: When selling property in San Miguel de Allende, expect agent fees to be 6% plus tax. Erick Sakal, a seasoned agent, emphasizes, “The agent you choose plays a pivotal role in showcasing your property effectively.”
  • Closing Costs for Buyers: Buying a home in San Miguel de Allende involves closing costs of around 5% of the property’s value. This includes notary, legal fees, and taxes. “It’s wise to budget around 5-6% for these costs,” advises Sakal.

Detailed Breakdown:

  • Acquisition Tax: Approximately 4% of the sales price goes to the city.
  • Notary Fee: Generally around 1%.
  • Seller’s Responsibility: Sellers cover the transaction commission and capital gains tax.
  • Note: For properties resold within 3 years, part of the acquisition tax might be transferred to the buyer. Conditions apply; contact us for more details.

2. Where's the best spot in San Miguel de Allende to call home or invest?

Answer:

This is a tricky one and varies greatly depending on every buyer’s needs and tastes. But here’s a glimpse of some of the most popular neighborhoods in San Miguel de Allende.

  • Historic Center: Known for its cobblestone streets, baroque architecture, and beautifully manicured parks Erick Sakal notes, “It’s a culinary and cultural hotspot with top-notch restaurants and art galleries.” Properties come at a premium in Centro, but they are always a great investment.
  • Popular Neighborhoods: Explore the charm of neighborhoods like Guadalupe and San Antonio, known for their vibrant mix of local culture and amenities.
  • Up-and-coming Neighborhoods: Allende and Independencia are becoming more popular due to their close proximity to Centro and the more authentic Mexican feel of each colonia. As they are increasing in popularity, you can still find some great investments in these neighborhoods.

3. What should I be aware of regarding location and potential negatives when buying property in San Miguel de Allende?

Answer:

  • It’s wise to spend the weekend in your preferred neighborhood to get a feel for the environment and get the full experience of the area. This way, you can minimize the chance of any surprises later! And remember that San Miguel de Allende is a vibrant and dynamic city that is celebrated for its festivities and traditions. So it’s fun to embrace this aspect of this unique city.

4. How is property tax calculated and paid in San Miguel de Allende?

Answer:

  • Annual Payment: Property tax, or ‘impuesto predial’, is due in the first three months each year. Taxes typically range from 2,000 to 20,000 pesos annually.
  • Discounts: Paying early can result in discounts—up to 15% in January and 10% in February.
  • Online Payment: Many areas, including San Miguel, offer the convenience of online payments.
  • Proactive Responsibility: Erick reminds, “It’s crucial to keep track of when these taxes are due and pay them on time to avoid penalties.”

5. Do I need a special permit to buy property here as a foreigner?

Answer:

  • Requirement for Foreign Buyers: Regardless of immigration status, foreigners need an SRE permit from the Mexican Ministry of Foreign Affairs. It’s required for foreign property buyers to legally register property deeds.
  • Property Rights: This permit ensures you’re treated as a Mexican citizen in terms of property ownership.
  • Government Protection: By obtaining this permit, you agree not to seek intervention from your home country regarding property disputes in Mexico.

Top Tip: It can take up to 3 weeks to obtain an SRE permit, so keep that in mind when planning your property transaction process.

6. Is getting a mortgage common when buying property in San Miguel de Allende?

Answer:

Typically, no, as most transactions in San Miguel de Allende are in cash. But just to understand the process, here are a few of the top points:

  • Mortgage Availability: Mexican banks and some international lenders offer mortgages to foreigners.
  • Interest Rates: Expect rates between 7 and 12%.
  • Credit Considerations: Banks consider your Mexican credit score and deposits in Mexican financial institutions.
  • Mortgage repayment deadline: Typically, you must pay off your mortgage by the time you are 70 or 80 years old.
  • Process Time: Erick points out, “Starting the mortgage application process 3–4 months in advance is advisable due to the detailed paperwork involved.”

7. Is an escrow account used in real estate transactions in Mexico, and how does it work?

Answer:

  • Escrow Account Usage: It’s common to use an escrow account in San Miguel de Allende to secure the purchase.
  • Shared Costs: Opening an escrow account usually involves a cost split between buyer and seller, with a cost of around US$600.
  • Negotiation Factor: Not all parties may agree to use escrow, which can complicate negotiations. Typically, Mexicans are not used to using escrow, as it’s not a common process here. So, be ready to discuss this with your agent; there are other legal options to complete the transaction.

8. How long does it take to buy a house here from start to finish?

Answer:

  • Variable Timeline: It varies a lot, greatly depending on the property and negotiations. Some wrap it up in a couple of weeks; others take longer.
  • What Slows Things Down: Legal permits, furniture negotiations, and dependency on external entities can all extend the timeline.

9. I’m thinking of buying a property to rent out. What should I know?

Answer:

  • Tax Registration: Landlords must register with SAT for tax purposes.
  • Immigration Status: Tourists cannot earn rental income in Mexico. Temporary residents must apply for permanent residency, which is possible when buying a property for around $300,000.
  • Tenant Relations: Erick Sakal emphasizes, “Ensure all rental agreements are legal and taxes are properly handled to avoid disputes.”

10. Can I keep house hunting if I’m only here for a short visit?

Answer:

  • Remote Options: Absolutely! Think virtual tours and digital platforms like DocuSign.com for remote house hunting. In fact, the first house we sold was completely remotely through videos and WhatsApp calls or tours to a young couple in San Francisco.
  • Power of Attorney: Consider assigning a power of attorney for essential legal processes if you can’t be present.

For details about these questions and many more, check out our Essential Guide to Buying Your Dream Property in San Miguel de Allende.