Reader Question: I will be moving to Mexico (specifically the Cabo San Lucas Area) to retire in the next few years. I will be selling my business in the states and planning to live off the proceeds as well as my Social Security. I will have both a U.S. and foreign bank account, and plan to apply for Mexican residency. What should I do to prepare?
Hey Scott, glad you're thinking about taking the plunge!
American citizens must pay tax on world-wide income wherever they live, so you will have to continue your tax filings in Mexico, plus file an FBAR if you have a foreign bank account. We usually refer out to Taxes for Expats if you want tax advice. They specialize in these types of filings.
Depending on which state you are living in now, you may want to consider transferring your official residency to FL or NV (both very tax-friendly and retiree-friendly states) before you officially leave the U.S.
We always recommend setting up a mail forwarding service, Inc Paradise is the service that we use in NV. Make sure to drop a change of address form in the mail and do a USPS change of address online the day that you leave (and keep a copy of it). That's good evidence of a formal address change.
If you want to get Mexican Residency, it's easy if you have a pension or some other sort of passive income source, because Mexico offers a "retiree visa" that is relatively easy to get. You have to actually start the process at a Mexican consulate before you leave, though, so we recommend getting in touch with a good Mexican immigration attorney to help with the paperwork. While not difficult, it is time consuming and it is easy to forget one necessary document that you might need, and that will derail the whole process, which is aggravating (and happened to us the first time we tried to get the ball rolling)! We always recommend EDUARDO CHAVEZ FREGOSO, ESQ.
He is our immigration attorney and he also does real estate, which is important if you plan to buy a home in Mexico. Expect to pay between $750 and $1,000 USD (at the current exchange rate 20:1) for the attorney to file the necessary paperwork for you. The retiree visa is good for 4 years and will allow you to live indefinitely in Mexico and open a Mexican bank account.
You can use your US driver's license in Mexico but you won't be able to use your car in Mexico for more than 180 days without bringing it back to the US. That's not a problem if you plan to go back and forth at least twice a year (people in Baja/Cabo tend to make frequent trips, but if you end up going somewhere like Quintana Roo/Cancun, you need to think about buying a car down there).
After that, it's basically all about getting used to the culture and the climate, both of which are different but wonderful. English is widely spoken in Cabo and all over Baja so you won't have a difficult time. Enjoy your move, Mexico is a beautiful place for retirees!
Colegio El Camino is a bilingual, Private K-12, nonsectarian, nonprofit organization governed by a permanent board of governors. There are over 400 students from all different countries and backgrounds.
El Camino offers education in Los Cabos to students from all nationalities, religions, cultures and socio-economic standing. In addition to their bilingual curriculum they offer support services including licensed psychologists, a mentoring program, career and college counseling, a nutrition program recognized by AdvancED as an outstanding practice, afternoon academic academies, afternoon sports program, the Camino Language Acquisition Support Program (C.L.A.S.P), para-academic workshops and the IB Diploma CAS (Creativity, Action and Service) program.
Communication is a key component in any successful institution and to guarantee that parents are informed and the lines of communication are open and easily accessible we are equipped with their bilingual website www.elcamino.edu.mx.
Heath Sparrow is the Headmaster at Colegio El Camino, and you can contact him through the school's official website.
Do you hate the snow? Want to escape to a beachfront paradise that is cheap, beautiful, as well as close to your loved ones?
And you don't have to leave the comforts of home. Baja has modern amenities, modern homes, a Costco, Wal-marts, supermarkets--anything you need is at your fingertips and at half the price.
We just finished our exploratory trip to Baja and LOVED it! We met so many happy expats there, (most of them from California or Texas).
Baja has something for everyone--and has every type of culture and people. We met die-hard liberals and staunch conservatives; and the one thing they had in common was that they loved living in Baja.
Baja really has something for EVERYONE.
Do you love serious sportsfishing? Los Barilles is a sportsfisherman's paradise. We saw several expats weighing enormous blue marlins.
Do you love the crunchy-granola atmosphere of San Francisco? Well, Todos Santos might be the perfect place for you! Todos Santos has yoga studios, lifelong surfers, and artists and artisans everywhere!
Do you love partying and nightlife? Cabo San Lucas is full of clubs, bars, dancing, and fun. Great for young people with lots and lots of crazy energy.
Do you love golf, beautiful beaches, and want to live a calm life surrounded by beauty and other expats? Then San Jose del Cabo might be the perfect choice for you.
We had so many wonderful experiences and met so many great people down in Baja. And living here is affordable, too.
(Here's some questions that people have asked us repeatedly about Baja and Mexico in general)
1. Our family is seriously considering a move to Baja and are weighing our options. We want a family-friendly location and we plan to rent for at least a year. A 3BR/2BA works and if there's a small office in there, too, that would be a nice bonus. We are hoping to find a nice place for $2,000 or less (preferably a detached home). Do you think this is possible?
Manny's Answer: Absolutely, for that price range you can find a single-family home in a very nice neighborhood. You can also find a nice condo on the beach for that price, although it won't be detached, and you'll have neighbors very close to you, (obviously).
The method we used all over Baja was to rent a nice place for a month using Airbnb, and then we took our time and searched for long-term rentals at a nice, unstressful pace. In some places, we just continued to rent using Airbnb and racked up airline miles on our credit card. By the end of the year, we had enough airline miles for free round trip airfare back to the US for our entire family (we personally use the Amex Delta Card for this, the miles never expire). Gotta think outside the box!
The average rent (currently) for a nice 2-bedroom is about $900-$1,500 in an upscale community if that's what you want. It would be fairly easy to get a larger detached home for 2K. You can easily find studios and smaller apartments for less than $500 a month if you want to rent something small and save money while you decide on a permanent home.
Our advice: stay away from Cabo Bello (a planned community in the Corridor). Cabo Bello has serious water problems and residents there frequently go without water for several days. Research any other properties thoroughly before you sign a lease. In some of those areas, the owners are DESPERATE to sell or rent to anyone that will take a property off their hands. You can also rent a hotel for a week or so, but we like having a full kitchen and a laundry room so we rarely do that. And, no matter what you do, do NOT rent or buy anything for long-term until you see it in person.
2. What should we do with our vehicles? How hard is it to get Baja plates for our American cars?
Manny's Answer: I'll give you my opinion on this. As for cars, we didn't bother trying to legalize our used American cars. We bought a used Excursion down here for a couple thousand bucks. In our opinion, used cars are so cheap that it's not even worth it to transfer an American car and deal with the paperwork and the hassle. We sold our newer Avalanche in the US at Carmax they cut us a check the same day and that was it. We used that money to purchase a used car in Mexico with Mexican plates.
There are English-speaking insurance agents in Cabo who draft special permits for expats who want to bring their American cars down, but we didn't use those services because we discovered it would be approximately the same cost as buying a used car.
There are also regular dealerships like you can find in the US. Nissan, Mazda, Ford, and Toyota all have dealerships in Baja and you can certainly purchase a new car or a used car from a dealer just the way you would purchase one in the US or Canada.
If you want to legalize your American car, be aware that you can only legalize certain years (new American cars cannot be legalized with Mexican plates). This law changes frequently. HOWEVER, you can certainly bring your car down and drive it for approximately 6 months (or 180 days, the length of a tourist visa) while you decide what you want to do. So, you don't have to decide immediately.
You can certainly USE your own American car for a few months while you get settled, that will save you the money on a rental car. But be aware that you might have to drive it back to dump it in the US when the 180 days are over. The problem with having American license plates is that you also become a target for the police. Better to stay under their radar.
That being said, we personally haven't had any issues. Not even theft. Los Cabos is very safe overall.
3. I'm an American and I want to move to Baja and work in the tourist industry there. What is terminology when we go down to stay permanently? Are we obtaining dual citizenship? Or are we just applying for residency?
Manny's Answer: For this scenario, you will be applying to become a legal Mexican RESIDENT. You can't just become a Mexican citizen right off the bat, unless you have a Mexican parent or grandparent. So, you will be applying for the Mexican equivalent of a "green card" in the US.
This will allow you to stay in Mexico indefinitely, work for a Mexican employer, buy property and open a bank account. You won't be able to become a Mexican citizen until you are living in Mexico for at least a few years. Then, you can apply for citizenship and become a dual citizen if you want. You will not be relinquishing your American citizenship unless you want to, and to do that you have to go to a US consulate and formally renounce as well as pay a fee.
4. What should we do about bank accounts?
Manny's Answer: We do not have Mexican bank accounts because of the onerous FATCA reporting requirements, which is a legal requirement for Americans to report foreign bank accounts. Rather than deal with that hassle, we obtained an HSBC bank account. We drove all the way to Oakland CA in order to get it, because HSBC is all over Mexico and since it's a US-based account, we don't have to pay any ATM fees or have any reporting requirements when we withdraw. Santander is another bank in Mexico that also has US branches (several in New York and New Jersey). We also retained our US-based Wells Fargo account and that's how we pay our US bills when we have to.
5. And we want to use our cellphone here as well as internet. What do you recommend?
Manny's Answer: For internet, we always make sure that we rent places that have free wi-fi. Those are easy to find these days, and every hotel has wi-fi. This has not been a problem for us as DSL internet service is now common all over Mexico. However, we also invested in a KeepGO device, which is a mobile 3G hotspot that works all over Mexico as well as other countries. It's metered, so data is expensive, but we use is only when we absolutely need to and it has helped us numerous times when wi-fi was unavailable.
For cellphones, we use Cricket as our cellphone provider. We have a family plan. Two of our family members in America use their phones up there, while we use our two cellphones in Mexico. It's a flat $150 per month for all 4 lines. The phones work in the US as well as Mexico so we always have cellphone service when we come back to the US on business. It works out great and there are no "surprise" fees like there is with AT&T and Verizon. After getting hit with a huge thousand-dollar "foreign roaming" bill with Verizon, we switched to Cricket. No more nasty surprises after that, we always know what our bill will be.
We are not affiliated with any of these companies, we are just letting our readers know what has worked for us. If you find something else that works for you, that's great.
WANT TO LEARN MORE ABOUT EXPATRIATING TO BAJA?
Thinking about expatriating to Baja California Sur? Cabo San Lucas, La Paz, or San Jose del Cabo caught your fancy? Then consider the beauty of Baja!
This particular book discusses Baja California Sur (BCS).
We cover the following cities:
This book also includes answers to common questions, a reference section for local schools, and several insightful interviews with local residents a well as a Mexican immigration attorney. Learn candid information to help you on your personal expat journey!
Many of you know that we are planning an extended research trip to Baja California this year. We have thought about driving this year, rather than flying. So, which border crossings are the safest on the Mexican-U.S. Border?
A big thank you to Jorge Luna, who has offered this incredibly useful information (this comment has been used with his explicit permission):
Jorge: I'm a regular user of the highways that connects the Texas border. The safest crossing between Mexico and Texa is Colombia Bridge Border Crossing. This is the quickest and safest highway There is a cheap toll in advance (approximately $3 or $4 USD, can't remember the exact amount). You can pay this using a major credit card.
Laredo is also a good option, but the traffic is heavy there (more during the Easter holiday), however Laredo is the shortest distance between Monterrey and Texas.
Another option is to use the toll road to Reynosa (it will cost around $15 USD) and cross into Texas using Anzalduas Bridge, using these last bridge you can avoid the Reynosa downtown area. Reynosa has a bad reputation on security issues.
If you are looking for a good stopping point, you can overnight in the McAllen/Harlingen area where you can find hotels starting at $40USD/night or she can overnight here in Monterrey that is full of affordable and comfortable hotels and drive straight to Houston the next morning without making stop on the Texas Valley area.
A final advice, never use the riverside highway that connects the Mexico's border cities such as Laredo ,Mx-Reynosa-Matamoros. If you need to move around the Rio Bravo area, it's better use the American Riverside Highway (Laredo,Tx-McAllen-Brownsville)
Thanks, Jorge for the great tip!
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Just a middle-class dad and mom with three young kids, looking to escape the rat race. This is our journey!
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