Mexico Property Laws: A Complete Guide for Foreign Buyers
Mexico Property Laws: A Complete Guide for Foreign Buyers
Buying property in Mexico has become increasingly popular among foreigners looking for retirement homes, investment opportunities, or vacation getaways. But before signing any contract, it’s crucial to understand Mexico property laws to ensure a safe and legal real estate transaction.
While owning property in Mexico is entirely possible for non-Mexican citizens, there are specific legal frameworks in place—especially when buying near the coast or borders. This guide will walk you through everything you need to know about Mexico property laws, including ownership rights, restricted zones, legal structures, and important precautions to take before investing.
Can Foreigners Own Property in Mexico?
Yes, foreigners can legally own property in Mexico. However, Mexico property laws distinguish between areas where foreign ownership is unrestricted and areas where additional legal steps are required.
There are two zones to consider:
✅ Unrestricted Zone:
Properties outside 50 km (about 31 miles) from the coast and 100 km (about 62 miles) from borders.
Foreigners can own property outright under their own name using a standard deed (escritura pública).
⚠️ Restricted Zone:
Coastal and border regions (e.g., Cancun, Playa del Carmen, Cabo San Lucas, Tijuana).
Foreigners cannot hold direct title, but can still purchase property legally through a bank trust or a Mexican corporation.
What Is a Fideicomiso (Bank Trust)?
Under Mexico property law, foreigners buying property in the restricted zone must use a legal structure called a fideicomiso.
Here’s how it works:
A Mexican bank acts as the trustee and holds the property title.
The foreign buyer is the beneficiary of the trust and has full rights to use, lease, sell, or pass the property to heirs.
Trusts are valid for 50 years and renewable indefinitely.
The buyer pays an annual trust fee to the bank (usually $400–$700 USD).
This structure is 100% legal and common for foreigners buying beach properties in Mexico.
Buying Property Through a Mexican Corporation
Another legal way for foreigners to acquire property in the restricted zone is by forming a Mexican corporation, particularly if the buyer intends to:
Run a rental business or resort.
Purchase multiple properties for commercial use.
A corporation:
Can be 100% foreign-owned.
Can own property anywhere in Mexico without using a fideicomiso.
Must file taxes and meet legal business obligations.
Consult a qualified attorney and accountant before forming a corporation to ensure compliance with Mexican business and tax laws.
Legal Process of Buying Property in Mexico
Understanding the step-by-step process ensures your transaction follows Mexico property laws:
Hire a Real Estate Agent & Attorney
Choose professionals experienced in working with foreign clients and knowledgeable about local law.Make an Offer & Sign the Offer Letter
Once accepted, both parties sign a formal letter of intent or reservation agreement.Due Diligence
Your attorney verifies the property’s title, ownership history, and ensures it is free from liens or disputes.Set Up Fideicomiso (if required)
The notary will coordinate with a bank to set up the trust for restricted-zone properties.Sign the Escritura Pública (Public Deed)
This is done before a notario público, a government-appointed legal official, not to be confused with a U.S. notary.Register the Property
After the deed is signed, it is registered with the Public Registry of Property in the appropriate state.Pay Closing Costs and Taxes
Expect to pay 4%–7% of the property value, including notary fees, registration, appraisal, and transfer tax.
Taxes and Fees Under Mexico Property Laws
Property owners in Mexico are subject to the following:
✅ Annual Property Tax (Predial)
Very low compared to the U.S. or Canada.
Based on the official assessed value, not market value.
✅ Capital Gains Tax (on sale)
Applies if the property appreciates in value.
Legal exemptions exist if the property is your primary residence or has been held long-term.
✅ Acquisition Tax (ISAI)
Usually 2% of the purchase price.
Paid at closing and required for title registration.
Hiring a local accountant is highly recommended to navigate taxes efficiently and legally.
Inheritance and Property Transfer
Under Mexico property laws, foreigners can pass property to their heirs. To simplify this process:
Include your heirs as secondary beneficiaries in the fideicomiso.
Draft a Mexican will for properties or assets located in Mexico.
Work with a notary to ensure the transfer process is smooth and legal.
Avoiding Real Estate Scams
To stay safe, follow these tips:
Never buy ejido land (communal farmland) unless it’s been fully regularized.
Don’t rely solely on verbal agreements—always insist on written contracts.
Make sure the real estate agent is registered and the attorney is licensed.
Avoid cash-only deals and always ask for receipts and transaction records.
Final Thoughts
Understanding Mexico property laws is essential for making a safe, secure, and profitable investment. Whether you’re looking to retire by the beach, rent out vacation homes, or start a real estate portfolio, you can absolutely own property in Mexico—legally and confidently.
With the right legal structure, professional support, and clear understanding of the law, buying property in Mexico is not only possible—it’s one of the best real estate opportunities available for foreigners today.