Can Foreigners Legally Buy Property in Mexico?

Yes, foreigners can legally purchase property in Mexico, including in popular tourist destinations such as the Riviera Maya, Puerto Vallarta, and Los Cabos. However, there are specific legal structures and processes that must be followed to ensure compliance with Mexican laws. Below is a step-by-step guide:

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1. Understanding the Restricted Zone

The restricted zone is an area defined by Mexican law as any property:

• Within 50 km (31 miles) of the coastline.

• Within 100 km (62 miles) of international borders.

While foreigners cannot directly own land in these areas due to constitutional restrictions, they can legally acquire property through a special mechanism known as a Fideicomiso (bank trust).

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What is a Fideicomiso?

A Fideicomiso is a legal trust agreement set up through a Mexican bank that allows foreigners to hold property in the restricted zone. Here's how it works:

• The Mexican bank acts as the trustee and holds the title to the property on behalf of the foreign buyer (the beneficiary of the trust).

• The foreign buyer retains all ownership rights, including the ability to sell, rent, build, lease, or inherit the property.

• The Fideicomiso is valid for 50 years and can be renewed indefinitely in 50-year increments.

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Costs and Process of Setting Up a Fideicomiso

• Initial Setup Fee: Approximately $500–$1,500 USD. **Reference Price** 

• Annual Maintenance Fee: Around $500–$1,000 USD. **Reference Price**

• A notary public or legal representative will assist in setting up the Fideicomiso, and the process is usually straightforward.

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2. Buying Property Outside the Restricted Zone

For properties outside the restricted zone, foreigners can directly purchase and own property in their name without the need for a Fideicomiso.

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• These properties are typically located inland and are not subject to the coastal and border restrictions.

• Foreign buyers enjoy the same legal protections as Mexican nationals for these purchases.

 

3. Key Steps to Buying Property in Mexico

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Step 1: Hire a Qualified Real Estate Agent

• We at How to Invest in Mexico, we help by selecting the best and most trustworthy certified real estate agent who is experienced in working with foreign buyers. They will help you navigate the market, negotiate deals, and understand local regulations. 

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Step 2: Obtain Legal Representation

• A real estate attorney is essential to ensure your transaction complies with Mexican law. They will:

  • Conduct due diligence on the property.

  • Review contracts and ownership documents.

  • Assist in the setup of a Fideicomiso (if required).

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Step 3: Conduct Due Diligence

• Verify the property's title to ensure there are no legal disputes or debts.

• Check zoning laws to confirm the property can be used as intended (residential, commercial, rental, etc.).

• Ensure the seller has full ownership rights to sell the property.

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Step 4: Sign a Purchase Agreement

• Once terms are agreed upon, a purchase agreement (contrato de compraventa) is signed by both parties.

• This document outlines the terms of the sale, including:

  • Purchase price.

  • Payment schedule.

  • Closing date.

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Step 5: Work with a Notary Public

• A notario público (notary public) is a government-appointed legal officer who oversees and finalizes property transactions in Mexico.

• The notary ensures:

  • All taxes are paid.

  • The title is legally transferred.

  • The transaction complies with local regulations.

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Step 6: Pay Closing Costs and Finalize the Transaction

• Closing costs typically range from 4–8% of the purchase price and include:

  • Transfer taxes.

  • Notary fees.

  • Title insurance (optional but recommended).

• Once payment is made, the notary finalizes the transaction and records the title transfer with the public registry.

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4. Additional Considerations for Foreign Buyers

Taxes and Fees

• Closing Costs: Include notary fees, title insurance, and transfer taxes.

• Property Taxes: Known as "predial," these are relatively low in Mexico compared to other countries.

• Capital Gains Tax: If you sell the property, you may be subject to capital gains tax unless exemptions apply.

 

Permits for Foreign Buyers

• Foreign buyers require a permit from the Mexican Ministry of Foreign Affairs to purchase property in the restricted zone. This is generally handled by the notary during the transaction process.

 

Financing Options

• Limited Mortgages for Foreigners: Mexican banks rarely offer mortgages to foreign buyers, so most transactions are cash-based.

• Foreign Financing: Some international banks or private lenders may provide financing options, but these are not common.

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