How to Buy Real Estate in Mexico as a Foreigner
Are you dreaming of living abroad, vacationing regularly, or retiring in Mexico? If so, you may want to buy a property of your own to call home. But can you buy property in Mexico as a non-citizen? And, further, can you buy land near the beach or on the island of Cozumel.
Many foreigners ask these questions when considering a move to Mexico so here you can find all the answers you need to know.
Can I own property in Mexico as a foreigner?
In short, yes, you can own property in Mexico as a foreigner. However, the location of your desired property will determine how you’ll need to go about the purchase.
Mexico has a “restricted zone’ which includes all of the land located within 100 kilometers (62 miles) of the country’s border or 50 kilometers (31 miles) of an oceanfront.
(Since Cozumel is an island, all of the land is included in the restricted zone.)
Property found within the restricted zone can still be bought by a person who is not a Mexican citizen but you’ll need to do so through ownership of a Mexican corporation or a trust agreement with a Mexican bank (aka Fideicomiso).
Buying property outside of the restricted zone is possible directly.
Buying Mexican property in the restricted zone: Should I use a trust or a corporation?
Do you want a piece of paradise near the beach or the border?
You’ll need to decide whether a trust or corporation is better for your situation.
Here’s a closer look at both options and the pros and cons of each.
Buying restricted Mexican property using a trust (Fideicomiso de Zona Restringida)
A Fideicomiso de Zona Restringida is a trust for real estate property located in a restricted zone. It’s the most commonly used option. To get a Fideicomiso, you will enter into an agreement with a Mexican bank of your choice which will become the trustee that holds the title of the property (since you can’t).
You become the beneficiary of the trust which typically enables you to use, improve, sell, rent, mortgage, and will the property as you’d like. The trust rights you receive will depend on the specific wording of the trust agreement. In most cases, the bank is given no responsibility for the property so trustees have the freedom to do whatever they want with it.
An experienced real estate agent can set this up for you in a seamless process.
Here’s a look at the pros and cons:
- Residency is not needed.
- You can designate the beneficiaries who will inherit the trust upon your death (functioning like a will).
- The property is not in your name so liens can’t be placed against it for any debts you owe personally.
- If you get residency and qualify, you can exempt 100% of ISR tax (capital gains tax) up to a selling price of approximately $ 4,000,000 (MXN) if you sell the property (year 2020).
- Trusts are perpetually renewable and transferable.
- Initial bank fee to establish trust and yearly fees.
- Can extend the buying timeframe by several weeks.
- Trust must be renewed every 50 years.
Foreigners interested in buying a property in Mexico for personal use that won’t generate an income, especially non-residents and tourists.
Buying restricted Mexican property using a corporation
A Mexican corporation is considered a Mexican citizen under the law so it enables you to buy property in the restricted zone. To set it up, it’s best to seek legal counsel and a good accountant.
The process will be completed by the Notary and generally costs $1,000 to $ 1,500 USD.
An important note is that a Mexican corporation requires at least two partners, both of which can be foreigners. However, in order to act on behalf of the corporation as a partner, you have to have your resident status. If you don’t, you will need to give Power of Attorney to a Mexican who acts on your behalf, which gives somebody else control over everything you do (not typically desirable).
- Get the property title in the name of the corporation.
- Save money on income tax if you intend to buy property for a commercial reason.
- Create a legal source of income in the country.
- Must have an accountant.
- Need resident status to act on behalf of the corporation.
- Cash is not an option to pay for the companies expenses (only check and wire transfer).
- No way to completely avoid capital gains tax when selling the property.
Best for: Foreigners with residency who want to buy property for a commercial reason or open a business.
Next, here’s a look at answers to frequently asked questions about owning property as a foreigner in Mexico.
What is the history of Mexican laws on foreigners owning property?
In 1917, the Mexican constitution declared that only Mexican citizens could be landowners. That changed in 1973 when the Foreign Investment Law was passed which allowed foreigners to buy property in Mexico as long as it was outside of the restricted areas. Then, in 1993, another law was passed which stands today, allowing non-Mexican citizens (foreigners) to buy property in restricted zones through the ‘Fideicomiso’ or a corporation.
What is the restricted zone in Mexico for buying a property?
The restricted zone in Mexico includes all land that is within 100 km of the country’s borders and 50 km of the ocean.
What are the risks of buying property in Mexico?
Many people wonder, “Is it safe to buy property in Mexico?”
Buying property in Mexico is easier and safer than ever thanks to the more liberal laws regarding land ownership by foreigners. There are a few issues you should know about which as an experienced and reputable real estate agent, I can help you mitigate.
- Verifying ownership of a property and right to transfer the title.
- Not being able to communicate in a foreign language with unfamiliar customs and laws (contracts must be written in Spanish to be legal).
- The trust rights given to you depend on the trust agreement.
- Finding properties that are in good condition and don’t have any hidden problems.
My team and I are fluent in several languages including English, Spanish, German, Dutch, Polish and working on French, and we have over a decade of experience in Cozumel real estate transactions.
We will ensure your interests are protected every step of the way.
How do title deeds work in Mexico?
Ownership of property in Mexico is documented through the “escritura.” It is inscribed into the ledger of a notary and copies are given to the buyer and seller. The copies must have an original signature by the notary. It’s important to ensure all of the information is correct prior to recording as corrections can add additional time and costs.
Buy property in Mexico with confidence and ease
When you are in the hands of trusted, reputable real estate professionals, you can buy property in Mexico with complete peace of mind, whether in a “restricted area” or not.
The team at Karen Cozumel Realtors are highly experienced in helping foreigners buy Mexican property using both trusts and corporations. Through our partnerships with local banks, attorneys, notaries, accountants and government entities, we will walk you through every step of the process with ease.
Find your dream home in paradise and ensure your interests are protected!