Yes, foreigners can legally buy property in Mexico. Whether you’re considering a vacation home, retirement retreat, or investment property, understanding the legal framework is crucial. This guide provides a detailed overview of the process, legal requirements, and considerations for foreign property ownership in Mexico.

Understanding Foreign Property Ownership in Mexico

Legal Framework for Foreign Ownership

Mexico’s Constitution, specifically Article 27, outlines the rules for property ownership. Foreigners are permitted to acquire property, but certain restrictions apply, especially in specific zones. The key legal structures facilitating foreign ownership are:

• Fideicomiso (Bank Trust): Allows foreigners to own property in restricted zones through a trust arrangement with a Mexican bank.
• Mexican Corporation: Foreigners can establish a Mexican corporation to own property, particularly for commercial purposes.

Restricted Zones and the Fideicomiso

What Are Restricted Zones?

Restricted zones are areas within:

• 50 kilometers (31 miles) from Mexico’s coastlines.
  • This applies to all coastal areas, including popular destinations like Cancun, Playa del Carmen, Los Cabos, and Puerto Vallarta.
• 100 kilometers (62 miles) from Mexico’s international borders.
  • This includes areas near the U.S.-Mexico border, such as parts of Baja California, Sonora, and Tamaulipas.

In these zones, foreigners cannot directly own land. However, they can acquire property through a fideicomiso.

How Does a Fideicomiso Work?

A fideicomiso is a legal trust where:

• A Mexican bank holds the legal title to the property.
• The foreign buyer is the beneficiary, retaining rights to use, rent, sell, or bequeath the property.
• The trust is typically established for 50 years, renewable indefinitely.
• Annual fees range from $500 to $600 USD, depending on the bank.

Direct Ownership Outside Restricted Zones

Outside the restricted zones, foreigners can:

• Purchase property directly in their name.
• Avoid the need for a fideicomiso.
• Enjoy the same rights and responsibilities as Mexican nationals regarding property ownership.

Ejido Land and Ownership Restrictions

What Is Ejido Land?

Ejido land refers to communal land designated for agricultural use. It is not privately owned and has specific regulations.

Foreign Ownership of Ejido Land

Foreigners cannot directly own ejido land. However, they may lease it for certain purposes, provided they comply with Mexican laws and regulations.

The Mexican Property Buying Process

Steps to Purchase Property

1. Due Diligence: Conduct thorough research on the property, including verifying ownership and legal status.
2. Offer and Agreement: Make an offer and sign a purchase agreement with the seller.
3. Obtain Permits: If purchasing in a restricted zone, apply for a permit from the Ministry of Foreign Affairs.
4. Establish Fideicomiso: Set up a fideicomiso with a Mexican bank.
5. Notary Public: Finalize the transaction with a notary public, who will register the property and ensure legal compliance.
6. Payment and Transfer: Complete the payment and transfer the property rights.

Costs and Taxes Associated with Property Ownership

Initial Costs

• Notary Fees: Typically 1%–2% of the property’s value.
• Acquisition Tax: Varies by state; generally between 2%–4% of the purchase price.
• Fideicomiso Setup: One-time fee ranging from $1,000 to $1,500 USD.

Ongoing Costs

• Annual Fideicomiso Fee: Approximately $500–$600 USD.
• Property Taxes (Predial): Generally low and vary by location.
• Maintenance Fees: Applicable if the property is part of a homeowners association.

Rights and Responsibilities of Foreign Property Owners

Rights

• Use and Enjoyment: Live in, rent, or lease the property.
• Transferability: Sell or transfer the property.
• Inheritance: Pass the property to heirs.

Responsibilities

• Maintenance: Keep the property in good condition.
• Tax Compliance: Pay property taxes and other applicable fees.
• Legal Compliance: Adhere to Mexican laws and regulations regarding property ownership.

Frequently Asked Questions (FAQs)

Do I need to be a resident to buy property in Mexico?

No, foreigners can purchase property without being residents.

Can I buy property in Mexico without a fideicomiso?

Yes, if the property is outside the restricted zones.

How long does the fideicomiso last?

The fideicomiso is established for 50 years and is renewable indefinitely.

Can I sell or rent my property?

Yes, as a beneficiary of the fideicomiso, you have the right to sell, rent, or lease your property.

Conclusion

Foreigners can legally buy property in Mexico, with specific provisions in place to facilitate ownership. Understanding the legal structures, such as the fideicomiso, and the associated costs and responsibilities is essential for a successful investment. Consulting with legal and real estate professionals is highly recommended to navigate the process smoothly.

Ready to invest in Mexico? Let us guide you through the property buying process with expert advice and trusted legal support. Contact us today to start your journey to owning property in Mexico!