How to Buy & Own Property in Mexico as a foreigner

It is perfectly legal for foreigners to buy & own Mexican real estate. Beyond the somewhat tedious process of setting up a bank trust (fideicomiso), buying property in Mexico as an American or Canadian is fairly straightforward. With a relatively low budget, you can purchase a beach property in Mexico (a house or a condo) that you’ve always dreamed of! All it takes is a little research and due diligence. Below we’ll cover everything you need to know to get started on purchasing real estate as a foreigner and expat condo ownership in Mexico.

Can foreigner buy property in Mexico?

It’s time to put an end to the most enduring myths about buying property as a foreigner and if it is even possible to own a condo in Mexico.

Mexican citizens are able to buy properties anywhere within the country, but foreigners face some extra fees when purchasing in some of the more desirable areas. Properties within 50 km of the coast or 100 km from a border will have to purchase the property(a house or a condo) through a trust with a Mexican bank known as a fideicomiso.

International buyers are encouraged to work with a notary  as they figure out all the paperwork and documents needed to create the fideicomiso. The fideicomiso is a renewable 50-year or 100 years trust that costs on average $500 per year, and is set up during the closing and title point of the sale.

It should be noted that all real estate transactions in Mexico require the involvement of a Notario Público for all the paperwork and documentation requirements. These notaries have significantly more experience and responsibility than a typical notary public in the United States and thus the two should not be confused.

While the process may vary, the general process for a Canadian or US Citizen or foreigners buying property in Mexico’s “restricted zone” should be:

1. Find your dream property (a house or a condo) only with licenced brokers / licenced property finders and make a written  offer with a 1000 to 5000 usd deposit at the broker .
2. Sign the initial sales agreement to sell/buy. A 30% deposit is usually expected from the buyer for pre-construction, and 40% is the minimum for already built property. The legally binding contract is in Spanish and should be written also by a Mexican lawyer/notary or a licenced broker .
3. Send your deposit via wire transfer, along with any other sequential payments as outlined in the terms of your sales contract.
4. Once you have paid the full balance for the property, the seller contacts your bank to start the trust application for your fideicomiso. Many times you are able to take posession of the property at this point.
5. Pay closing costs, taxes, & fees. Closing costs average around 7% in Riviera maya .
6. Within 3 months of your closing date, the Public Registry issues the final deed (escritura) to your property and the property is officially yours. This can take longer for pre-sale properties. We’ve seen titles taking about a year in some cases.

The whole process of registering a property can be completed in 45 – 100 days. The process may be slightly different depending on the type of property; e.g. pre-construction deals, beachfront properties, land purchases, etc.

What is a fideicomiso?

A fideicomiso is a trust that allows a foreigner to buy property in Mexico with all the rights of a Mexican citizen. This is a safe, legal, and extremely common vehicle for foreign ownership of real estate in Mexico. Sell it, rent it, build on it, live on it, or pass it down to your heirs… the choice is yours!

• It can be held by one or more individuals. This means that a husband and wife can be co-owners. Owners can also list an heir.
• It lasts for 50 years/100yearsb and after that, it is renewable by the owner or their heirs. This means that ownership does not expire as long as it is renewed.
• The trust is easily transferrable when an owner is ready to sell.
• With a single fideicomiso, international owners can hold multiple properties in Mexico.
• Fideicomisos do add some time and cost to the buying process. The setup costs range from $1500 to $2500 USD and maintenance fees cost around $500 to $700 USD per year.

Buying Property via a Corporation

 A Mexican corporation can be formed in two weeks with at least two partners. (They can both be foreigners; no Mexican citizen is needed, so don’t fall for that story.) It costs a maximum of $1,500 USD to 3000 usd and from there you can use it to acquire property through a normal transaction as a Mexican national would. So in a month and a half, you can have the corporation formed and the property under its name. You can also buy a car and pretty much anything you want with it. But price and speed are the only benefits of a corp.

The corporation ties you to an accountant for life. Even if it reports zero income, an accountant will charge you a fee. To act on behalf of the corporation as a partner you need to get your resident status, otherwise you will have to act through powers of attorney given in the corporation to Mexicans (which means that somebody else will have, for lack of a better word, control of your money, land, car, and everything you buy or do through a corporation). Everything, and we mean everything you buy through a corporation, has to be done through a check and or wire transfer made from the corporation bank account, so cash is not an option. And finally, the biggest downside: there is no way to avoid capital gains when selling the property. If you manage the property properly and get fiscal receipts for everything you do in the house, you can deduct that against the profit at the time you sell to lower the tax bill, but you can´t avoid it completely.

That makes this the best option for people interested in starting a business. If you intend to open a business or even buy property for a non-residential reason, a corporation is the best route. It will save you some money on income tax, and most of all, it will allow you to create a legal source of income in the country.

My opinion:

In my opinion, a Fideicomiso is the best way to go if you plan on buying property in Mexico and using it for residential/personal reasons that will not generate any major income. If you intend to open a business or if you’re buying the property (or multiple properties) to function as a business, then you will want to form a corporation but is will pay more taxes every year ( double taxes , as owner of the house and over the income of the corporation ) .

Closing Costs

Before buying real estate in Mexico, make sure you are considering the closing costs into your budget. Real estate closing costs in Mexico consist of various fees and expenses. They generally total between 5% to 7% of the purchase price. These costs are always the responsibility of the buyer. The seller, on the other hand, will have to pay other real estate fees and their capital gains taxes.

Property taxes in Mexico

• Transfer Tax: A 2% acquisition tax is payable by the buyer when the property changes ownership to them. This is part of the closing costs.
• Property Tax: This is called predial, and the average cost is approximately 0.1% of the assessed value of the property at the time of sale.

How to send the payment?

If you’re planning to pay your down payment or full payment from a non-mexican bank account, you’ll want to keep an eye on the exchange rate and associated fees from your bank. Most property is listed in USD, so no matter what, you will have to ask your bank to convert to USD before sending the transfer and a lot of developer has bank account in USD also in Mexico .

Wire transfers are the gold standard and are sometimes the only available method when sending payments to purchase property in Mexico, and are also very secure. If the amount is not greater than $10K USD, we suggest using Wise.com as they consistently offer the best exchange rates and the lowest fees.

Property Purchases in Mexico and Escrows

Escrow accounts are fairly a new thing in Mexico, adopted from the US and Canada. This really depends on the seller, and if the seller wants to arrange these services. If a seller does not wish to set up the escrow, but the buyer requests it, then many times the buyer is responsible for the escrow setup fees ($600-$800 USD). Escrow is rare when it is a single-family home or a direct sale by owner of a property that is already built.

To sum it up, don’t be afraid if a seller or developer doesn’t offer escrow. A lot of foreigners that are in Mexico will tell you “don’t buy unless there’s escrow!”, and that’s good general advice, but it is still a new thing in Mexico, and until it is more widely adopted you won’t see it very often. So, if you find your dream property and they don’t offer escrow, it’s not a deal-breaker. There are other ways to make sure your purchase is safe for exmple if the developer is covered by a bank trust ( fideicomiso administrativo ) .

A Note on Escrow

Escrow is new around here, but most real estate brokers and agents are using escrow. HOWEVER, not all sellers are open to it and also the brokers dont like much this way . Escrow’s have about a $750 USD start-up cost paid for by the buyer, and there are very few escrow companies in the area that are recommended. The best Escrow companies in Mexico are actually title companies in the US. Mexico does not have any regulation over escrow companies so to protect your money you will want to go with a company that is backed up and regulated by a federal body in either the US or Canada. Hypothetically, anyone can start up an escrow company in Mexico and no one will check the funds or whats going on with that company, but companies based in the US are regulated by the federal banking commission. Many brokers use US-backed escrow companies

Sending less than $5000 USD to MXN

For amounts below $5000 USD, we always use Wise (formerly Transferwise). Wise.com offers the best exchange rate to send money to Mexico since they are independently provided by Reuters, guaranteeing fair and low-cost money transfers. Based on our past experience with them, the recipient’s Mexican bank account usually gets the money transfer within 3 days.

Due diligence when buying pre-construction

Everyone gets a little nervous about pre-construction or pre-sales, but almost all projects complete relatively on time. The, “I’ve heard horror stories!”, exclamation comes up a lot, and sometimes we question if they really have heard those stories, or if we can find some firsthand accounts of those stories (If have experienced or know firsthand of a horror story, write us! We’ll need specifics though). Regardless, you should definitely do some steps of due diligence when buying into a new project:

1. Legal due diligence: buy only with your personal licensed real estate agent and Confirm that the Seller is the legal owner of the property, or has a legal contract of sale or transfer from the owner. Insist on seeing the deed (escritura) for the property on which the construction is to take place.
2. Building permits: Confirm that the Seller has current/paid-up construction permits in place for the project contemplated
3. Confirm the reputation of the developer. Ask for references of happy previous clients, and check them out and check the CV .
4. The same goes for the master broker/marketing entity. Confirm his track record, reputation and experience in preconstruction projects.
5. Finally, be sure you are happy with the sales agent who you are dealing with, your broker ( if legally licenced in Mexico ) is surely connected only with serious developers . Do they understand, and can they explain to you the legal structure on which the development is based.

Most pre-sale or pre-construction sales contracts will outline the penalties and repercussions of a project delaying or not being completed. Normally the developer is obliged to pay you a daily or monthly delay fee, and if the project does not complete, you will be entitled to the return of your money after the developer is able to sell the project to another buyer , the most safe are the developers covered by a bank trust ( fideicomiso administrativo) .

The delivery date of projects is not a guideline, the law 247 establish that the delivery MUST BE indicated with day/month/years but try to keep in mind that the completion date could be delayed 1-3 months due to supply chain problems with materials (seen during covid). Developers tend to build from the bottom up – so if your unit is on the top floor, it would be one of the last ones to complete. A good developer will offer a on the construction( almost because the law 247 oblige them to do it ) .

Land & Lots

Purchasing land is always a full-cash purchase and is a simple transfer of title transaction. You’ll need to get a notary to check that the land does not have any liens and that the land is not deemed ejido.  

Ejido Land

Ejido land is mainly used for agriculture, on which community members farm designated plots and collectively maintain communal holdings. Today, many Ejido properties are abandoned, with no farming activity taking place. However, by law foreigners are not allowed to be owners of ejido land, only Mexican citizens.

A Mexican citizen wishing to purchase Ejido land must have the agreement of the whole community that “owns” the land. If an Ejido property is sold without the consent of all owners, the buyer can risk a legal battle after the fact, which, in the worst-case scenario means the land will be returned to the original owner. The owner has rights of possession over the communal land, but does not have a Deed, and if he wants to sell it, he needs the approval of the assembly of the commissary.

The only way to acquire Ejido land is to go through a privatization process that transfers the property to a Mexican citizen through a Title or Deed. Transferring Ejido property into private ownership is a time-consuming process, and there are no guarantees it will succeed. Until an Ejido Title has been transferred to private property by a Mexican, foreigners cannot acquire ownership of Ejido land.

Leased Land

In the USA or Canada, there are areas that are protected and the homeowner essentially is leasing the land from the government for 99 years. That is not the case in Mexico. Land leases in Mexico are always involving private individuals, and have a max time limit of 9 years and 11 months. The landlord may also choose to lease his land on a month-to-month basis as there is no legal minimum.

There are a lot of cases where people have entered into the “informal” rolling 10-year agreement with landlords. This is a bad idea because the fact is that if your landlord decided to just terminate the agreement after the first 10 years – THEY CAN. The landlord can simply opt to not recognize the next 10 years of the so-called deal.

Always ask if the land is leased when purchasing a property in Mexico.

the best way to buy a land in mexico

In my opinion the best way to buy a land is inside a develpment with amenities , it grant you all the right and your investment will be safe under every aspect if you buy with a licenced broker .

Tips when Looking for Property in Mexico

• Keep an open mind – many experience a reality check when it comes to prices, neighborhoods, amenities, and other various quirks about property in Mexico
• Tropical property maintenance is a lot of work – you will need a property manager
• Some agents advertise that they are an AMPI certified agent – this is NOT the real estate certificate for Mexico!!!! licence as broker is legally required for anyone to practice real estate and over 95% of broker are ILLEGAL , an illegal broker cant protect you from scam and fraud so ask ALWAYS to see number of licence ( matricula ) and check it on the governament web site .
• You can usually find some good properties on Facebook. Join the groups and search on Marketplace. Many sellers also list their property on EXP or inmuebles 24 or listglobally .
• Location is always the #1 factor, but you’ll always have to sacrifice something. Whether it be an amenity, build quality, price, HOA fees, parking, highway noise – there are tons of factors when choosing a property. Pick the top 3 most important things to you and stick to them.
• Due diligence of a property purchase in Mexico includes researching the broker ( first and most important things) , your broker/property finder will meet for you the best developer, checking that all deeds on the land and the property are official (if it is already built property), and making sure the identity of the seller is verified. A good developer will have multiple sucessful previous projects, major investors, and have a large and professional crew. The construction license should always be posted with a permit number at the construction site.
• Furniture is not as cheap as many would assume. In fact, some argue it’s probably cheaper to furnish a home in the US than in Mexico.

I hope this post has been helpful for you , i’m in market since 1993 , i hope you”ll choose me as your personal broker , please send me a message to +529841500051 or send me a email to rivieramayablue@gmail.com or