A complete guide to buying property in Mexico as a US citizen
Mexico’s vibrant culture, breathtaking coastlines, and welcoming communities have made it a top destination for Americans dreaming of owning a slice of paradise. From the beaches of Baja to the colonial charm of San Miguel de Allende, buying property in Mexico has become more than just a trend – it’s a lifestyle shift for thousands of US citizens.
This practical guide breaks down the legal, financial, and tax considerations, tailored for Americans ready to enter the Mexican real estate market with clarity and confidence.
What every buyer should know
- Foreigners can legally own a home in Mexico using a bank trust for restricted coastal and border zones.
- Due diligence is essential when buying property – hire a notario público (notary public) and verify land title before purchase.
- Expect to pay extra costs when buying property – these include acquisition taxes, notary fees, and yearly property taxes.
Can Americans legally own property in Mexico?
Americans can legally buy property in Mexico – and many already do. The country welcomes foreign investment in real estate, and US citizens can fully own homes across most regions. But if you’re buying property in Mexico near the coast or an international border, you’ll need a fideicomiso – a trust held by a Mexican bank that grants full usage rights.
This rule applies to the “restricted zone”, defined by Article 27 of the Mexican Constitution as land within 100 km (61 miles) of international borders and 50 km (31 miles) of the seacoast. Within this area, foreigners cannot hold direct title but may acquire property through a fideicomiso. A permit must also be secured from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores) – and buyers must agree to submit to Mexican jurisdiction and waive diplomatic protection.
Fideicomiso: your key to coastal ownership
Fideicomiso is a legal workaround that allows foreigners to own land in restricted zones of Mexico. In simple terms, it’s a trust agreement where a Mexican bank holds the property title on your behalf, while you retain all ownership rights. The role it plays are:
-
Secure ownership for coastal properties
If you're wondering, "Can an American own land in Mexico’s beachfront areas?" – the fideicomiso is the answer. It legally enables Americans to purchase land within restricted zones that would otherwise be off-limits. -
Long-term validity and transferability
The fideicomiso lasts 50 years and is renewable. It can also be transferred or sold to another foreigner, offering long-term flexibility and investment security. -
Estate planning and legal protection
Fideicomisos allows you to name multiple beneficiaries and avoid inheritance tax, making it a popular choice for American retirees and investors seeking secure property succession in Mexico.
Do you need residency or visa to buy real estate in Mexico?
Americans can purchase land in Mexico without holding residency or a visa. However, to complete the transaction and register ownership, a Mexican tax ID (RFC) is required.
While obtaining an RFC usually involves temporary or permanent residency, non-residents can still acquire property by working with a legal representative or notary who helps secure the necessary permits and tax filings on their behalf.
If you plan to live in Mexico long-term or generate rental income, having the proper visa and RFC is strongly advised and the best visas to have are:
-
Temporary resident visa
Popular with Americans buying property in Mexico. It lasts up to four years and supports multiple re-entries. -
Permanent resident visa
Ideal for long-term living and owning property. It never expires and offers stronger financial thresholds for eligibility. -
Work visa
Issued when employed by a Mexican company. Often tied to a temporary resident visa with work authorization.
Steps to buy property in Mexico as an American
- Step 1: Work with a licensed real estate agent who understands the market and can guide you through local processes – including selecting a trusted notario to legally oversee the transaction.
- Step 2: Make an offer – then conduct a title search and ensure there are no legal issues tied to the land or home before signing the agreement.
- Step 3: Pay closing costs – then transfer ownership through a fideicomiso if in a restricted zone, with the notario registering the escritura (deed) to finalize your rights.
Which ownership option is best for buying a home?
Worried which ownership option between fideicomiso and corporation is better when buying a house as a United States citizen in Mexico? This breakdown will clear it up and guide you to making an informed choice.
Fideicomiso: pros & cons
| Pros | Cons |
|---|---|
| Full rights to use, lease, improve, and sell the property | Buyer does not hold title directly – the bank holds legal ownership |
| Simple to transfer ownership to heirs or beneficiaries | Requires legal paperwork and bank coordination for changes |
| Avoids inheritance tax in many cases | Still subject to US estate reporting requirements |
| Multiple beneficiaries can be listed | Adding/removing beneficiaries requires legal fees and bank approval |
| Ideal legal structure for coastal and border-zone residential properties | Not suitable for all property types, especially outside restricted zones |
| Protects buyer under Mexican law via notario oversight | Legal protections are under Mexican jurisdiction – may offer limited recourse for US citizens |
When a corporation beats a trust
Buying property in Mexico as an American for commercial or rental income may benefit from forming a Mexican corporation. Unlike a fideicomiso, corporations can own land in restricted zones without trust fees. This is ideal if you're buying property for business, development, or multiple units. Always consult a local attorney to ensure it aligns with your long-term goals.
What does it cost to buy a home in Mexico?
Property prices in Mexico vary significantly based on location, property type, and proximity to urban centers. We are focusing on three major cities in Mexico and their property prices as of May 2025.
- Mexico City: Average price per square meter in the city center is approximately $3,279 USD, while outside the center it's around $2,320 USD.
- Guadalajara: City center properties average $2,500 USD per square meter, and $2,000 USD outside the center.
- Puerto Vallarta: Expect to pay about $2,800 USD per square meter in central areas, with prices decreasing to $2,200 USD in outlying regions.
(Property prices sourced from Numbeo.)
Estimated closing costs & legal fees
| Notary fees | 0.5–1.5% of purchase price |
| Registration tax | 1–2% depending on location |
| Legal fees | $1,000–$3,000 (varies by complexity) |
| Bank fideicomiso setup | $500–$1,500 one-time + $500 annual maintenance |
| Closing coordinator | $500–$1,000 (if applicable) |
| Title search & due diligence | $300–$600 |
| Appraisal & survey | $300–$700 |
| Agent commission | 2–4% of the purchase price |
NOTE! These additional costs typically add 6-10% to the total property investment.
Hidden costs to watch out for
When buying property in Mexico, be mindful of potential hidden expenses:
- unpaid property taxes or utility bills from previous owners.
- currency exchange fluctuations affecting the final purchase price.
- homeowners association (HOA) fees, especially in gated communities.
- maintenance and repair costs for older properties.
- insurance premiums, particularly in areas prone to natural disasters.
Taxes to know before buying property in Mexico
When buying property in Mexico, understanding the tax landscape is crucial for US citizens. From acquisition to ownership and eventual sale, various taxes can impact your investment. Here's a breakdown of the key tax considerations:
Property taxes: Mexico vs US
Property taxes in Mexico are typically lower than in the US, with annual rates (Impuesto Predial) ranging from 0.05% to 1.2% of the property's assessed value. In contrast, US property taxes are based on market value and usually fall between 0.7% and over 2%, depending on the location.
| Tax type | Mexico | United States |
|---|---|---|
| Annual property tax A recurring tax on property ownership; based on assessed value and paid yearly |
0.05% – 1.2% of assessed value | 0.7% – 2%+ of market value |
| Acquisition tax (ISAI) A one-time tax when purchasing property; based on the transaction's assessed value. |
2% – 5% of assessed value | Varies by state; often lower |
Capital gains tax on resale
When selling property in Mexico, non-residents are subject to capital gains tax. The tax can be either:
- 25% of the gross sale price without deductions, or
- 35% of the net gain, allowing for deductions like improvements and commissions
It's advisable to consult with a tax professional to determine the most beneficial option.
Tax residency rules
If Mexico becomes your primary home or you spend over 183 days there, you may be considered a Mexican tax resident. Tax residency means you're taxed on worldwide income by Mexican authorities. US citizens buying property in Mexico should consider how extended stays or relocation could impact both their Mexican and US tax obligations.
US tax implications
American property owners in Mexico must also consider US reporting requirements:
- FBAR filing if foreign bank or financial accounts exceed $10,000
- FATCA reporting for foreign assets using Form 8938
- Declaring rental income and capital gains on US tax returns
- Using foreign tax credits or FEIE to avoid double taxation
Buying land in Mexico as a US citizen may create tax obligations in both countries, and you must report foreign income and property holdings to the IRS to stay compliant. US expats automatically have until June 16, 2025, to file, and our free extension service can help extend the deadline to October 15 or December 15, though any taxes owed are still due by April 15.
Also read - Complete tax guide for US expats in Mexico
What is ejido land and why is it risky?
Ejido land in Mexico is property designated for agricultural use by local communities. Even if it’s not actively farmed, land zoned as ejido remains classified as such permanently.
Foreigners cannot directly purchase ejido land unless it’s privatized, transferred to a Mexican citizen, and then sold a complex, time-consuming, and often unsuccessful process. This creates significant legal uncertainty and potential loss of investment for buyers.
To avoid complications, here's how to verify if land is legally safe to purchase:
- Consult a notario público as they can access the property’s legal status and history.
- Request an official title search and confirm the land is not still zoned as ejido.
- Ask for proof of privatization to ensure the property was legally transferred.
- Work with a local real estate attorney because they can flag red flags before you commit.
Ready to own land in Mexico minus the tax stress?
Buying property in Mexico can be a dream come true for US citizens but only if you handle the legal and tax details correctly. From trust structures to IRS reporting, expert guidance is essential to avoid costly mistakes.
Our team at Taxes for Expats helps you stay compliant, reduce tax burdens, and enjoy your Mexican home with confidence.
FAQ
VA loans can only be used for properties within the US and its territories, not for buying property in Mexico.
Americans can buy property in Mexico without living there full-time, as long as all legal and tax requirements are met.
Financing options in Mexico are limited, often require large down payments, and rarely offer long-term mortgage terms like those in the US.
