How does American buying real estate in Mexico work?

Authored by the expert who managed and guided the team behind the Mexico Property Pack

Everything you need to know before buying real estate is included in our Mexico Property Pack

Who is the author of this content?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Mexico. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The LatinvestorAt TheLatinvestor, we explore the Mexican real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Mexico City, Cancún, and Puerto Vallarta. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Can Americans legally buy property anywhere in Mexico, or are there restrictions compared to locals?

Americans can legally purchase property throughout Mexico, but face specific geographical restrictions that Mexican citizens do not encounter.

Within Mexico's "restricted zone"—defined as areas within 50 kilometers of any coastline or 100 kilometers of international borders—Americans cannot hold direct property title. Instead, they must establish a fideicomiso, which is a bank trust where a Mexican bank holds legal title while the American buyer retains all beneficial ownership rights including use, sale, inheritance, and rental income.

Outside the restricted zone, Americans enjoy identical property ownership rights to Mexican citizens and can hold direct title without any additional legal structures. The fideicomiso system costs approximately $600-800 annually in trust fees and requires renewal every 50 years, though renewal is generally automatic.

This restriction exists due to constitutional provisions aimed at protecting Mexico's sovereignty over strategic coastal and border areas, but it doesn't prevent foreign ownership—it simply requires an additional legal structure.

What types of properties can Americans buy, and are there limits on land size or usage?

Americans can purchase nearly all categories of real estate in Mexico without significant restrictions on property types or sizes.

Permitted property types include residential homes, condominiums, commercial buildings, vacant development land, vacation rentals, and investment properties. Mexican law generally imposes no limits on the size of land Americans can purchase, whether for residential or commercial purposes.

The primary restriction involves ejido land, which represents communal property owned collectively by rural communities and cannot be purchased by foreigners or even many Mexican citizens. Ejido land lacks individual title and represents a significant portion of Mexico's territory, particularly in rural areas.

Americans should verify zoning regulations and environmental restrictions before purchase, especially for commercial development or construction projects. Some coastal areas have additional environmental protections that may limit development regardless of ownership structure.

Do Americans need a specific visa or residency status to purchase property in Mexico?

Americans do not require any specific visa or residency status to purchase property in Mexico as of September 2025.

Property ownership is completely separate from immigration status, allowing Americans to buy real estate while remaining non-residents of Mexico. However, buyers must obtain a Mexican tax identification number (RFC) for property registration and tax purposes.

While residency isn't required for purchase, some Americans choose to obtain temporary or permanent residency for other benefits such as easier banking, utility setup, or extended stays. Mexican residency can also provide certain tax advantages for property ownership.

The RFC tax ID can typically be obtained through a Mexican consulate in the US or through an authorized representative in Mexico, streamlining the process for non-resident buyers.

Do Americans have to be physically present in Mexico to complete a property purchase?

Physical presence in Mexico is not mandatory for Americans to complete property purchases, though it's highly recommended for due diligence purposes.

Americans can execute the entire transaction remotely by appointing a trusted representative through a power of attorney, allowing the designated person to sign documents and complete the closing on their behalf. This power of attorney must be properly notarized and often requires authentication by Mexican consular services.

Remote purchases are particularly common for investors buying multiple properties or buyers who have previously visited and inspected the property. However, first-time buyers should strongly consider visiting the property in person to verify condition, location, and legal status.

It's something we develop in our Mexico property pack.

Many successful transactions occur through video tours, virtual inspections, and trusted local representatives, but personal inspection remains the gold standard for avoiding costly mistakes.

What is the full step-by-step process for Americans buying real estate in Mexico?

The Mexican property purchase process for Americans involves ten distinct steps that typically require 30-60 days to complete.

1. **Property identification and title verification** - Research the property's legal status, confirm it's not ejido land, and verify clear title without liens or encumbrances.2. **Purchase agreement execution** - Sign an "Offer to Purchase" contract detailing price, terms, timeline, and contingencies, typically requiring a 10-20% deposit.3. **Notary public selection** - Hire a Mexican notary public (notario público) who serves as the government-appointed legal representative for real estate transactions.4. **Fideicomiso establishment** - If buying in the restricted zone, select a Mexican bank to serve as trustee and initiate the trust application process.5. **Document compilation** - Gather passport copies, proof of funds, purchase agreement, property deed, Mexican tax ID (RFC), and trust paperwork if applicable.6. **Due diligence and title search** - The notary conducts comprehensive title verification, zoning compliance checks, tax payment confirmation, and encumbrance searches.7. **Closing cost payment** - Pay closing costs totaling 4-6% of purchase price, including transfer taxes, notary fees, legal costs, and trust setup fees.8. **Final deed execution** - Sign the "Escritura Pública" (public deed) before the notary, releasing escrow funds and transferring title or beneficial rights.9. **Property registration** - Register the title with the Public Registry of Property and, if applicable, register the fideicomiso with relevant authorities.10. **Tax and utility setup** - Establish property tax payments, transfer utilities, and complete final ownership documentation.

Is it mandatory for Americans to hire a lawyer, and what should they look for?

While not legally mandatory, hiring a qualified lawyer is strongly recommended for Americans purchasing Mexican real estate, particularly for first-time buyers or restricted zone purchases.

The notary public handles the legal transfer process, but an independent lawyer provides crucial buyer representation, contract review, and due diligence that protects American interests throughout the transaction.

Key qualifications to seek in a Mexican real estate lawyer include bilingual communication skills, extensive cross-border transaction experience, strong local reputation among expat communities, transparent fee structures, and verifiable professional references.

Effective lawyers should demonstrate familiarity with US tax implications, fideicomiso structures, and common pitfalls that affect American buyers. They should provide clear explanations of Mexican legal concepts and maintain regular communication throughout the process.

What are the taxes and ongoing fiscal obligations for Americans owning property in Mexico?

American property owners in Mexico face tax obligations in both countries that require careful planning and compliance.

Mexican tax obligations include a one-time acquisition tax of approximately 2% of the property's assessed value, annual property taxes (predial) ranging from 0.1-0.3% of assessed value, and annual fideicomiso fees of $600-800 for trust properties. Property taxes in Mexico are generally much lower than US rates.

US tax obligations require Americans to report their global property holdings to the IRS, pay income tax on Mexican rental income, and potentially face capital gains tax on property sales. Some Mexican taxes may be credited against US tax liability to avoid double taxation.

Americans should maintain detailed records of all Mexican property expenses, taxes paid, and improvements for US tax purposes. Professional tax advice is essential for optimizing both Mexican and US tax strategies.

It's something we develop in our Mexico property pack.

Which areas are most popular with Americans for living, renting out, or investment?

Location	Primary Appeal	Average Rental Yield
Cancún/Riviera Maya	Beach tourism, international airport	8-12% annually
Puerto Vallarta	Established expat community, culture	6-10% annually
Los Cabos	Luxury tourism, golf courses	7-11% annually
Playa del Carmen	Beach lifestyle, growing tourism	9-13% annually
San Miguel de Allende	Colonial charm, retiree community	5-8% annually
Mexico City	Urban amenities, business center	4-7% annually
Tulum	Eco-tourism, bohemian lifestyle	10-15% annually

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What is the current breakdown of average property prices in key Mexican cities?

Mexican property prices vary dramatically by location, with coastal tourist destinations commanding premium pricing compared to interior cities as of September 2025.

Location	Average Property Price (USD)	Price per Square Meter (USD)
Mexico City	$150,000 - $400,000	$2,000 - $4,500
Cancún	$180,000 - $600,000	$2,500 - $5,500
Playa del Carmen	$150,000 - $500,000	$2,300 - $4,700
Puerto Vallarta	$200,000 - $700,000	$2,500 - $6,000
Tulum	$180,000 - $400,000	$2,200 - $4,800
Los Cabos	$300,000 - $1,000,000+	$4,000 - $7,000
San Miguel de Allende	$250,000 - $800,000	$3,000 - $6,500

Are mortgages available to Americans buying in Mexico?

Mortgages are available to Americans purchasing Mexican property, though options are more limited than domestic US financing and typically require higher down payments.

Mexican banks offer foreign buyer mortgages with interest rates ranging from 7-10% annually, while some US-based international lenders provide rates of 5-8% for Mexican properties. Most lenders require 35-50% down payments for foreign buyers compared to 20% typical in the US.

Approval requirements include excellent credit scores (typically 700+), documented income verification, valid identification, substantial down payment, and sometimes proof of existing liquid assets. The approval process often takes 45-90 days compared to 30-45 days for US mortgages.

Americans can improve approval chances by working with international mortgage brokers, establishing relationships with Mexican banks before applying, preparing comprehensive financial documentation, and considering properties in major markets where lenders have more experience with foreign buyers.

What are the most common mistakes Americans make when buying property in Mexico?

American buyers frequently encounter avoidable pitfalls that can result in significant financial losses or legal complications.

The most serious mistake involves purchasing ejido or communal land without proper individual title, which can result in complete loss of investment since these properties cannot be legally owned by foreigners or sold in traditional markets.

Other critical errors include:

1. **Inadequate title verification** - Failing to conduct thorough title searches and boundary confirmations2. **Zoning oversights** - Not verifying construction permits, zoning compliance, and development restrictions3. **Financial shortcuts** - Avoiding escrow services or independent legal review to save costs4. **Agent dependency** - Relying exclusively on real estate agents who may have conflicts of interest5. **Due diligence gaps** - Not investigating unpaid utility bills, property taxes, or HOA fees6. **Documentation errors** - Accepting incomplete or improperly executed legal documents

Prevention strategies include hiring independent legal counsel, using reputable escrow services, conducting comprehensive property inspections, verifying all documentation through official channels, and avoiding deals that seem unusually favorable compared to market rates.

It's something we develop in our Mexico property pack.

How does the buying process for Americans compare to Mexican citizens?

The property acquisition process for Americans involves additional complexity and costs compared to Mexican citizens, particularly in coastal and border areas.

Aspect	Americans (Foreigners)	Mexican Citizens
Geographic Restrictions	Trust required for coast/border areas	Direct ownership everywhere
Ownership Structure	Fideicomiso in restricted zones	Direct title ownership
Total Costs	4-6% + annual trust fees	3-4% closing costs only
Transaction Timeline	45-60 days (with trust setup)	30-45 days typically
Legal Protections	Equal once properly structured	Full constitutional protections
Financing Options	Limited, higher rates	Full domestic lending access
Ongoing Obligations	Trust renewals, dual tax reporting	Property taxes only

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Taxes for Expats - Buying Property in Mexico as an American
2. Riviera Maya Cozy - US Citizen Buy House Mexico
3. Mexico Relocation Guide - Foreign Property Ownership
4. Global Property Guide - Mexico Buying Guide
5. The Latinvestor - Mexico Foreign Real Estate Ownership
6. The Latinvestor - Buy Property Mexico Without Citizenship
7. Riviera Maya Blue - Foreign Citizens Buy Property Mexico
8. Pacaso - Buying Property in Mexico
9. MexHome - Questions Foreigners Ask
10. MexLaw - Property and Real Estate Laws in Mexico