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Overview for Expats Wanting to Invest in Mexican Real Estate

Overview for Expats Wanting to Invest in Mexican Real Estate

One out of 10 British citizens live abroad.Though most of them head towards the U.S. Several thousand of them are living in Mexico, either part time or full time. Many of them are buying real estate in both the Mexican Restricted Zone and the non-restricted zone. Here we will give you a brief overview on what a UK citizen is up against when he/she decides to buy a home in Mexico.

Let's face the facts. One out of 10 British citizens live abroad. (source: www.immigrationmatters.co.uk). Though most of them head towards the U.S. Several thousand of them are living in Mexico, either part time or full time. Many of them are buying real estate in both the Mexican Restricted Zone and the non-restricted zone. Here we will give you a brief overview on what a UK or other foreign citizen is up against when he/she decides to buy a home in Mexico

Mexico's 2 Main Legal Structures Regarding Foreign Home Ownership

Mexico has 2 main divisions when it comes to foreigners buying property within the Country. They break this down into what they call the Restricted Zone and the Non-Restricted Zone. The laws concerning foreign property ownership are very different in both regions.

The Restricted Zone

Property located within 50 kilometers of any beach or coastline or within 100 kilometers from either the US-Mexico border or the Mexican border with Belize or Guatemala is considered "restricted". Britons and other non-Mexican national can NOT legally own any land nor property within these areas.

British citizens can however get away with purchasing property within the restricted zone by using a legal loophole known as the Fideicomiso. We'll discuss Fideicomisos in a bit.

The Non-Restricted Zone

Britons and other non-Mexican citizens CAN legally own property that is located outside of the restricted zone. The non-restricted zone comprises mainland property that is more than 100 kilometers from any Mexican border or more than 50 kilometers from any coastline.

There are still several requirements that a foreign national needs to meet prior to buying property within the non restricted zone, however, once those requirements are met they are on equal terms with any Mexican national and can buy and sell land or property under the same terms and conditions that govern Mexican Citizens.

Understanding Fideicomisos

Buying property within the restricted zone is basically done through a trust. There are basically 3 parties involved when a foreigner purchases restricted zone property.

  1. The Seller known as the Fideicominte in Spanish
  2. The Fiduciario which is the trustee that will actually purchase and own the property on your behalf.
  3. You. The Buyer, also known as the Fideicomisario.

Basically this is how it works. A trustee (usually a Mexican financial institution or bank), buys and owns the property on behalf of the foreign buyer which is not legally entitled to own the land or property within the restricted zone.

The foreign buyer is given full control over the property and can rent, sell or otherwise use the property as he/she wishes. In other words, the buyer has acquired full rights and responsibilities that come with the property's ownership, including any gains or losses it may incur and will also have to pay property taxes and any other fees associated with homeownership. 

The trustee is obligated to follow any orders given by the foreign buyer and has therefore no real rights over the property other than just having its name attached to it as the legal owner.

Useful Resources on Buying Property in Mexico
VivaReal is an Latin America property listings network focusing on Mexico, Costa Rica, Panama, Colombia, Brazil, Argentina, and other Latin American and Caribbean countries. VivaReal's mission is to help connect expats, retirees and worldwide investors with local real estate agents and sellers throughout these countries.