Can You Buy Land In Mexico Without Being A Citizen?

‍A quick two-week vacation to Mexico simply isn’t enough, which is why a lot of retirees and ex-pats are seeking to acquire real estate to relocate permanently.

Yes, you can buy land in Mexico without being a citizen. The process of buying land in Mexico as a non-citizen is not very difficult, but you do need to bypass the county’s ‘restricted zones’ by setting up a ‘fideicomiso’ trust so that you can acquire real estate without location restrictions.

After extensively researching Mexico’s real estate laws, I have gathered enough information to determine if foreigners are allowed to buy land without citizenship. My research has indicated that you need to follow Mexico’s land purchase process carefully to make your real estate acquisition legal.

‍Can You Buy Land In Mexico Without Being A Citizen?

There are a lot of myths regarding buying real estate in Mexico as a foreigner. Despite many people claiming that you cannot do so legally, that is simply not true.

As a foreign national, you can pursue investments in Mexico - including buying real estate. While getting involved in real estate and business in the country requires you to go through Mexico’s procedure(s), buying land is very realistic and not all that difficult.

Before you start evaluating land parcels, you should understand that Mexico has ‘restricted zones’ that are technically off-limits for foreign real estate acquisitions. However, there is a loophole that enables you to become a property owner. More on this next.

Mexico’s ‘Restricted Zones’ for Real Estate Explained

Initially, the Mexican government was weary of foreign investors, and they prohibited non-nationals from buying land. In 1917, an article was added to the constitution stating that no foreigner shall be allowed to buy land in Mexico’s restricted zones.

The restricted zones dictate specific terms for foreign real estate acquisitions, such as prohibiting non-citizens from buying land within 50km of the coastline.

With that said, the Mexican government eventually realized that closing off the hot spots of their country to outside investors would prevent economic growth and development. So, in 1973, the concept of fideicomiso was introduced so that non-citizens could buy land through a bank trust.

Setting up a fideicomiso trust is quite simple, and your real estate investment will be secured as a bank connected to the Mexican government oversees the trust. The trust essentially works as a middleman between you and the seller - with an option to extend the lease every 50 years.

The fideicomiso trust takes an initial fee when you buy the property. Afterward, you pay around $700 to $800 per year in maintenance fees to the trust.

How to Buy Land in Mexico Without Being a Citizen

Once you get your head around the fideicomiso and restricted zones, buying land in Mexico is pretty straightforward and probably quite similar to how you do so in your home country.

Mexico is a promising location for future investments, and the government does not want to discourage people from getting involved. With that said, you may find that buying land in Mexico may actually be easier than in other western countries.

The zoning laws in Mexico are not as intensive as in the United States and Europe, which implies that there will likely be less tape if you have any development plans. Follow this process to buy land in Mexico without being a citizen.

1. Property Location & Valuation

Mexico is a big country, and there are a lot of great places to buy land. Finding the right location is all about determining your real estate goals.

You need to consider why you are buying land in Mexico, as this will help you narrow down your search. If your primary goal is to find a place for living, consider what you value as a home base. Do you like the beach or city life? Regardless, Mexico is a country that has it all, and you will not be disappointed.

On the other hand, Mexico is also a great place to pursue business opportunities. One of the best things about owning land is that you can set up a business. Mexico does not discriminate against foreign nations starting businesses, which is one of the reasons this is a great place for investing.

With that said, depending on what your goals are for buying land in Mexico, you need to choose a location wisely. Once you have narrowed down your top shortlisted candidates, evaluate each property carefully. Hire an inspector, if needed, and be thorough with your evaluation.

2. Making an Offer

Bargaining is always on the table when it comes to real estate, and you should make an offer that you think is fair for the property. This can sometimes be tricky to do without real estate knowledge, which is why I recommend hiring an appraiser to inspect the land.

An appraiser will give you a detailed analysis of the property so that you can make an offer that suits your interests and finances. Once both parties have agreed on a price, you should have a notary present to make the deal official.

This process also requires putting around 5 to 10% of the property’s value in escrow as a deposit. Having an attorney present throughout the real estate acquisition is highly recommended. They will ensure that all documentation is sound, and they will take care of the bulk of the paperwork for you.

3. Fideicomiso Trust

Despite the fideicomiso trust being the biggest legal obstacles for non-citizens buying land in Mexico, it is actually pretty straightforward. Hiring a good lawyer can make a huge difference in simplifying this process, as they will likely be able to connect you with a fideicomiso trust.

You will need to have all of the right documents on-hand before you set up the trust, as a bank official will need all the required paperwork to finalize the fideicomiso. This will include the following:

• Deed
• Tax receipts
• Property sale contract

If all documentation is in order, the notary will approve the trust agreement. The documentation will be sent to the Mexican Public Registry of Property, and the property title will be handed over to you once the final payment is made.

Taxes When Buying Land in Mexico

As a foreigner, you can expect to pay an increased tax rate compared to Mexican nationals. While this does add to your expenses of living in Mexico, you will likely still save a ton of money compared to your home country.

There are various taxes that you need to be aware of, and you should stay up to date regarding changes in the tax code as a foreign national. That is why I recommend hiring a tax attorney in Mexico, as they will simplify the process and give you accurate and up-to-date information. These are the primary taxes you should keep in mind when buying land in Mexico as a non-citizen:

• Property Acquisition Tax - 2% of the land value
• Property Tax - 0.1% paid quarterly
• Capital Gains Tax - Upwards of 35% of the profits
• Rental Income Tax - 25% (if applicable)

Best Places to Buy Land in Mexico

Buying land in Mexico comes with a lot of incentives, both financially and for quality of life. A lot of people are moving to Mexico due to the climate, reasonable real estate prices, and rich culture, but you still need to figure out where you want to buy your land.

There are a lot of great places, which is why you need to consider what you are looking for before you start weighing out options. Mexico is filled with dynamic landscapes, and it has exceptional city life.

One factor that you may want to keep in mind is safety. Mexico is by no means the safest country on Earth, and some places are much more dangerous than others. With that said, that does not imply that there are no safe places to live.

In addition, you also want to keep your budget in mind. Mexico's land prices have been on the rise in recent years, and safe haven real estate hot spots are no longer what they once were. To help you find a perfect piece of real estate, I have compiled a list of the best places to buy land in Mexico based on price, safety, and quality of life.

1. Bahia de Navidad
2. San Miguel de Allende
3. Riviera Maya
4. Durango
5. Mexico City
6. Los Cabos
7. Guanajuato
8. Puerto Vallarta

Compared to thriving tourist districts around the country, these destinations are relatively low-key and have competitive real estate prices. If you are looking for affordable land in either an urban or coastal area, I recommend checking these locations out.