Buying Property in Mexico as a Foreigner: Fideicomiso, Notario and Closing

Yes. Mexico's Constitution (Article 27) and the Foreign Investment Law set the rules:

Many popular areas for foreign residents, such as Puerto Vallarta, Cancún, Playa del Carmen, Los Cabos and Ensenada, are in the restricted zone. Inland cities such as San Miguel de Allende, Mexico City and Querétaro are generally outside it.

For the agreement outside the zone, you agree to be treated as a Mexican national with respect to that property and not to ask your own government to intervene in disputes about it. This is often called the Calvo clause.

A fideicomiso is a trust with three parties:

• The bank (trustee, fiduciario), a Mexican bank that holds legal title.
• You (beneficiary, fideicomisario), with the right to use, rent, improve, sell or pass on the property.
• The seller (fideicomitente), who places the property into the trust at the sale.

Key points:

• The term is up to 50 years and can be renewed.
• You can name substitute beneficiaries, who take over your rights if you die. This works much like naming heirs.
• The SRE must issue a permit before the trust is set up.
• The bank charges a setup fee and an annual trust fee. Compare banks before you choose.
• When you sell, you can transfer your beneficiary rights to the buyer or the bank can transfer the property to a new trust.

If you buy a property already in a trust, you can sometimes take over the existing trust, which may cost less than creating a new one.

In Mexico, a notario público is not the same as a notary public in the US or Canada. A Mexican notario is a licensed attorney appointed by a state government after a strict selection process. For a property sale, the notario:

• Confirms the seller's identity and legal title.
• Obtains a certificate showing whether there are liens (certificado de libertad de gravámenes).
• Checks that property tax (predial) and water bills are paid.
• Calculates and collects the taxes due on the sale.
• Drafts the deed (escritura) and registers it with the Public Registry of Property.

The buyer usually chooses the notario. Pick one in the state where the property is located. A notario is neutral; for advice on your side of the deal, you may also want your own lawyer. In the US, people who call themselves "notarios" and offer legal help are a known scam. See notario fraud.

• Title and liens. The notario orders the lien certificate; ask to see it.
• Land type. Make sure the property is private property, not ejido land that has not been converted. Buying unconverted ejido land is one of the biggest risks for foreigners. See ejido land risks.
• Zoning and permits. For new builds, ask for the land use permit (uso de suelo) and construction licenses.
• Condo rules and fees. In a building, ask for the condominium regulations and proof that maintenance fees are current.
• Presales (preventa). Buying before a building is finished carries a risk the project stalls. Check the developer's record and how your payments are protected.
• Agents. Real estate agents are not licensed in every Mexican state. Ask for references and never wire money to a personal account.
• Escrow. In areas with many foreign buyers, US-style escrow services are common. They hold funds until the deed is signed.

Expect closing costs on top of the price. They usually include:

• Acquisition tax (impuesto sobre adquisición de inmuebles), set by each state or municipality.
• Notary fees, the appraisal (avalúo), and public registry fees.
• Trust costs (bank setup fee and SRE permit) in the restricted zone.

After you buy, you pay annual property tax (predial) to the municipality. If you rent the property out, the rental income is taxable in Mexico and you need an RFC. See how to get an RFC.

When you sell, capital gains tax applies. Mexican tax residents may qualify for an exemption when selling their own home, subject to limits and conditions. Ask the notario before you list the property. See taxes for residents.

Not automatically. You can buy as a tourist, and owning a home does not change your immigration status. Owners of very high-value property can use it to support a residency application; the threshold is set in UMA days like the other financial tests. See investing in Mexico and temporary residency. Most buyers qualify for residency through income or savings instead; see the solvency calculator.