Yes, foreigners can buy a property directly within Mexico. However, according to Mexican law, foreigners cannot own real estate directly within the restricted zone.

The Mexican Constitution prohibits direct ownership of real estate by foreigners within what is known as the «restricted zone.» The restricted zone covers all land located within 100 kilometers (approximately 62 miles) of any Mexican border and within 50 kilometers (approximately 31 miles) of any Mexican coastline. However, to allow foreign investment in these areas, the Mexican government created the «fideicomiso,» which is, in general terms, a real estate trust. Essentially, this type of trust is similar to trusts established in the United States, but a Mexican bank must be designated as the trustee and, as such, holds the title to the property and is the registered owner. The Mexican government created the «fideicomiso» to reconcile the issues involved in the development of the restricted zone and attract foreign capital. This allowed foreigners, as beneficiaries of the trusts, to enjoy unrestricted use of land located in the restricted zone without violating the law.

Fideicomiso vs. Mexican Corporation

A fideicomiso allows a foreign buyer to own properties with all the rights of a citizen. With a single fideicomiso, you can own many Mexican properties. Most importantly, it provides continuity of ownership, and it will be the property of your heirs. You can also transfer the fideicomiso to another foreign buyer if you wish to sell. A fideicomiso is valid for 50 years and is renewable from then on (by you or your heirs). It can be held by one or more individuals or an entity (LLC, for example). The opening of a fideicomiso, including fees paid to the Secretary of Foreign Affairs, is approximately $1,800, and annual fees are around $500.

Foreigners can also own land in restricted areas through a Mexican corporation. These can be 100% foreign-owned. Consider a corporation when buying real estate strictly for investment or business purposes. If you plan to subdivide and develop land, a Mexican corporation makes sense.

Corporations have more restrictions and reporting requirements than fideicomisos. You must file monthly reports on income and expenses. Assets in a corporation are considered commercial, so they are subject to additional taxes. The initial costs of setting up a corporation will vary depending on the attorney. The minimum required is 50,000 Mexican pesos. Additionally, you will also incur annual costs to have a certified accountant handle it.