- The restricted zone is 50 km from any coast and 100 km from any border, under article 27 of the Constitution.
- Inside it, a foreign individual holds residential property through a fideicomiso, a renewable 50-year bank trust.
- Outside it, you take direct title in your own name.
- You do not need residency to buy. You do need an RFC to close.
- Mexican citizens, including dual nationals, don't need a trust at all.
The restricted zone, and why it exists
Article 27 of the 1917 Mexican Constitution prohibits foreign nationals from directly acquiring land within 50 kilometres of any coastline and 100 kilometres of any international border. The provision is a century old and it was about sovereignty over strategic territory, not about property markets.
The practical effect is that almost every destination on a foreign buyer's shortlist sits inside it: Cancún, Tulum, Playa del Carmen, Los Cabos, Puerto Vallarta, the Riviera Nayarit, all of coastal Baja, and the border cities. Meanwhile San Miguel de Allende, Guadalajara, Mexico City, Querétaro and Mérida are outside it, and there you simply buy in your own name with a normal deed.
How the fideicomiso really works
A Mexican bank, authorised as a trustee, holds legal title to the property. You are the beneficiary. In practice you hold every right an owner has:
- Live in it, rent it, renovate it, or leave it empty.
- Sell it to whomever you like, including another foreigner, who takes over or creates a trust.
- Use it as collateral for financing.
- Name substitute beneficiaries, which is the closest thing to a will for that asset and avoids Mexican probate for it.
The trust runs for 50 years and is renewable. Setting it up requires a permit from the Ministry of Foreign Affairs, which the notary and the bank coordinate.
It is not a 50-year lease, and the bank is not your landlord. The bank cannot sell, mortgage or occupy the property; its role is fiduciary and it acts on your instruction. Anyone describing this as "you don't really own it" either does not understand the structure or is selling you something else.
What it costs
| Item | Typical range | When |
|---|---|---|
| Trust setup fee | Several hundred to ~2,000 USD | At closing |
| Annual trustee fee | Commonly 500–700 USD | Every year |
| Foreign Affairs permit | Government fee, revised annually | At closing |
| Acquisition tax | Varies by state, roughly 2%–4.5% | At closing |
| Notary, registry, appraisal | Included in total closing costs of about 5%–8% | At closing |
| Annual property tax (predial) | Low by US standards | Every year, discounted if paid in January |
Figures move with the bank, the state and the year. Treat these as orientation and get written quotes before you sign anything.
Send us the property details and we'll tell you whether a trust or a company makes more sense, what it will cost to run, and what to check before you sign.
Get a reviewFideicomiso or Mexican company?
A Mexican corporation can hold restricted-zone property directly, and it gets recommended far more often than it should — usually by people who earn a fee setting companies up.
A company genuinely makes sense when the property is a commercial operation: several rental units, a business activity, partners, a real income stream. It brings monthly bookkeeping, annual filings, statutory obligations and, if it holds what is plainly somebody's beach house with no activity, an argument with the tax authority waiting to happen.
For a single home, the fideicomiso is usually simpler and cheaper across the years you will hold it. Run the numbers over ten years, not over closing day.
The two traps that cost real money
1. Ejido land
Ejido property is communal agrarian land with its own legal regime. It cannot be sold to a foreigner in the ordinary way, and converting it to private property is a formal process that must be completed before a sale, not promised afterwards. Every year foreign buyers lose everything on beachfront ejido plots that were priced too well to question. If a deal is dramatically cheaper than comparable properties, this is the first thing to check.
2. Paying before the title search
Mexico's system runs through a notario público, who is a state-appointed lawyer with public faith, not a US-style notary. The notary verifies title, checks liens, calculates taxes and registers the deed. Never hand over money based on a private contract and a handshake before that work is done — and use your own advisor, not only the one the seller or the developer introduces.
Taxes while you own and when you sell
While you hold it: the annual predial municipal tax, which is low, plus trustee fees. If you rent it out, that is Mexican-source income: you need an RFC, you issue electronic invoices and you file monthly. Short-term rental platforms report to the tax authority and withhold, so the "nobody will notice" approach stopped working some time ago.
When you sell: capital gains tax applies. There are exemptions for a primary residence, but they depend on residency status, on having the property registered as your home and on documentation you should have been building for years. This is precisely where people who bought without advice discover the cost of it.
Mexican citizens do not need a fideicomiso anywhere in the country. If you were born in the United States to a Mexican parent, you are already Mexican by birth under article 30 of the Constitution — you just need the paperwork. Registering your birth before you buy can remove the trust, its setup cost and its annual fee entirely. See how dual citizenship works →