It is possible to buy a house in Mexico as a foreigner

Have you ever wondered if it’s possible to buy a house in Mexico as a foreigner? The answer is yes, but with certain restrictions. Properties must be located outside the border zones for foreigners to acquire them. However, before beginning this process, it is crucial to obtain a permit for the acquisition of real estate from the Mexican Government’s Ministry of Foreign Affairs (SRE). Although it may seem complicated, obtaining this permit is usually a relatively simple and quick process. Below, we’ll guide you through the necessary steps to facilitate your process of purchasing a property in Mexico as a foreigner.

Requirements for foreigners

For foreigners interested in purchasing a home in Mexico, it is essential to understand the legal requirements they must meet to complete a successful real estate transaction. These requirements may vary depending on the location of the property and the buyer’s immigration status, but generally include the following:

• Residence Permit : Foreigners wishing to purchase property in Mexico must have a valid residence permit. This permit can be temporary or permanent and must be issued by the National Migration Institute (INM). This document is essential to demonstrate that the buyer is legally authorized to reside in the country and conduct real estate transactions.
• Federal Taxpayer Registry (RFC) : Obtaining a Federal Taxpayer Registry (RFC) with the Tax Administration Service (SAT) is another crucial requirement for foreigners wishing to purchase property in Mexico. The RFC is a unique tax identification number that allows buyers to comply with their tax obligations in the country, including paying taxes related to the acquired property.
• Legal Representative (if necessary) : In some cases, foreign buyers may need to appoint a legal representative in Mexico to act on their behalf during the purchase process and signing of the deeds. This is especially important if the buyer cannot travel to the country to complete the transaction in person.

It’s important to keep in mind that these requirements are essential to ensuring a smooth property purchasing process.

Meeting these requirements guarantees a smooth legal and tax process for foreigners interested in investing in real estate in Mexico.

Real estate trust and Mexican law

Article 27 of the Mexican Constitution establishes limitations on purchasing a home in Mexico as a foreigner, restricting direct purchases in areas such as the border and the coast. However, a fideicomiso (trust) is an agreement regulated by the Credit Institutions Law, where the foreigner acts as trustee and a bank as fiduciary. This mechanism allows for the indirect purchase of the property, granting the foreigner full enjoyment of the property.

For foreigners interested in acquiring real estate in Mexico, a real estate trust is essential. This instrument facilitates both the purchase and management of the property, avoiding potential conflicts and providing a solid legal framework. Trustees of financial institutions must begin the process by submitting the corresponding applications to the Ministry of Foreign Affairs (SRE) to obtain the necessary permits for establishing trusts.

Do I have to pay taxes when buying a house in Mexico as a foreigner?

The answer is yes. The process of acquiring and owning real estate in Mexico entails certain taxes that foreigners must consider. These taxes are divided into three main categories (ISAI, ISR, and Predial):

Real Estate Acquisition Tax ( ISAI )

• The ISAI varies by state and generally represents around 2% of the property’s value.
• In Quintana Roo, this tax ranges between 1.5% and 2.5%, depending on the municipality.
• The ISAI withholding is carried out by the notary public.
• The determination of ISAI payment or exemption is based on land use and sales price.

Income Tax (ISR)

Income tax is applied to income earned in Mexico, including income from the sale of real estate.

Property Tax

This tax is mandatory for all property owners and varies by state.

It’s important to understand these taxes and their implications when purchasing property in Mexico as a foreigner to avoid financial surprises and comply with applicable tax obligations.

What steps should I follow to purchase a home if I am a foreigner?

In addition to the requirements already mentioned, you should consider the following steps to acquire the home of your dreams:

• Search and select the property: Explore the real estate market to find the home that fits your needs and budget [ View Properties ].
• Mortgage Loans (optional): Evaluate available financing options and obtain a mortgage loan if necessary to finance your purchase.
• Hire a lawyer: Make sure you have legal counsel to review contracts and ensure the purchasing process is transparent and secure.
• Make an offer: Negotiate the price and terms of the transaction with the seller and present a formal offer through a sales contract.
• Signing the purchase agreement: Once your offer has been accepted, sign the purchase agreement before a notary public to formalize the transaction and guarantee its legal validity.

4 Best Cities to Buy Property in Mexico

If you’re considering investing in real estate in Mexico, choosing the right location is crucial to maximize your investment. Here are the four best places to buy a property:

1. Mexico City: As the country’s capital, Mexico City offers a wide variety of real estate options. Popular areas like Polanco, Santa Fe, and Roma-Condesa remain attractive investment hotspots. Furthermore, with a steadily growing economy, vibrant cultural life, and continued demand for properties, Mexico City is an excellent choice for real estate investors.
2. Playa del Carmen : Located on the beautiful Riviera Maya, this city is known for its stunning white-sand beaches and turquoise waters. This coastal city has experienced rapid development in recent years, making it an attractive destination for real estate investors. With a growing supply of beachfront condos, vacation homes, and development opportunities, Playa del Carmen is ideal for those looking to invest in the tourism sector.
3. Tulum : With its bohemian charm and pristine beaches, Tulum has become a popular destination for both tourists and real estate investors. This picturesque coastal town offers a wide range of properties, from eco-resorts to exclusive beachfront villas. With sustained tourism growth and a booming real estate market, Tulum promises to be a lucrative long-term investment.
4. Mérida : Known as the “White City” for its limestone colonial buildings, Mérida is the capital of the state of Yucatán and a rising destination for real estate investors. With a vibrant historic center, a rich culture, and a growing international community, Mérida offers a wide variety of properties, from elegant colonial homes to modern condominiums in residential developments. Furthermore, its strategic location in southeastern Mexico makes it an ideal starting point for exploring the region’s natural and archaeological wonders.

You might be interested in: Best areas to invest in the Riviera Maya

CONCLUSION

Buying a home in Mexico as a foreigner can be a reality with the proper procedures and knowledge of the relevant legal and tax requirements. Although there are some restrictions and additional steps to follow, such as obtaining a permit from the Ministry of Foreign Affairs and considering a real estate trust, these processes are generally accessible and relatively simple.

Additionally, it’s important to consider the taxes associated with purchasing a property, such as the Real Estate Acquisition Tax (ISAI) and the Property Tax, to avoid financial surprises in the future. With a clear understanding of the necessary steps and available options, foreigners can make successful real estate investments in Mexico. Likewise, by considering the best cities to buy property, such as Mexico City, the Riviera Maya , and Merida, investors can identify growth opportunities and maximize their return on investment in the Mexican real estate market.

If you just want to get to know the area better, read our Riviera Maya Travel Guide .