Can Americans Own Land in Mexico?
Can Americans Own Land in Mexico?
If you’ve been asking yourself this question, you’re not alone.
In fact, questions related to buying property in Mexico are very popular these days, especially due to the massive changes in attitudes brought about by the pandemic.
Now, instead of feeling locked into a nine-to-five job in an office that never moves, many people have discovered that they actually can work from home just as effectively. Their bosses may not all agree, but many feel that after the pandemic subsides, there’s no going back.
Consequently, people are re-examining why they are content to suffer through cold, slushy, cloudy and depressing winters every year, especially when they can just as easily relocate to warm and sunny Mexico, at least for a few months per year.
So can foreigners buy property in Mexico? Yes they can. Can Americans own land in Mexico? Also yes! Mexico real estate, including land, is available for purchase by Americans, Canadians, and anyone around the world considered a “foreigner.”
The best news of all is that making real estate transactions in Mexico is easy - especially when you’re working with professionals whose speciality is helping Americans purchase and own land in Mexico. The only question left is “What are you waiting for?”
Can Americans Own Land Anywhere in Mexico?
Americans can own land almost anywhere in Mexico, but let’s face it, most people interested in buying land in Mexico want to have it as near as they can to the ocean. This falls into what is called the “Restricted Zone.”
Where is the Restricted Zone?
The Restricted Zone is defined in the Mexican Constitution as any land located within 50km (about 30 miles) from the coastline, and any land within 100km (about 62 miles) of any of Mexico’s international borders.
But don’t let the name fool you - the Restricted Zone is anything but restricted.
Americans (and any foreign nationals) can buy within the restricted zone as long as they follow a few rules, which we’ve written about in our blog “Can Americans Buy Property in Mexico.”
The short version is that any American buying property or land in Mexico’s restricted zone must purchase the real estate through a bank trust agreement called a fideicomiso. These are agreements sanctioned by the Government of Mexico that provide foreigners with all the rights that a Mexican citizen has with respect to private property ownership.
As long as buyers abide by the rules, it’s easy to buy land or houses for sale in Mexico.
Is it Hard to Buy Property in Mexico?
No, it’s relatively easy to buy property in Mexico. Using a fideicomiso, Americans can purchase, live in, lease, rent, sell or even will their real estate to their heirs, all as they normally would at home.
To establish a fideicomiso, foreigners simply apply through the Ministry of Foreign Affairs and register in the Public Registry of Property and the National Registry of Foreign Investment.
It might sound a little scary at first, but creating a fideicomiso is actually really straightforward, as long as you’re working with a lawyer and real estate agent that you trust.
Read a more substantive piece about the process of buying residential property through a fideicomiso in our blog “How to Buy Mexico Real Estate.”
Is There Any Land in Mexico That American’s Can’t Buy?
Yes, there are certain areas of the country that no one but Mexican nationals can buy. This is called Ejido land.
Ejido land is similar to native reserves in Canada and the United States, in that it is not private property. It was land set aside in the 1917 Mexican Constitution’s land reforms, through Article 27. This article stated that ejido land is reserved for communal use, but is ultimately owned by the state.
The system that created ejido land is one that combines communal ownership with individual use. Mexicans have what are called “usufruct rights,” which means they can use the land and even pass it on to heirs, but not sell it or substantially change it. Any improvements spent on this kind of land is ultimately owned by the state.
The point is, any American that wants to buy land should be very careful on this issue, staying far away from deals involving ejido land. It is illegal to buy ejido land as a foreigner, and so if you’ve found a piece of land that you absolutely love, make sure it has never been considered ejidal land or, if it was, that it was successfully privatized in the past and never legally challenged.
While technically it is possible to convert ejido land into private property, the process is very complex and takes a lot of time. It’s not worth the risk.
Can I Build Residential or Commercial Property on My Land?
If your goal is to buy property upon which you will eventually build your dream home, then you can have the real estate held in a fideicomiso, as described above.
However, if the land has been purchased as a non-residential investment, then the real estate will need to be held via a Mexican corporation. This is true if you want to eventually subdivide the land and sell it off, build a commercial or industrial property, build a multi-unit condo property, or other. Mexican corporations, even those that are 100% foreign-owned, can purchase properties without a trust of any kind, even in restricted areas.
Forming a Mexican corporation has been completely legal for foreigners since 1995. They can own, operate and administer Mexican corporations seeking to buy and develop property, and while Mexican corporations require a minimum of two associates or shareholders, both shareholders can be foreigners. Having a Mexican partner is not a requirement.
There are several different types of Mexican corporations, but the two most common are limited liability corporations (called an “S.A. de C.V.”, which is an acronym of the spanish phrase Sociedad Anónima de Capital Variable) and limited liability partnerships (called an S. de R.L. de C.V., an acronym for Sociedad de Responsabilidad Limitada de Capital Variable).
Your choice of which corporation to set up is important for tax purposes in both the US and Mexico. Our advice would be to speak with an attorney and an accountant on both sides of the border to make sure you understand both the pros and cons of each corporate entity.
Is Buying Property in Mexico a Good Investment?
The real estate market all over the world is extremely hot, and real estate in Mexico is no exception. With the right real estate agent, you can find and purchase your dream property in the Restricted Zone, and because of the rapid appreciation of property in Mexico, you’ll find yourself with a handsome profit before long.
However, the definition of a good investment can be quite broad indeed. A good investment doesn’t necessarily have to refer to the financial gain you eventually receive for the sale of your Mexican property. You might consider how a new vacation or retirement home affects you personally, from both an emotional and psychological standpoint.
For example, buying Mexican real estate will put you in touch with an entirely different culture and climate. Sometimes there are very real differences between people that are living in the sun year-round, and those that are forced to deal with whatever weather comes their way back home.
Learning a new language, eating different foods, hearing different music, and enjoying a lower cost of living can also have real benefits. In that sense, buying real estate can be much more than a financial transaction, it can be a major lifestyle change. After all, what could be better than taking a nice long walk on a December morning in nothing but shorts and sandals? And how can that not be considered a good investment?
As we mentioned above, Mexican real estate includes more than just retirement homes, vacation homes, second homes. Buying property in Mexico can also extend to buying land, which can then be built upon later. Depending on what you use the land for, you can do so easily and securely using a fideicomiso, or by forming a Mexican corporation.
So if you’ve been toying with the idea of buying property in any of Mexico’s restricted Zones, consider getting in touch with Zisla today. At Zisla, we specialize in demystifying the process, and we’ve been helping clients find their dream Yucatan real estate for years.
Call us or visit our website today. You’ll be glad you did!