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For Estate Planning, Estate Administration And Disputes

Real estate ownership in Mexico

On Behalf of | Jun 25, 2020 | Real Estate Law |

The Mexican government has many similarities to that of United States, specifically when it comes to property ownership. Individuals can and do own private property in Mexico. 

However, as in many of these types of situations, the similarities are mostly on the surface level. Furthermore, there are some restrictions for United States citizens owning property south of the border. 

Restrictions on ownership 

The official site of the Mexican government states that Article 27 of their constitution allows the creation and ownership of private property. For foreign nationals, the country restricts real estate property ownership. 

There is an area around the international borders and the coasts in which foreigners cannot legally own property. While this restricted zone takes up a very small amount of the country, geographically speaking, it does cover many of the most desirable plots of land for international commerce and the tourist trade. 

Allowances for interests in Mexican entities 

Because of the restricted zone and the desirability of the real estate within that zone, many foreigners turn to alternate ownership methods. While it is illegal for a foreign individual or corporation to own the land outright, foreigners may maintain interests and trusts with Mexican banks that own the land. Mexican companies with foreign ownership may also own land. 

Considerations on taxes 

One consideration many Americans have when purchasing foreign property is the tax consequence. The IRS treats interests in foreign corporations and trusts as specified foreign financial assets, unlike overseas homes or rental units. This would probably mean that any restricted-zone investments would behave differently on tax day than would property further inland. 

Even with strong exchange rates and favorable trade agreements, there is much to consider when buying Mexican property. However, it remains a relatively welcoming market for foreign investment overall.