Buying Property in Mexico as a Foreigner: Tax Tips & Legal Essentials

Puerto Vallarta & Riviera Nayarit Edition

Mexico’s Pacific coast, especially Puerto Vallarta and Riviera Nayarit, has become a hotspot for international property buyers. With stunning beaches, vibrant culture, and affordable living, it’s no surprise. But before signing a contract, it’s crucial to understand the legal framework and tax obligations that apply to foreign buyers.

Can Foreigners Own Land in Mexico?

Yes, but with a special process. Foreigners cannot directly own land within 50 km of the coast or 100 km from international borders. However, through a fideicomiso, or bank trust, foreigners can legally purchase and control property.

The fideicomiso is established through a Mexican bank and grants full rights: sell, rent, remodel, or bequeath the property. It’s valid for 50 years and renewable.

Key Taxes You’ll Encounter

1. Property Transfer Tax (ISAI)

Approx. 2% of the appraised value. Varies by state.

2. Annual Property Tax (Predial)

Very low compared to the U.S. or Canada — usually between $200–$500 USD/year.

3. Capital Gains Tax (When Selling)

Payable on profit from the sale. Possible exemptions with:

• RFC (Mexican tax ID)
• Proof of residency
• Primary residence declaration

4. Rental Income Tax

Report income to Mexico’s SAT. Tax rate ranges from 15% to 30% depending on deductions and earnings.

Exemptions and Compliance Tips

Always consult a notary or tax advisor. Proper documentation can help reduce or avoid capital gains.

Professional Help Makes the Difference

Work with a certified real estate agent, bilingual notary, and accountant to ensure a smooth and legal process.

Conclusion

Owning property in Mexico is possible and rewarding for foreigners. With the right support and understanding of taxes and laws, you can enjoy a dream home in paradise — without tax surprises.

🇲🇽 Buy smart. Live well. 🏡