Cross Border Basics
Below is a short list of important terms you will likely come across during your property ownership journey in Mexico.
Cross-Border Mortgage
A loan provided to a foreign buyer to purchase Mexican real estate, typically denominated in USD or CAD and originated by an international or private lender.
Restricted Zone
A constitutional area where foreigners cannot directly own land (coastal and border zones). Ownership must be structured through a fideicomiso or a Mexican corporation.
Fideicomiso
A bank trust that allows foreigners to legally purchase property within the “Restricted Zone” (50 km from the coast, 100 km from the border). The bank holds title to the property on behalf of the buyer, who retains all ownership rights, including the ability to sell, lease, or pass it on to heirs.
Mexican Corporation
An alternative to fideicomiso for property ownership, commonly used for commercial or rental properties. Requires more administration and local tax filings.
Notario Público (Notary Public)
A government-appointed lawyer with the authority to validate and register real estate transactions. Plays a much larger role in Mexico than in countries like the U.S. or Canada.
Escritura Pública (Public Deed)
The official document recorded with the Public Registry that proves legal ownership of the property.
Registro Público de la Propiedad (Public Property Registry)
The government office where property deeds and legal titles are officially recorded.
ISR (Impuesto Sobre la Renta)
Capital gains tax on the sale of Mexican property. Foreigners may be eligible for exemptions, but only if the property is their primary residence and proper documentation is in place.
IVA (Impuesto al Valor Agregado)
Value-added tax, typically 16%, which may apply to new construction or services like legal or notary fees.
Predial
Annual property tax. Generally low compared to the U.S. or Canada.
Oferta de Compra (Offer to Purchase)
A formal letter or contract expressing the buyer’s intent to purchase a property at a specific price and terms.
Contrato de Promesa (Promise to Purchase Agreement)
A binding agreement that outlines the terms before the final deed is executed.
Avalúo (Appraisal)
An independent valuation of the property’s fair market value, often required for financing or tax purposes.
Closing Costs
These include notary fees, registration fees, transfer taxes, trust setup or renewal fees, and sometimes lawyer fees. Typically range between 5%–7% of the purchase price.
