Buying Property in Mexico’s Restricted Zone – Complete FAQ
Last updated: August 11, 2025
Thinking about buying a home or investment property in Mexico’s breathtaking coastal or border regions? The rules for foreigners are different here, and it’s easy to get lost in half-truths and internet myths. We’ve been in Mexican real estate since 2004 and started Mexico Life Realty (originally Elements Realty Group) in 2007 to give buyers like you a full-service, start-to-finish experience. This guide is our no-nonsense, plain-English FAQ, designed to answer what you’re really asking and make you feel confident before you buy.
1. What exactly is the “restricted zone,” and is it still a thing?
Yes — the “restricted zone” is alive and well in 2025. It’s defined in the Mexican Constitution as all land within 50 kilometers (about 31 miles) of any coastline and 100 kilometers (about 62 miles) of any international border. Foreigners can’t hold direct title in these areas, whether you’re talking about beachfront condos in Cancun, ocean-view villas in Cabo, or desert property near the U.S. border. This rule has been in place for decades and is not a temporary measure. If you buy outside the restricted zone, you can take title directly in your name. Inside, you must use a bank trust (fideicomiso) or, for certain non-residential properties, a Mexican corporation. At Mexico Life Realty, we’ve been guiding buyers through these rules for over 20 years, ensuring every purchase is both legal and future-proof.
2. How can a foreigner legally buy inside the restricted zone?
The only legal way for a foreigner to buy residential property in Mexico’s restricted zone is through a bank trust called a fideicomiso. In this setup, a Mexican bank holds the legal title, but you — the trust beneficiary — have all the rights of an owner: you can live there, rent it, remodel it, sell it, or pass it to your heirs. The trust runs for 50 years and can be renewed indefinitely. You’ll need a permit from the Secretaría de Relaciones Exteriores (SRE) to establish it. We’ve created and managed hundreds of fideicomisos since 2004, handling every detail except paying and signing. That means you get the paperwork, bank coordination, and legal protections sorted without drowning in bureaucracy, so you can focus on the excitement of owning in Mexico.
3. Do I need Mexican residency or a visa to buy?
No — property ownership is considered a foreign investment matter, not an immigration issue. You don’t need residency, a visa, or even to set foot in Mexico to buy here legally. That said, if you plan to live in the property year-round or rent it long-term, having the right residency visa can simplify things like utility setup, local banking, and tax compliance. We’ve worked with clients who purchased while still living abroad, as well as those who moved here full-time later. Our job is to handle the property side, but we can also connect you with trusted immigration attorneys if you want to explore residency as part of your move.
4. Can I avoid the trust by using a company or LLC?
Yes — but only if the property is for non-residential use. A Mexican corporation (even 100% foreign-owned) can hold title in the restricted zone for commercial purposes, such as a rental business, hotel, or retail space. Residential use by the owners still requires a fideicomiso. If you buy through a Mexican company, it must include the “cláusula de admisión de extranjeros” in its bylaws and notify the SRE within 60 business days. A foreign entity, like a U.S. LLC, can also be a trust beneficiary, but the property would still be in a fideicomiso. We’ve set up both corporate structures and trusts for clients, helping them choose the right path so they avoid costly legal headaches down the line.
5. What rights do I actually have under a fideicomiso?
When you hold property in a fideicomiso, you have almost identical rights to someone holding direct title. You can use it as your home, rent it, renovate, take out a mortgage against it, sell it, or transfer it to your beneficiaries. The bank acts as trustee and is the legal titleholder on record, but they operate only under your written instructions. The trust document is the key — it spells out your rights and ensures the bank can’t act without your approval. We’ve been drafting and reviewing these agreements since before Mexico Life Realty even had its name, and we make sure the terms protect you today and in the future.
6. How long does a closing take?
Once your SRE trust permit is approved (often within five business days), the rest of the process — due diligence, bank trust setup, and notary work — typically takes 45 to 60 days. That’s the average, but we’ve seen some close in 30 days when everything clicks and others stretch to 90 days or more if title work, municipal approvals, or bank timelines lag. In busy coastal markets, government and bank offices can get backed up, which is why having a team that stays on top of every step matters. We coordinate directly with the notary, trustee bank, and seller so you’re never left guessing where your deal stands.
7. What should I budget for closing costs in the restricted zone?
Closing costs typically run between 5% and 9% of the purchase price. That range covers the state transfer tax (ISAI), notary fees, bank trust setup charges, the federal permit fee, appraisal costs, and public registry fees. Costs vary by state, municipality, and property value. For example, Quintana Roo’s ISAI rate differs from Baja California Sur’s. At Mexico Life Realty, we prepare a detailed estimate early in the process so you know exactly what to expect — no nasty surprises on signing day. We’ve been on enough closings to know that financial clarity upfront makes for a smoother experience all around.
8. Do I own “the beach” in front of my lot?
No — in Mexico, all beaches are public property. The first 20 meters from the high-tide line (known as the ZOFEMAT zone) is federal land. You can’t own it, but you can apply for a federal concession to use it privately for things like palapas, beach decks, or a dock. Without a concession, you can’t block public access. Since 2020, obstructing beach access can lead to fines and enforcement actions. When we list or sell beachfront property, we make sure buyers understand exactly where private ownership ends and federal property begins, so there are no false promises about “private beaches.”
9. Is there a size or “one-property-only” limit for trusts?
There’s no national law that limits fideicomisos to one property or sets a hard size cap, like 2,000 m². However, if you expand the property, combine lots, or change the property’s use, your trustee will need to request SRE approval to amend the trust. Some banks also set internal limits on how much property they’ll hold under a single trust. If you’re planning multiple purchases or a larger parcel, it’s best to discuss that at the start so the trust is structured to handle it. We’ve set up single-property trusts, multi-lot trusts, and complex configurations — the key is matching the setup to your plans from day one.
10. How do I avoid ejido (agrarian) land problems?
Ejido land is communal agricultural land, and buying it without proper regularization is one of the fastest ways to end up with a worthless property. Only land that has been converted to private property (dominio pleno) and recorded at the Public Registry can be sold to foreigners. Before you buy, always verify the status with both the Registro Agrario Nacional and the local Public Registry. We’ve seen too many buyers get burned by skipping this step, which is why every Mexico Life Realty deal starts with a thorough title and land status check. If the land you love is still ejido, we can walk you through the regularization process — but we’ll never let you sign for something you can’t legally own.
11. Do I have to close with a Notario? What do they do?
Yes — in Mexico, a Notario Público is not just a witness but a highly trained, government-appointed legal authority who oversees property transactions. They verify that the title is clear, check for any liens or unpaid taxes, calculate and collect the appropriate taxes, prepare the deed, and register the transfer with the Public Registry. In short, they are the official gatekeeper who ensures your deal is legal and binding. At Mexico Life Realty, we’ve worked with many of the same Notarios for years. That long-standing trust speeds up communication and helps resolve potential issues before they become closing delays. When we say we’re full-service, we mean it — we coordinate directly with the Notario, so you never have to worry about translating legal terms or chasing documents across town.
12. What taxes hit me when I sell as a non-resident?
When you sell property in Mexico as a non-resident, you’re generally subject to a capital gains tax known as ISR. The standard withholding is 25% of the gross sale price. In some cases, you may opt for a roughly 35% tax on the net gain, but you must meet certain requirements and appoint a registered fiscal representative in Mexico. The Notario handling your sale will calculate the tax and withhold it at closing. Factors such as documented improvements, currency fluctuations, and deductions allowed under Mexican law can all impact the final amount. We advise sellers to start tax planning months before listing. Our team works with experienced CPAs who can maximize legal deductions and help you avoid overpaying, so more of your equity stays in your pocket.
13. What are my ongoing owner taxes?
In most parts of Mexico, annual property taxes — known as Predial — are remarkably low compared to many other countries. The amount is based on the assessed value of your property and varies by municipality. You’ll typically pay at your local municipal office or online. Paying early in the year often earns you a discount. If you own in a condo or planned community, you’ll also have HOA or maintenance dues, which are private obligations under your condo regime. These cover things like security, landscaping, and common area maintenance. At Mexico Life Realty, we provide buyers with an estimate of both Predial and HOA costs before closing, so you understand the full picture of ongoing expenses and can budget accordingly.
14. Can I rent short-term (Airbnb) legally?
In many areas, yes — but there are three things to check before counting on short-term rental income. First, review your condo or HOA rules to ensure rentals are allowed. Second, confirm your property is zoned for rental use with the municipality. Third, understand your tax obligations. In some states, short stays (usually under 30 days) require you to collect and remit a local lodging tax in addition to income tax. Platforms like Airbnb or Vrbo may withhold some taxes automatically, but you’re still legally responsible for compliance. Since 2004, we’ve helped countless investors find properties that align with their rental goals and avoid buying into buildings or neighborhoods with restrictive rules that kill income potential.
15. Can trust-held property be financed?
Yes — some Mexican and international lenders will finance property held in a fideicomiso. In these cases, the lender places a lien on the property, and the trustee bank signs loan documents on your instruction. The process involves more steps than domestic lending, and interest rates can be higher than in the U.S. or Canada. Your creditworthiness, the property type, and your income documentation all factor into loan approval. We maintain relationships with lenders familiar with trust-held property, which helps cut through red tape. Even if you plan to pay cash now, knowing your financing options for future purchases or renovations is always smart.
16. Do I need escrow and title insurance?
Escrow is not legally required in Mexico, but it’s widely used for secure transfer of funds, especially in transactions involving foreigners. An independent escrow company holds your deposit and final payment until all contract conditions are met. Title insurance is also optional but available through providers like Stewart Title’s licensed Mexican underwriter. It can be a good safeguard in areas with complex title histories. At Mexico Life Realty, we recommend escrow for every deal and title insurance when the property’s chain of ownership raises any red flags. These steps add small costs but can save enormous headaches later.
17. What permits do I need to build or subdivide, especially near the beach?
Before building or subdividing, you must first confirm the property’s zoning (uso de suelo) and obtain the necessary municipal construction permits. In coastal zones, additional permits may be required from federal authorities, especially if your plans involve the ZOFEMAT zone or environmental impact. For example, building a seawall, pier, or beachfront deck almost always requires a federal concession. Subdividing land may trigger further environmental reviews. Since 2004, we’ve guided clients through these bureaucratic layers — from the first zoning check to the final occupancy certificate — ensuring their dream project doesn’t stall due to missing paperwork. When we say full service, we mean it: we handle every step except paying and signing.
18. What happens to the trust if I die? Is there probate in Mexico?
One of the advantages of a fideicomiso is the ability to name substitute beneficiaries. If you pass away, the trustee can transfer the property to these beneficiaries without going through Mexican probate, which can be time-consuming and costly. The bank will still require formal documents such as death certificates and, in some cases, apostilles or notarized translations. By keeping your beneficiary designations updated and ensuring your heirs know where the trust documents are stored, you make the process much smoother for your family. We review these designations with clients periodically, especially after major life changes, so your estate plan always matches your current wishes.
19. How do I confirm if a property is actually inside the restricted zone?
If you’re unsure, the definitive method is to check the property’s coordinates with the Secretaría de Relaciones Exteriores (SRE). Providing the exact latitude and longitude, or UTM coordinates, removes any guesswork. In some cases, sellers misrepresent location, especially in inland areas near the coast. As part of our due diligence, we verify the property’s exact location against the official restricted zone maps. This not only confirms the need for a trust or corporation but also ensures you won’t face legal issues later if authorities discover a misclassification.
20. Can foreigners hold property outside the restricted zone without a trust?
Yes — foreigners can own property outright outside the restricted zone. The only formality is signing the Calvo Clause (a declaration that you won’t seek foreign government protection over the property) as part of the deed process. In these cases, you can hold direct title in your own name, just like a Mexican citizen. For many buyers, properties just beyond the restricted zone offer a way to avoid the trust entirely while still enjoying proximity to the coast. We’ve helped clients find beautiful inland homes and ranches that require no bank trust — just a clean title transfer with a Notario.
Extra 2025 Realities to Keep in Mind
- Anti-Money Laundering (AML) compliance: Real estate transactions in Mexico are considered “vulnerable activities” under AML law. Expect to provide identification, proof of funds, and additional documentation. In mid-2025, reforms to the LFPIORPI law increased penalties for non-compliance. This applies to everyone — buyers, sellers, agents, and developers — and is part of doing business legally here.
- Beach access laws: Since October 2020, obstructing public beach access is a sanctionable offense. You can market “controlled access” through private property, but not “private beaches.”
Leave A Comment