Buying inside Mexico's restricted zone: what foreigners can and cannot own

Almost every property a foreign buyer actually wants in Mexico sits inside the restricted zone. The beach in Tulum, the marina in Cabo, the colonial center of a border city, the surf town on the Pacific: all restricted. Understanding this zone is not optional trivia, it determines how you are legally allowed to buy and how much the transaction will cost.

What the restricted zone actually is

Under Article 27 of the Mexican Constitution, foreigners cannot hold direct title to land within:

• 50 kilometers (about 31 miles) from any coastline, and
• 100 kilometers (about 62 miles) from any land border.

Everything else is the unrestricted zone, where a foreigner can buy and title property directly in their own name, exactly like a Mexican citizen.

The reason is historical and sovereign, not economic: Mexico wanted its coasts and borders protected from foreign control after a turbulent 19th century. The rule has never been repealed. It has only been made workable through legal structures.

Where the line falls in practice

Some cities and regions are entirely inside the restricted zone, and buyers routinely underestimate how far inland it reaches:

• The entire Riviera Maya, Los Cabos, Puerto Vallarta, and virtually all coastal resort areas are restricted.
• Guadalajara sits comfortably in the unrestricted zone, so foreigners can buy there directly.
• Mexico City is unrestricted.
• San Miguel de Allende, the classic expat inland town, is unrestricted.

Because a straight-line 50 km reaches surprisingly far from the water, always confirm a specific property’s status rather than assuming from the town name. Your notary can verify this precisely.

What you can own inside the restricted zone

You can own residential property inside the restricted zone. You cannot do it with direct title, so Mexican law gives you two legitimate routes.

Route 1: the fideicomiso (bank trust)

For a home, condo, or single vacation property, the fideicomiso is the standard tool. A Mexican bank holds title in trust as trustee, and you are the beneficiary with full rights to use, rent, sell, and inherit.

• Setup: roughly USD 2,000 to 2,500 one-time.
• Annual fee: roughly USD 600 to 800.
• Term: 50 years, renewable indefinitely.

The bank never owns your property economically. It administers the trust on your written instruction and nothing more.

Route 2: a Mexican corporation

A Mexican corporation can hold restricted-zone land directly, with no trust required. This route makes sense when the property is used for a commercial or rental business, or when you are acquiring multiple properties.

• Best for: rental operations, development, or portfolios.
• Trade-off: monthly accounting, annual tax filings, and the property must serve a genuine business purpose, not simply be a personal home dressed up as a company.

For a single family home, the corporate route is usually overkill and more expensive to maintain over time.

What you cannot do

• You cannot take direct personal title to restricted-zone land as a foreign individual. Attempts to do so through nominee arrangements (a Mexican “friend” holding title for you) are illegal and unenforceable, and you have essentially no recourse if the nominee walks away with your asset. Never do this.
• You cannot buy ejido (communal) land as if it were regular titled property. Ejido land follows an entirely different legal regime and is a frequent trap. Treat any “beachfront bargain” on ejido land as radioactive until fully regularized.

Costs beyond the ownership structure

Whichever route you take, budget for the standard closing costs on top:

1. Acquisition tax (ISABI): typically 2% to 4% of the purchase price, depending on the state.
2. Notary fees, registration, and appraisal: combined closing costs usually run 5% to 8% of the price.
3. Trust setup (if using a fideicomiso), paid at closing.

Sellers, meanwhile, face capital gains tax (ISR) of up to 35% on their gain, which matters to you because it shapes negotiation and how the price is documented on the deed.

A decision to make before you offer

The single most common mistake foreign buyers make is choosing an ownership structure after signing a purchase agreement. By then, switching between a fideicomiso and a corporation means renegotiating, re-drafting, and paying twice. Decide the structure first, based on how you will actually use the property.

• Live in it or vacation in it: fideicomiso.
• Run it as a business or buy several: corporation.
• Buying inland, outside the zone: direct title, simplest of all.

How we help

Living Real Estate Guide is a buyer-side advisory. We do not list property and we accept no developer commissions, which means we have no reason to push you toward a more expensive structure than you need.

For restricted-zone purchases, we:

• Confirm a property’s zone status before you fall in love with it, using verified notary sources rather than a listing agent’s assurances.
• Introduce you to independent notarios and real estate attorneys who set up the correct structure, whether that is a fideicomiso or a corporation.
• Bring in tax advisors to model your acquisition and eventual exit costs so there are no surprises.

Every professional we connect you with is vetted and independent of any seller. We stay on your side of the table from first question to final signature. If you are considering a coastal or border property, speak with us before you commit, not after.