On December 9, 2025, Cuesta Campos, together with Procopio, presented a case study for Meritas Private Client Group titled “Structuring Mexican Property for U.S. Clients.”
Speakers:
Enrique Hernández – Procopio
Sofía Cano – Cuesta Campos
Héctor Avilés – Cuesta Campos
The case involved a U.S. client seeking to acquire a condominium within a residential development in Los Cabos. As is common in practice, the developer recommended a local closer aligned with the Notario, who advised that the transaction be structured through a trust. The client therefore sought coordinated U.S. and Mexican legal and tax advice to properly evaluate the acquisition and its legal, tax, and estate-planning implications.
Based on this case, we highlighted the following key takeaways:
Mexican legal framework
- Foreign buyers cannot directly own residential property in the Restricted Zone (50 km from the coastline) under Article 27 of the Mexican Constitution.
- Ownership is achieved through a Restricted Zone Trust, with a Mexican bank as trustee and the buyer holding full beneficial rights.
- The SRE permit requires express submission to Mexican jurisdiction and waiver of diplomatic protection.
Roles matter
- Closers are not legally required and do not represent the buyer; conflicts may arise when aligned with the developer or Notario.
- The Notary Public is neutral and does not advocate for either party.
- Real protection comes from independent Mexican counsel, robust title and lien due diligence, and careful review of the condominium regime.
Tax is where structure wins or loses
- Mexico taxes capital gains on real estate and, under Article 161 of the Mexican Income Tax Law (LISR), can reach indirect transfers of “real estate-rich” entities.
- The Mexico–U.S. Tax Treaty (Article 13) may significantly limit Mexico’s taxing rights for U.S. residents-particularly in minority or non–property-rich structures.
- Rental income is taxable; VAT treatment depends on whether the activity is true residential leasing or hospitality-style lodging via platforms.
Succession & Estate Planning
- U.S. wills do not automatically govern Mexican-situs assets.
- Trust must include beneficiary-substitution provisions to avoid Mexican probate.
- Inheritances received by non-residents are subject to 25% Mexican income tax, with no step-up in basis.
U.S. Tax & Reporting
- Trust are often treated as foreign trusts for U.S. tax purposes.
- Forms 3520 / 3520-A and FBAR may apply, depending on structure.
- Mexican taxes paid may be creditable in the U.S.
Recommended Structure
- U.S. LLC as trust beneficiary, with LLC interests held by a U.S. revocable trust.
- Enhances privacy, control, and estate coordination.
- Creates flexibility to exit via LLC interest sale rather than direct real estate transfer.
Bottom line:
In cross-border real estate, structure is leverage. Early coordination between U.S. and Mexican legal and tax advisors is not optional, it is the difference between efficiency and long-term exposure.
