Buying Property in Cancun: Fideicomiso, Taxes and Investor Math

Buying Property in Cancun: Fideicomiso, Taxes and Investor Math

Cancun is inside Mexico's Restricted Zone (within 50 km of any coast or 100 km of any border). Foreigners cannot hold direct title - but you can hold property through a fideicomiso, a bank trust that has been the standard tool since the 1970s. Hundreds of thousands of foreigners own this way.

It is not a workaround; it is THE way.

How a fideicomiso actually works

A Mexican bank (the trustee) holds title. You are the beneficiary and have every right of an owner - sell, lease, will, renovate. The trust runs for 50 years, fully renewable. Annual fee: $500-700 USD, plus a one-time setup of $1,500-2,500.

For purely commercial properties (no residential use), you can alternatively form a Mexican corporation (S.A. de C.V.) and have the corp own the property directly. Cheaper long term, more paperwork.

Closing costs - real numbers

Plan for 6-8% of purchase price on top of the sale price:

| Cost | % | |---|---| | Acquisition tax (ISAI) | 2.0-4.5% | | Notary fees | 1.0-1.5% | | Registration | 0.5% | | Appraisal + permits | 0.5% | | Fideicomiso setup | ~0.3% | | Legal counsel (do not skip) | 0.5-1.0% |

Ongoing taxes

• Predial (property tax): extremely low - typically $200-800 USD/year on a $200-400K condo
• ISR on rental income: 25% withholding on gross rent for non-residents, OR a progressive rate (up to 35%) if you become a tax resident and deduct expenses. Most absentee owners use a property manager who handles the withholding.
• Capital gains on sale: 25% of gross OR 35% of net gain (you choose). Significant deductions available if you have receipts in your CFDI fiscal name.

What returns actually look like (Cancun condo, 2024)

A representative 2BR condo in Puerto Cancun, $280K USD:

• Long-term rental (12-month lease): $1,400/month × 11 months occupancy = $15,400/yr gross, ~5.5% cap rate before tax
• Vacation rental (Airbnb): $190/night × 60% occupancy = $41,600/yr gross, ~14.8% gross. After 25% management, 25% withholding, HOA, utilities, vacancy - net is closer to 6-8%
• Hotel Zone studio at the same price: lower yield but stronger appreciation

Where the legal traps are

1. Ejido land - communal land that cannot legally be sold to anyone. Often listed by unscrupulous agents at "amazing" prices. Walk away.
2. Pre-construction - verify the developer's permits (uso de suelo, licencia de construcción) before deposit. Several Cancun developers have left projects half-built.
3. HOA delinquency - when you buy, the unit inherits unpaid HOA fees. Get a "constancia de no adeudo" before closing.
4. CFE meter in seller's name - common, fixable, but block closing until done.

Recommended team

• Bilingual real estate lawyer (NOT the seller's lawyer) - $1,500-3,000 flat
• Notario público - required by law, you pick which one
• Independent property inspector - $200-400
• Tax advisor familiar with both your home country and Mexico - critical if renting

Two strategic notes

• The Mayan Train and Tulum airport opened in late 2023. South-of-Cancun areas (Puerto Morelos, Playa del Carmen, Tulum) are seeing 8-15%/year appreciation as a result. Cancun proper has been more stable, 4-6%.
• Pre-sale (preventa) discounts of 15-25% are real, but only buy from developers with finished prior projects you can visit.