What are closing costs in Mexico?

Typically 4.3–10.1% of the price on a $300,000 purchase.

Buying property in Mexico as an American

Q: How is rental income taxed in Mexico?

Non-resident tax on gross rent: Non-residents pay 25% on gross rent without deductions (or may elect 35% on net income through a Mexican legal representative). Short-term lets also owe 16% VAT (IVA) and a state lodging tax (e.g. 5-6% in Quintana Roo); from 2026 platforms must withhold 100% of the VAT for non-resident hosts (LIVA art. 18-J). US–Mexico tax treaty in force; Mexican income tax is generally creditable in the US.

Mexico is a short flight away and popular for vacation rentals. On the coast and near borders, Americans hold property through a bank trust (fideicomiso). Non-residents are taxed on gross rent, and local mortgages are expensive.

Data last verified on October 19, 2026 · AbroadYield research desk – public sources cited in each section

Key numbers

Gross rental yield

6.0–10.0%

Closing costs

4.3–10.1%

On a $300,000 purchase

Tax on rent (gross basis)

25%

Non-resident tax on gross rent

Entry prices from

$120,000

6–10 weeks to close

Can Americans buy?

Restricted in some areas

Allowed inland. Within 50 km of the coast or 100 km of a border, foreigners hold residential property through a renewable 50-year bank trust.

Temporary residency is available with proof of income or savings, or by owning Mexican real estate worth more than 91,710 UMA-days (about MXN 10.76 million in 2026, roughly US$545,000–580,000; public deed required, some consulates require the deed to be recent). Permanent residency usually follows after four years of temporary residency or with higher income/savings.

Data last verified on October 19, 2026 · AbroadYield research desk – public sources cited in each section

Sources: SAT – Servicio de Administración Tributaria (Mexico); US Department of State – country information

How rent is taxed

Non-residents pay 25% on gross rent without deductions (or may elect 35% on net income through a Mexican legal representative). Short-term lets also owe 16% VAT (IVA) and a state lodging tax (e.g. 5-6% in Quintana Roo); from 2026 platforms must withhold 100% of the VAT for non-resident hosts (LIVA art. 18-J).

US–Mexico tax treaty in force; Mexican income tax is generally creditable in the US.

As a US taxpayer you also report the rent on Schedule E. Your free ranking estimates the combined effect for your state and income.

Data last verified on October 19, 2026 · AbroadYield research desk – public sources cited in each section

Sources: SAT – Servicio de Administración Tributaria (Mexico); PwC Worldwide Tax Summaries; IRS – United States income tax treaties

Main risk

Coastal property must be held through a bank trust (fideicomiso).

Short-term rentals are broadly allowed; from 2026 platforms withhold 100% of the VAT for non-resident hosts, Quintana Roo collects its lodging tax through platforms, and Mexico City requires host registration.

Data last verified on October 19, 2026 · AbroadYield research desk – public sources cited in each section

Sources: US Department of State – country information; Global Property Guide (yields, transaction costs)

Cities we cover

Mexico City$3,024/m² · gross 6.9%
Playa del Carmen$2,700/m² · gross 5.1%
Puerto Vallarta$2,808/m² · gross 3.7%
Mérida$1,512/m² · gross 6.6%
San Miguel de Allende$1,512/m² · gross 9.0%
Tulum$2,430/m² · gross 9.0%
Los Cabos$2,754/m² · gross 7.1%

Is Mexico right for you?

Get your free ranking of all destinations in 3 minutes, with after-tax estimates for your US state and income.

Get my free ranking