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9 Financial Questions to Ask as an American Moving to Mexico

May 19, 2023
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Moving to Mexico as a U.S. Expat

It’s not difficult to see why there are more Americans living in Mexico than in any other foreign country in the world.1 Boasting scenic coastlines, an agreeable climate, a low cost of living and great food, Mexico has become a premier destination for Americans working, living and retiring abroad. If you’re thinking of moving to Mexico from the U.S., it’s important to consider these nine financial questions before making the big move.

#1 What are the challenges of investing while living in Mexico?

Increased compliance requirements brought on by the Foreign Account Tax Compliance Act (FATCA) have greatly limited American expats’ access to financial services abroad, and Mexico is no exception.

Many domestic financial institutions are either unwilling or unable to meet the FATCA reporting burdens, resulting in the closure or restriction of accounts once you inform them of your move across the border. For this reason, it’s important to work with a firm that understands your expat status and can maintain or establish a relationship despite your international address. At Creative Planning International, we open accounts on our clients’ behalves as a U.S. advisory firm, so working with expats abroad isn’t an issue.

#2 What are the tax implications of living in Mexico?

The United States is one of the only countries in the world that taxes based on residency and citizenship. Like it or not, this means you’ll continue to file U.S. tax returns on an annual basis, even if your permanent residence is in Mexico. Once across the border, it’s important to establish whether you’re a Mexican tax resident or a Mexican non-resident.

You’re considered a Mexican tax resident from the moment you establish an abode in Mexico unless you also have a home in the U.S. And according to the tie-breaker rules, if you don’t work in Mexico and receive more than 50% of your income from U.S. sources, then you’re considered a Mexican non- resident, which means you’ll only pay taxes on Mexican-sourced income.

Being a Mexican tax resident means you’ll be taxed on your worldwide income. However, proper use of the foreign earned income exclusion (FEIE), foreign tax credit (FTC) and/or the foreign housing exclusion can help you avoid double taxation. Working with an expat advisor well versed in cross-border planning can open the door to several planning opportunities in this area. 

#3 What will happen to my U.S. retirement accounts if I move to Mexico?

Although you may have moved abroad, your retirement accounts will remain in the U.S. If you have earned income, you should be able to continue making contributions to your U.S. retirement accounts, depending on your tax filing status, income and use of FEIE versus FTC. An experienced cross-border financial advisor can help you determine whether a contribution is advisable in your situation.

#4 How will my U.S. retirement accounts be taxed in Mexico?

Withdrawals from your U.S. retirement accounts are taxable in both the U.S. and Mexico unless you’re considered a non-resident for Mexican tax purposes (see above). Due to a provision in the Mexico-U.S. tax treaty, Mexico will recognize the tax-deferred status of U.S. retirement accounts.

#5 Can I purchase property in Mexico?

Foreigners are able to own land and real estate property in Mexico, with some caveats. Buying in some of the more desirable locations (50 kilometers from the coast or 100 kilometers from an international border) will land you in the “Restricted Zone.”

This means the property must be owned by a 50-year renewable trust called a fedeicomiso, and the trustee must be a Mexican financial institution or corporation. Although the Mexican institution will own the property title and must be notified of all operations, the foreigner holds the beneficial title and maintains the right to use, sell and bequeath the premises.

In a 2013 Revenue Ruling, the IRS decreed that the 50-year renewable trust is not considered a trust for U.S. purposes, thereby eliminating the need to file IRS forms 3520A and 3520

Some states in Mexico will allow you to add beneficiaries directly to the deed of your property in what’s called a Testamento Simplificado, which will pass the property directly to your beneficiary and avoid the Mexican probate process. Check with local legal counsel for guidance.

#6 What do I need to consider in terms of estate planning for my assets in Mexico?

Although a U.S. will can be legally valid in Mexico, it’s typically advisable to avoid having your U.S. assets probated in Mexico, as this process can be cumbersome, be expensive and take years to complete. For this reason, having a Mexican will for your Mexican assets to coordinate with a separate U.S. estate plan is generally advisable (more on this in #8). Working with an experienced international advisor and qualified legal counsel can help you execute an effective cross-border estate plan.

#7 Can my beneficiaries inherit my assets in Mexico?

For Mexican assets, don’t assume property held jointly carries the same implications as your property in the U.S. Mexico doesn’t allow joint survivorship titling, which means property doesn’t automatically pass to the surviving partner at the death of the first partner. Joint property in Mexico operates like tenants in common (TIC) titling in the U.S., so your portion will pass to your named beneficiary (or according to Mexican state testate laws if you don’t have a will).

Although Mexico doesn’t have an estate or gift tax, your beneficiaries still may be subject to tax on the U.S. side. Therefore, having a coordinated Mexican/U.S. estate plan for your assets is recommended.

#8 What if I have a trust in the U.S.? Will my U.S. trust help protect my assets?

Mexico is one of the few civil law countries that recognizes trusts and will even enforce U.S. trusts in certain circumstances. It’s possible, albeit complicated and expensive, to have a trust created in the U.S. that will cover property in Mexico.

For an expedient probate process, it’s generally advisable to create a U.S. trust for your U.S. assets and use the beneficiary designations on your qualified retirement accounts. You may execute a Mexican will for any Mexican real estate or financial assets.

#9 Will Mexico tax me on an inheritance if I receive it from the U.S.? 

Gifts and inheritances received by Mexican tax residents are taxed at ordinary income rates (no special gift or estate tax is applied), but a full exemption is available for sums received from lineal descendants/ascendants and spouses. Speak with a qualified wealth manager to best plan for an inheritance received while abroad.

If you’re considering moving to Mexico, Creative Planning International is here to help you navigate the financial challenges and ensure your finances remain on track. We work with Americans abroad to help them maximize their wealth and avoid costly mistakes.

For more information about our services for U.S. expats, request a meeting with a member of our team.


  1. https://www.nbcnews.com/news/latino/more-americans-living-mexico-effects-locals-rents-rcna56662

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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