Quick Answer
Yes. US citizens and residents must include worldwide assets — including Mexican real estate — in their taxable estate. The current US federal estate tax exemption is approximately $13.6 million per individual (2026). Most property owners fall under this threshold. However, the exemption is scheduled to potentially reduce in future years. Consult a cross-border estate planning attorney for strategies.
Detailed Answer
US citizens and permanent residents are subject to federal estate tax on worldwide assets, which includes real estate owned in Mexico. Your Cabo property's fair market value at the time of death is included in your gross estate for US tax purposes. The current federal estate tax exemption is approximately $13.6 million per individual (2026), meaning most property owners will not owe federal estate tax. Married couples can effectively shelter up to $27.2 million combined through portability elections.
However, the current exemption level is historically high and is scheduled to potentially decrease significantly when the Tax Cuts and Jobs Act provisions expire. If the exemption drops to approximately $6-7 million per individual, more estates would be affected. Additionally, some US states impose their own estate or inheritance taxes with much lower thresholds. For Canadian property owners, the rules differ — Canada does not have an estate tax but applies deemed disposition at death, which can trigger capital gains tax on the Mexico property's appreciation.
Cross-border estate planning requires specialized expertise, and the strategies differ meaningfully from domestic-only planning. Our team connects every buyer with attorneys who specialize in US-Mexico cross-border estate structures. Contact us for referrals to qualified professionals, or browse estate planning topics in our FAQ hub.