The allure of Mexico has never been stronger for Canadians. With over 2.6 million Canadians visiting Mexico in 2024 alone—a record year—and more than 50,000 now calling the country home permanently, the trend shows no signs of slowing. In fact, Canadian tourism to Mexico jumped nearly 12% in the first half of 2025, with many travellers opting for Mexican destinations over traditional U.S. hotspots.
But transitioning from snowbird to permanent resident is a different journey entirely. Whether you're dreaming of retirement on the Pacific coast, seeking a lower cost of living, or simply ready for a fresh start under warmer skies, leaving Canada requires careful planning that goes far beyond booking a one-way flight.
Why Canadians Are Choosing Mexico
The reasons drawing Canadians southward are as varied as the country itself, though a few themes emerge consistently.
Cost of living tops the list for most. While Canada's housing crisis shows few signs of abating—particularly in Vancouver, Toronto, and increasingly secondary markets—Mexico offers Canadians the chance to stretch their retirement savings significantly further. A comfortable lifestyle that might cost $5,000 or more monthly in Canada can often be achieved for $2,000 to $2,500 USD in many Mexican cities. For couples on fixed incomes or those who retired earlier than planned, this difference can mean the distinction between scraping by and living well.
Healthcare presents another compelling factor. Mexico's private healthcare system delivers quality care at a fraction of Canadian prices, often with shorter wait times than what Canadians experience at home. In popular expat destinations like Mérida, Puerto Vallarta, and Guadalajara, English-speaking doctors and internationally accredited hospitals are readily available. Many Canadians discover they can afford comprehensive private health insurance and still spend less than they would navigating Canada's public system with its supplementary coverage gaps.
Climate hardly requires explanation. After decades of enduring winters that stretch from November to April—or longer in prairie provinces—the prospect of year-round warmth holds obvious appeal. Mexico's diversity means you needn't commit to tropical heat; highland cities like San Miguel de Allende, Guanajuato, and Oaxaca offer spring-like temperatures throughout the year.
Proximity to home seals the deal for many. Unlike retiring to Portugal or Thailand, Mexico remains a few hours' flight from Canadian cities. Direct routes connect major Mexican destinations to Vancouver, Calgary, Toronto, and Montreal, making it feasible to visit family for holidays or handle Canadian matters as needed.
Where Canadians Are Settling
Mexico's geography offers remarkable variety, and Canadian expats have gravitated toward several distinct regions depending on their priorities.
Lake Chapala and Ajijic in Jalisco host Mexico's largest concentration of expats—an estimated 15,000 or more, many of them Canadian. The mild highland climate (averaging 22°C year-round), proximity to Guadalajara's international airport, and well-established English-speaking community make the transition gentler for those nervous about the move. You'll find Canadian clubs, English-language theatre groups, and grocery stores stocking familiar products. Critics note the area can feel like a Canadian enclave transplanted to Mexico, which appeals to some and disappoints others seeking deeper cultural immersion.
Puerto Vallarta on the Pacific coast attracts those who want beach living without sacrificing urban amenities. The city's international airport offers direct flights to several Canadian cities, and the established expat infrastructure includes English-speaking healthcare, real estate services, and social networks. The nearby Riviera Nayarit communities of Sayulita and San Pancho offer quieter alternatives for those willing to trade convenience for authenticity.
Mérida in the Yucatán Peninsula has surged in popularity among Canadian retirees over the past decade. Consistently ranked among Mexico's safest cities, Mérida combines colonial architecture, rich Maya culture, and access to Caribbean beaches without the resort-town prices of Cancún or Playa del Carmen. Healthcare facilities in Mérida rival those in major Mexican cities, and the growing expat community provides support without overwhelming local character.
San Miguel de Allende in Guanajuato draws Canadians seeking culture over coastline. The UNESCO World Heritage city's cobblestone streets, art galleries, and acclaimed restaurants have made it a favourite among creative types and those who appreciate fine dining. Property prices run higher here than in most Mexican expat destinations, but remain modest compared to Canadian urban centres.
Baja California appeals particularly to western Canadians, given its proximity to British Columbia and Alberta. The peninsula offers desert landscapes, world-class fishing, and a distinctly gringo-friendly atmosphere in towns like Todos Santos, La Paz, and Loreto. Crucially, Baja's "Free Zone" status allows foreign-plated vehicles to operate without the usual permit requirements—a significant consideration for those driving their own cars into Mexico.
The Visa Landscape
Canadians enjoy relatively straightforward access to Mexico compared to many nationalities. For stays of up to 180 days, you need only a valid passport and the Forma Migratoria Múltiple (FMM)—a tourist permit issued automatically upon arrival. The FMM costs approximately $45 USD, though it's often included in airfare.
The 180-day limit, however, catches many aspiring expats off guard. While some attempt to extend their stays through "visa runs"—exiting to Guatemala or the United States and re-entering—Mexican immigration authorities have grown increasingly skeptical of this approach. Getting caught overstaying your tourist permit can result in fines, detention, and bars on future entry.
For those planning to stay longer than six months, Mexico offers two primary residency options:
Temporary Residency (Residente Temporal) permits stays of one to four years and suits those wanting to test the waters before committing permanently. You'll need to apply at a Mexican consulate in Canada before departing, presenting proof of income or savings that meets threshold requirements. As of 2025, applicants typically need to demonstrate monthly income starting around $4,400 USD or savings of approximately $73,000 USD over the preceding twelve months—though requirements vary by consulate.
Permanent Residency (Residente Permanente) grants indefinite stay rights and eliminates the need for renewals. Income and savings requirements run higher, but the convenience and security make it worthwhile for those certain of their intentions. Permanent residents can work in Mexico, open bank accounts without restriction, and access the public healthcare system.
Both residency types require navigating Mexican bureaucracy, which operates on its own timeline and logic. Most Canadians find the process manageable but recommend budgeting extra time and patience—or engaging an immigration facilitator familiar with the system.
The Financial Considerations Most Canadians Overlook
Here's where things get complicated—and where inadequate planning can cost Canadians tens of thousands of dollars.
Leaving Canada permanently isn't simply a matter of changing your address. From the Canada Revenue Agency's perspective, severing your tax residency triggers a cascade of obligations that catch many unprepared emigrants by surprise.
Departure tax represents the most significant financial consideration for Canadians with substantial assets. When you cease to be a Canadian tax resident, the CRA treats you as having sold certain types of property at fair market value—even if you haven't actually sold anything. Any capital gains that have accrued while you were a Canadian resident become taxable in the year you leave.
The implications ripple across your investment portfolio. Those stocks you've held for twenty years? The rental property you bought in 2010? The family cottage your parents transferred to you? All potentially subject to deemed disposition and the resulting capital gains tax. The numbers can add up quickly, particularly for Canadians who've built substantial wealth through real estate or market investments.
Some assets receive exemptions—your principal residence, RRSPs, and RRIFs among them—but the rules are intricate and the exceptions numerous. Getting it wrong means either paying tax you don't owe or, worse, failing to pay tax you do owe and facing penalties when the CRA catches up.
Ongoing Canadian-source income creates additional complexity. If you continue receiving rental income from Canadian property, dividends from Canadian corporations, or pension payments after you leave, you'll face non-resident withholding tax—typically 25% of the gross amount, though tax treaties between Canada and Mexico may reduce this rate for certain income types.
Registered accounts require careful handling. While you can maintain your RRSP and TFSA after leaving Canada, the rules around contributions, withdrawals, and tax treatment change significantly. Contributions to a TFSA made while non-resident, for example, trigger substantial penalties. And if you've participated in the Home Buyers' Plan or Lifelong Learning Plan, outstanding balances become due when you depart.
Section 216 and 217 elections offer potential relief for Canadians with certain types of income, but understanding when they apply—and whether filing them benefits your specific situation—requires careful analysis.
The CRA also requires specific forms to be filed when you leave, documenting your assets and the deemed dispositions. Missing these forms or completing them incorrectly can result in penalties of thousands of dollars per form.
Planning Your Departure Properly
The complexity of leaving Canada tax-efficiently means that timing and preparation matter enormously. Ideally, you should begin planning at least one year before your intended departure date—and that's not an exaggeration.
A thorough departure plan addresses several dimensions:
Asset review and optimization: Before triggering deemed disposition, you'll want to understand which assets will generate gains, whether any harvesting of losses might offset them, and whether timing adjustments could reduce your overall tax burden.
Residency severance: The CRA looks at multiple factors in determining whether you've genuinely become a non-resident. Simply moving abroad isn't sufficient if you maintain a Canadian residence, keep your health card active, and return frequently. Understanding what ties to sever—and which you can maintain—helps avoid complications.
Income structuring: The sequence in which you receive certain payments, and the year in which you're resident when receiving them, can significantly affect your tax liability. Professional guidance helps optimize these decisions.
Forms and filings: The departure tax return itself is more complex than regular Canadian returns, requiring additional schedules and documentation. Some forms have strict deadlines, and late filing triggers automatic penalties.
Mexican tax considerations: While Canada's departure tax captures your attention, you'll also need to understand your tax obligations in Mexico. The two countries' tax treaty affects how certain income is treated, and Mexico has its own rules around tax residency that may surprise Canadians accustomed to the Canadian system.
What Expatify Offers
Navigating these requirements manually is possible but daunting. Most fee-only financial planners charge hundreds of dollars per hour, and the complexity of cross-border tax planning often requires multiple consultations. Immigration lawyers and tax accountants add further to the cost.
We built Expatify specifically for Canadians facing this transition. Our platform provides:
A departure tax calculator that estimates your tax liability based on your actual assets, helping you understand the financial implications before you commit to leaving. Knowing the numbers upfront allows you to plan accordingly—or decide that now isn't the right time.
A foreign income calculator that models your ongoing Canadian tax obligations after you leave, including withholding rates and treaty benefits relevant to your situation.
A comprehensive 47-item departure checklist organized by timeline—from twelve months out through post-departure tasks—ensuring nothing falls through the cracks during a process where missing a single deadline can prove costly.
A learning centre with detailed guides on the topics Canadians find most confusing: deemed disposition, Section 216 and 217 elections, withholding rates, and residency determination.
An AI assistant trained on Canadian departure tax rules, ready to answer your specific questions without the meter running.
For $69 CAD, you get lifetime access to all of these tools—a fraction of what a single hour with a cross-border tax specialist typically costs.
Making the Decision
Moving to Mexico from Canada can be one of the most rewarding decisions of your life. The combination of lower costs, better weather, rich culture, and genuine warmth from Mexican people creates a quality of life that many Canadians only dreamed of during their working years.
But the move requires more than enthusiasm. Canada's tax system is designed to capture the gains you've accumulated during your time as a resident, and the consequences of inadequate planning can follow you across borders for years.
Whether you're seriously planning a move, casually exploring the idea, or simply curious about what leaving Canada would entail, understanding your departure tax obligations is an essential first step. The numbers might reassure you that the move makes financial sense—or they might reveal that a few more years of planning would serve you better.
Either way, you'll be making an informed decision rather than discovering the implications after it's too late to change course.
Ready to understand what leaving Canada would cost you? Start with our departure tax calculator and get a clear picture of your obligations before you make any decisions.
Related Resources:
- CRA: Leaving Canada (Emigrants)
- Government of Canada: Canada-Mexico Relations
- Canadian Embassy in Mexico: People-to-People Ties
This article provides general information only and does not constitute legal, tax, or financial advice. Individual circumstances vary, and readers should consult qualified professionals for guidance specific to their situations.