Buying a home, vacation rental or condo in Mexico as a foreigner, you’ll need to do so through a bank trust (also known as a fideicomiso), or through a Mexican Corporation.
If you’re purchasing a home or condo in Mexico as a foreigner, you’ll need to do so through a bank trust (also known as a fideicomiso), or through a Mexican Corporation.
What is a Fideicomiso?
A fideicomiso (fe-day-eh-co-mee-so), also known as a bank trust, is the most common way to purchase real estate in Mexico. When you have a fideicomiso, you are listed on the property deed as the beneficiary of the fideicomiso. The trustee of the fidelity, who holds title to your property and is responsible for carrying out your wishes, is either a Mexican bank or an attorney specializing in trusts. A Mexican bank trust can only be created by a Trustee licensed by Banco de México (the Central Bank of Mexico).
Benefits of using a Fideicomiso to buy property in Mexico
- Trusts are easier to set up and less expensive to maintain. This can be helpful if you’re working with a small budget and don’t have the money or time for setting up a corporation.
- Trusts are better for people who are not familiar with Mexico’s real estate laws and regulations. If you’re not as confident in your ability to navigate Mexican real estate laws and regulations, trusts may be better for you.
- Trusts may be necessary if certain types of property interest you, such as beachfront property, which can only be purchased using a Fideicomiso.
What is a Mexican corporation?
A Mexican corporation is essentially a company created just to own property or assets. You must set it up in Mexico, and you can use it to do business there or elsewhere. It is a legal entity that exists independently of its owners and investors (called shareholders). The corporation’s shares may be owned by individuals, corporations, or other Mexican corporations. Once the corporation is created and registered, it has a life separate from its shareholders and managers.
Benefits of using a Mexican corporation to buy property in Mexico
- A Mexican corporation can be established in significantly less time than a fideicomiso.
- Corporations can buy commercial property, and they’re generally easier to sell than fiduciary-held property.
- Corporations can easily sell shares, making it easy for more than one person to hold title to the same property.
- Any number of people may own shares in the corporation, so this is a great option for buying a vacation home with friends or relatives.
- Mexican corporations are used by many foreign nationals who operate businesses in Mexico – whether it be renting out their properties as vacation rentals or operating other business ventures from Mexico.
- There’s no minimum amount of time that the corporation must own the property; if you decide you’re done with your Mexican real estate investment, there’s no waiting period before selling!
Summary: Should you use a Fideicomiso or a Mexican corporation to buy your property in Mexico?
So, which is best for you?
If you’re interested in purchasing a vacation home or property that won’t cost an arm and a leg, the fideicomiso is the right choice. It’s the most common way to purchase property in Mexico as a foreigner—and it’s usually pretty quick and simple to set up.
The Mexican corporation might be better for people looking to make large investments (like purchasing land, multiple properties as a business or building a home). It also has some tax benefits and can provide more privacy. But again: it takes longer to set up, requires more expense, and involves more paperwork. You should probably consult a lawyer if this is your plan of action.
