can foreigners own property in Mexico?
Yes !
It is safe, simple and secure.
Option 1
Through a bank held trust called a FIDEICOMISO in Spanish.
Mexican real estate law permits foreigners to acquire residential real estate located in the coastal and border areas of Mexico through a bank Trust that grants rights of real estate ownership. This Trust allows you to invest in any Mexican property and own it as a beneficiary while a bank of your choosing holds the legal title as your trustee.
As the beneficiary of the trust, the buyer maintains complete control over it, retaining the use of the property and making all investment decisions. This is not a lease, it is equivalent to a Living Trust in the US. A Fideicomiso bestows upon the Beneficiary of the Trust (the buyer) absolute and irrevocable control over the property: to enjoy, lease, improve, mortgage, sell, inherit and will.
Is the Fideicomiso an asset of the bank?
No it is not an asset of the bank.
The trust to the buyer’s Mexico real estate property is held by the bank for the beneficiary (buyer) and is not considered an asset of the bank, therefore not exposed to any legal action that the bank might find itself in. The trust is the beneficiary’s property.
Fideicomiso Cost.
The Trust is initially established for a 50 year period and can be renewed at any time paying a nominal fee. The trust is set in 50-year increments guaranteed renewable for perpetuity. The current cost is about $600 USD per year.
Can the Mexican government take a Foreigner’s Property?
Under the North American Free Trade Agreement, NAFTA, Mexico may not directly or indirectly, expropriate property except for a public purpose (i.e. building roads). And only through a legal condemnation proceeding will this be possible. In the rare case where it is necessary to expropriate land, the government will pay swift and fair market compensation to the owner, together with interest. This is the same process known as Eminent Domain in th USA, Compulsory Purchase in the UK or Expropriation in Canada.
Option 2
Buying through a privately owned Mexican Corporation
Many investors choose to purchase property though a corporation if the intent is to conduct the investment as a business.
How to buy through a corporation?
Ownership of property in Mexico is possible through the establishment of a Mexican corporation. As of 1995 foreigners can fully own, operate and administer Mexican corporations. A foreign corporation in Mexico requires two or more individual investors, who combined, control 100% of the corporation. None of the corporation’s investors can be Mexican. Once the Mexican corporation is formed, it has the legal capacity to acquire property anywhere in Mexico, including the restricted zone. Through a corporation, foreign owners acquire the right of domain, in addition to possession and benefit.
The property is owned with the same rights as if it were a Mexican entity. There are no investment restrictions on foreign-owned Mexican corporations aimed at buying and developing property.
Types of Mexican Corporations
- Limited liability corporation (LLC)
- Limited liability partnership (LLP).
Choosing the right one is important for tax purposes in both the US and Mexico, and the foreigner should speak with an attorney or accountant on both sides of the border to understand the benefits and costs each one entails.
What is the cost to set up a Corporation?
Typically, an attorney will charge $1,500 USD to set up the corporation.
Plus approximately $100 USD per month as an accounting fee.
