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Wednesday, February 1, 2023

Should you form a corporation to buy a house in Mexico?

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Lee Steele
Lee Steele
Lee Steele is the founding director of Roof Cat Media and has published Yucatán Magazine and other titles since 2012. Sign up for our weekly newsletters, so our best stories will appear in your inbox every Monday.
Se Vende: Property for sale in Yucatán
Se Vende: Property for sale in Yucatán. File photo

Foreigners can’t technically buy property anywhere near Mexico’s coast or borders, but they acquire property here all the time.

The way to get around the country’s protective restriction, which dates back to the revolution, has been the mighty Fideicomiso, which is basically a bank trust.

“Many years have passed, and even though the prohibition seem pretty ridiculous now, it still exists because many people and institutions profit from it, mainly banks,” writes Easy Legal Mexico, the Mérida law firm that specializes in expat services.

Now and again we hear rumors that legislation will wipe out the Fideicomiso, but that has yet to happen.

“Many attempts (or announcement of attempts) to modify the constitution and change this article have been made, but nothing solid, and we can say with a good level of certainty that this is something that may never change,” write Alfonso Barrera Romero and Francisco Gutierrez Cetina, principles of the law firm.

So does it make sense to form a Mexican corporation, and buy your property through it?

Not necessarily.

Although a corporation would let you get around the yearly bank fee, which is around $700 U.S., it also ties you to a legally required accountant who keeps you compliant with the tax collector. You also lose one big advantage that you had with the bank trust: avoiding capital gains taxes if you sell the property.

Maybe a Fideicomiso isn’t so bad.

There are other things to consider. Will the property be strictly residential, or a profit-making enterprise? What kind of visa do you have, or intend to obtain? Read more at the Easy Legal website.

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