When contemplating the acquisition of property in Mexico, factors beyond price and location require consideration. You must ponder the property's intended use—will it serve as a vacation spot for yourself, family, and friends, or is it an investment for potential rental income?
Understanding the property's purpose is crucial in determining the appropriate legal process for acquisition—whether through a fideicomiso (bank trust) or a Mexican Corporation.
FIDEICOMISO
A fideicomiso is the favored choice among foreigners seeking property in Mexico. However, it's essential to note that a fideicomiso is distinct from a Canadian trust.
This option is suitable for non-Mexicans who:
Intend to use the property for personal purposes.
Are contemplating Mexican residency.
Plan to rent out the property and already have Mexican residency.
Seek a means of estate planning, as the trustee can designate beneficiaries who inherit the trust upon your demise.
Want potential tax benefits—property sales may be exempt from capital gains tax (ISR) up to a selling price of MXP $3.8 million if certain conditions are met.
Nevertheless, there are drawbacks to the fideicomiso route, including associated bank fees and paperwork.
MEXICAN CORPORATION
Another option for foreign property buyers is establishing a Mexican corporation so the property is acquired under the corporation's name.
This option suits non-Mexicans who:
Plan to generate rental income from their Mexican property.
Intend to acquire multiple rental properties.
WHAT TO DO
Whether renting the Mexican property for income or utilizing it as a vacation destination, understanding the available options is crucial. It is advisable to consult with a Mexican lawyer who can thoroughly discuss and review your specific needs and circumstances.
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