Property Futures

Real Estate News, Reviews and Investment

Foreign property ownership in Mexico is a matter of trust

Foreign property ownership in Mexico is a matter of trust.

Cabo San Lucas BayCabo San Lucas BayStan Shebs via Wikipeda

There are areas of Mexico where foreign investment is not allowed. But of course there’s a way around it, and it’s perfectly legal.

Foreigners are certainly allowed to buy property in Mexico; however, there are certain areas that are restricted from foreign investment, specifically coastal areas (50km from the coast inland) and areas that border the US (100km from the northern border inland). Formally known as The Restricted Zone, only Mexican citizens or companies owned by Mexican citizens are allowed to make property purchases.

Yet it is in these most desirable locations that foreign investors are the most keen to buy.

Fortunately there is a perfectly legal workaround that manages to find a way to allow a foreign investor to jump into one of these worthy markets: a Fideicomisos. It’s a type of trust that allows for an authorised Mexican bank to hold the property in their trust on behalf of the foreign buyer. In this scenario, the buyer becomes the beneficiary of the trust.

The bank charges for this service (usually around US$1500 to create the trust and an additional US$500-$600 per year). An attorney is strongly recommended not only to review the contract but to advise the investor on his or her tax obligations in both Mexico and their homeland. While an attorney will add to the fees for this type of property purchase, they are likely to save you money in the long run.

Additionally, once the trust is created, it’s transferrable and as such, it becomes a type of asset. So when it comes time to sell your casa in Mexico, you can more easily attract a wider pool of potential buyers– local and foreign.

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This entry was posted on February 13, 2013 by in Future, Investment, Property and tagged .

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