CAN FOREIGNERS PURCHASE REAL ESTATE IN THE MOST DESIRABLE AREAS OF MEXICO?
Yes! You can obtain property rights in the Mexican coastal and border areas through a Fideicomiso (Real Estate Bank Trust) which affords Foreigners all of the rights of Fee Simple Ownership in The U.S.
WHAT IS A FIDEICOMISO AND HOW DOES IT WORK?
As a Foreigner, you can acquire irrevocable and rights to property in the restricted Zone of Mexico through a 50 year transferable Real Estate Bank Trust called a “Fideicomiso.” This trust is the legal equivalent for ownership (commonly referred to in the U.S. as Fee Simple) and is provided specifically for non-nationals to purchase property in the restricted zones of Mexico (border and beach areas.) The fideicomiso is the ONLY legal way for Foreigners to acquire residential property for personal use in these areas that is sanctioned by the Mexican government, and provided for in the Mexican Constitution under The Foreign Investment Law.
The Mexican Government via Mexico City issues an SRE permit to a Mexican bank of your choice, a survey, appraisal, and 2 No Lien certificates for the property are reviewed by The Notario Publico. The property is then delivered to that Mexican bank, authorized to act as the trustee designating you as the beneficiary of the trust. The bank acts like an employee of the beneficiary (you) in all transactions involving the property. The beneficiary (you) retains the use and control of the property and makes all decisions concerning the property. You have the same “bundle of rights” as owning property with fee simple title. You have the right to use, enjoy, lease, improve, mortgage, sell, inherit and will the property.
Some people have chosen to accept title through a Mexican Corporation, thereby holding title as Mexican entity. Technically if you are purchasing property as an investment (i.e. rental property, multiple properties, a partnership, or future development) you should hold title through a corporation. Many Foreigners have been told that by holding title through a Mexican Corporation, you can save time and money vs. a fideicomiso. What is not disclosed is that a Mexican Corporation is legally obligated to file taxes monthly, with the filing done by a certified Mexican Accountant, among other obligations. Also, holding title through a corporation significantly changes your capital gains taxes should you decide to sell the property. Please consult an accountant or attorney to discuss the best options for your tax situation.
LEASED LAND, A BETTER OPTION?
This is one of the most misunderstood aspects of Mexican Real Estate. Many people don't know that in Mexico, the only legal lease is valid for up to a 10 year period. Additionally, the Mexican Government only recognizes lease contracts that are in Spanish and Notarized by a Mexican Notario Publico. Please remember as a Foreigner you do not get title to your leased property. You are purchasing the "improvements" on the property and are still required to pay a monthly fee to the Landowner. Should the Landowner decide to sell the campo or decide not to renew your lease, you will lose your lease rights unless specified otherwise in your notarized contract.
When does leasing property make sense? Leasing a property is a good option when you can't afford a big investment or the closing and fideicomiso costs. The best way to find out if the property you are considering is a good fit for you is to talk to the people who live in the community or your AMPI affiliated Real Estate Professional.