Property Ownership Is Not Possible for Foreigners
A common misconception about Mexico is that foreigners cannot own property in the country, particularly near the coast or international borders. This belief stems from historical regulations and misunderstandings about current laws. In reality, Mexico offers legal avenues for foreign nationals to own property, even in areas traditionally considered restricted. Understanding the legal framework and available mechanisms can dispel this myth and open opportunities for those interested in investing in Mexican real estate.
Restricted Zones
According to the Mexican Constitution, there are areas known as “restricted zones” where direct ownership of land by foreigners is prohibited. These zones include land located within 50 kilometers (about 31 miles) of the coastline and 100 kilometers (about 62 miles) of international borders. The restriction was originally established to protect national security and maintain sovereignty over critical regions.
However, this does not mean that foreigners are entirely barred from acquiring property in these areas. The Mexican government has implemented legal mechanisms that allow foreign nationals to invest in and enjoy property within the restricted zones while adhering to constitutional provisions.
Fideicomiso (Trust)
One of the primary methods for foreigners to legally purchase property in restricted zones is through a Fideicomiso, which is a bank trust. Under this arrangement, a Mexican bank acts as the trustee, holding the title to the property on behalf of the foreign buyer, who is the beneficiary of the trust.
Key aspects of the Fideicomiso include:
- Rights of Ownership: The beneficiary (foreign buyer) retains all rights to use, rent, modify, or sell the property. They can also pass it on to heirs.
- Trust Duration: The trust is established for an initial term of 50 years and is renewable indefinitely for additional 50-year periods.
- Legal Protection: The bank, as the trustee, is responsible for ensuring that all transactions comply with Mexican law, providing an additional layer of security for the foreign investor.
- Costs: Setting up a Fideicomiso involves initial fees and annual maintenance costs paid to the bank for administering the trust.
The Fideicomiso is a well-established and widely used mechanism that enables foreigners to invest confidently in prime coastal and border areas, enjoying the benefits of property ownership without violating constitutional restrictions.
Corporations
Another avenue for foreign property ownership in Mexico is through the establishment of a Mexican corporation. By setting up a corporation, foreigners can acquire property in restricted zones for non-residential purposes, such as commercial or investment activities.
Key points about using a corporation for property ownership:
- Corporate Structure: The corporation must be organized under Mexican law, with at least two shareholders. Foreigners can own 100% of the shares.
- Property Use: Properties purchased under a corporate entity in restricted zones must be used for commercial purposes. Residential use is generally not permitted under this structure.
- Compliance and Regulations: The corporation is subject to Mexican corporate laws, including tax obligations, accounting requirements, and annual reporting. Professional legal and accounting assistance is advisable to maintain compliance.
- Advantages: Owning property through a corporation can offer benefits such as limited liability protection and potential tax advantages, depending on the nature of the investment.
Establishing a Mexican corporation is a viable option for foreigners interested in commercial real estate ventures, development projects, or other business activities within restricted zones.
When considering a move to Mexico, many Americans grapple with preconceived notions that may color their perception of what life in this diverse and . . .
