What is the Best Option for you to Buy Property within the Restricted Zones of Mexico?
Keep in mind that every fideicomiso needs a federal permit to create the trust, when the information is submitted and it mentions that the property is equal or larger than 2,000 square meters, the permit includes, among other conditions, the obligation for Bank and notary to insert a clause within the trust contract, obligating the trust beneficiary owners to invest at least US $250 K within 24 months after the creating of the trustor forfeit the property to the Mexican government, thus, the option is to create a foreign-owned Mexican corporation which once in operation may acquire property (which becomes a company asset) thus, avoiding the trust and the condition to make such a sizable investment, (keep in mind that this amount increases based on a chart that you can find here in Baja Legal Advice in the article discussing this).
If you create a foreign-owned Mexican corporation you will have to spend several thousand dollars in creating one, pay a monthly fee to a bookkeeper to file monthly tax reports, (yes, you read that right, even if the company generates no income), the property then becomes a company asset which may be attached by our IRS for failure to make monthly tax reports, also, it presents problems to transfer property which then besides being a taxable transaction (the company does not have the option to deduct as much as $67,000 dollars on the taxable gain which a legal resident of Mexico has) and the mechanism to Will out the asset to somebody is not a straightforward one, also, at the end of the day, the supposed savings in creating the corporation, compared to those of the trust, are nil, because of bookkeeping fees among other reasons.
Lastly, let us consider the Estate Planning benefits provided by a trust, as follows:
If I was to buy property, even as a Mexican national, I would set up a real estate trust, why? because, under the trust, after my passing my beneficiaries will not have to file for probate to become the trust beneficiary owners, whereas, under a Will, my heirs would have to retain the services of an attorney, file Probate in Court, pay thousands of dollars in legal fees and wait a year or more for Probate to conclude.
Attorney at Law / Licensed Exclusively in Mexico
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