Fideicomiso vs. Mexican Corporation: How Foreigners Can Buy Property in Mexico

Are you a foreigner looking to invest in Mexico? Find out how in this article.

If you want to buy real estate in Mexico and are not a Mexican citizen, it’s important to make sure you can do so legally. 

One of the key considerations when buying property in Mexico is how to legally acquire real estate in the “restricted zone.”

Under Article 27, Section 1 of the Political Constitution of the United Mexican States, foreigners are not permitted to acquire property on the coast or within 50 kilometers inland, or within 100 kilometers of the borders.

This restriction was put in place in 1917, when the risk of invasion was high, and it has changed little since. Although it now seems outdated and unnecessary, it still exists because many people and institutions benefit from it, especially banks. There have been efforts to amend the Constitution and change this article, with little success.

As a result, expats who want to buy property in Mexico, especially on the Yucatán Peninsula, have two options: obtain a Fideicomiso (bank trust) from a Mexican bank or set up their own Mexican corporation. These options serve different purposes and each has its own requirements.

Fideicomiso

When foreigners want to buy property in Mexico, they often choose a Fideicomiso as the best option.

Although there is no exact translation, the Fideicomiso can be described as a “real estate trust”: it is a legal document that allows a Mexican bank to lend its name to hold the property. Technically, the bank holds title to the property, but the beneficiary is responsible for its use, management, maintenance, rental income, mortgage loans and sale proceeds, while the bank is only responsible for holding title. For an annual fee of approximately $700 USD, the beneficiary can name successor beneficiaries to inherit the trust, and no one can place a lien on the property. 

The main benefit is that if the beneficiary qualifies for resident status and the property meets the criteria, they may be exempt from up to 100% of ISR (capital gains tax) on a sale price of up to $3,800,000 MXN.

The main drawback of setting up a Fideicomiso is its cost. Bank fees, which include the permit, an annual fee paid in advance and expenses, range from $2,000 to $2,500 USD. 

These expenses are also added to all the closing costs (such as property acquisition tax, fees, certificates, notary and attorney fees, etc.). 

In addition, issuing the permit takes the bank about three weeks, but gathering the necessary documents and filling out forms usually takes at least two weeks. As a result, the typical closing time for a Fideicomiso is roughly two to three months.

Mexican corporation

By contrast, forming a Mexican corporation is simpler and faster. Two partners, both foreigners, can create a Mexican corporation in two weeks. The cost is no more than $1,500 USD, and the corporation is treated as a Mexican national for property acquisition purposes. So in just a month and a half, the corporation can be formed and the property placed in its name. You can also buy a car and almost anything else through it. 

However, affordability and speed are the only benefits of a corporation.

The downside of a corporation is that it ties you to an accountant for the rest of your life. 

Even if the corporation reports zero income, an accountant will charge a fee. You must also obtain resident status to act as a partner on behalf of the corporation. Otherwise, you must use powers of attorney granted to Mexican nationals, which means someone else has control over your money, property, car and anything else you buy or do through the corporation. Every purchase made through a corporation must be paid by check or bank transfer from the corporation’s bank account, which makes using cash impossible. 

Finally, the most significant drawback is that capital gains tax cannot be avoided when selling the property. However, if you manage the property properly and obtain tax receipts for all work done on the house, you can deduct those expenses from the gain when you sell to reduce your tax liability, though it cannot be eliminated entirely.

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If you’re looking to start a business or buy a property for non-residential purposes, forming a corporation is the ideal option. Not only will it save you money on income tax, it will also let you establish a legitimate source of income in the country. 

However, if you intend to buy a property in Mexico for personal or residential use that does not generate income, a Fideicomiso would be the better option. Our recommendation is to form a corporation for business purposes and opt for a Fideicomiso for personal or residential purposes.

Both the fideicomiso and the corporation have tax implications. Check with the Servicio de Administración Tributaria (SAT), Mexico’s tax authority, to understand your obligations as a foreign investor.

You may also be interested in: Is It Safe to Buy Property in Mexico as a Foreigner? and Taxes for Foreigners Buying Property in Mexico 2026.