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Why The Fideicomiso May Be a Better Option Than a Corporation When Buying Real Estate in Mexico

Updated: Apr 26, 2020

As discussed previously on this site and in The Starter’s Guide to Mexico, there are two options available to foreigners when buying real estate in Mexico in the restricted zone. The first option is the “Fideicomiso” which can be translated roughly to “bank trust” in English. The second is by forming a Mexican corporation or “sociedad”.

Each option has its advantages and disadvantages and depending on your situation and goal will determine which is right for you. In my experience, I’ve noticed that many lawyers will try to sway foreigners towards the corporation route. While the corporation may be right for some buyers, many would benefit more from the fideicomiso.

Lawyers push clients towards the corporation as it means more business for the lawyer in the future as the corporation has annual responsibilities that require a notary. In addition, any changes to the structure of the corporation will also require notary services.

The corporation makes sense for buyers or investors looking to purchase multiple properties. However, if your plan is to just purchase a single property, the fideicomiso is likely the better and cheaper route to take.

The advantage of the corporation, although more costly and more involves more regular paperwork, is that once formed, you can buy property in the restricted zone at will.

Thus, I recommend investors go for the corporation and those that plan on buying a single home, such as retirees, I recommend the fideicomiso. As stated previously, each individual situation is different and you should seek your own legal advice.

Ready to Buy Property In Mexico?

Don't buy property in Mexico without first reading The Starter's Guide to Mexico. Not only does the guide go into more detail on the Fideicomiso vs Corporation, but other important topics regarding Mexico such as doing business on a tourist visa, obtaining residency, and opening a bank account.

This guide is indispensable if you plan on living or doing business in Mexico. Click here for more information.

Disclaimer: This article is not intended to serve as legal or investment advice. This article is for entertainment purposes based on personal experience of the author.

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