A “fideicomiso traslativo de dominio” translates to a “trust for the transfer of ownership” in English. This trust is a legal mechanism established in Mexico to allow non-Mexican citizens to acquire and hold property within the restricted zone. Here´s how it works:

1. Set-Up: To purchase property in a restricted zone, a foreigner must partner with a Mexican bank, which acts as the trustee. The foreigner becomes the beneficiary of the trust.
2. Trust Agreement (fideicomiso agreement): A fideicomiso agreement is created, outlining the terms and conditions of the trust. This document specifies the trustee´s responsibilities, the beneficiary´s rights, and the property´s details. It’s crucial to understand that the trust is a document that must always be executed before a Mexican notary public, as if it is done through a private document, it will not be valid.
3. Property Acquisition: The foreigner selects the property they wish to acquire. The trustee, on behalf of the beneficiary, purchases the property in Mexico.
4. Trustee´s Role: The trustee holds legal title to the property, but the beneficiary retains all the benefits of ownership, such as using, selling, or improving the property.
5. Control and Rights: The beneficiary has control over the property, including the ability to make decisions regarding its use, development, or sale.
6. Duration: The trust has a maximum duration of 50 years, renewable for an additional 50 years, ensuring long-term ownership and investment.
7. Transferability: The beneficiary can transfer the beneficial interest in the trust to another foreigner, making it relatively straightforward to sell the property.

In summary, a “Fideicomiso Traslativo de Dominio” is a trust arrangement that enables non-Mexican citizens to own property in restricted zones of Mexico. It involves a Mexican bank acting as a trustee, holding legal title while the foreigner enjoys all the benefits of property ownership. This mechanism allows foreigners to invest in Mexican real estate within the legal framework established by Mexican law.

Yes, non-Mexicans can own real estate in Mexico, including property in the restricted zones near coastlines and borders. However, ownership in these restricted zones is facilitated through a trust arrangement called a “fideicomiso traslativo de dominio,” which involves a Mexican bank acting as a trustee to hold legal title to the property on behalf of the foreign owner (beneficiary). This trust structure allows non-Mexican individuals or entities to enjoy the benefits of property ownership while complying with Mexican law.

A trust in Mexico involves three key parties:

1. Settlor (Fideicomitente): The person or entity that establishes the trust and contributes assets or property to it.
2. Trustee (Fiduciario): A Mexican bank, entrusted with managing and holding legal title to the assets or property in the trust for the benefit of the beneficiary.
3. Beneficiary (Fideicomisario): The individual or entity that benefits from the trust, often by receiving income, using the property, or having certain rights and control over the assets held in the trust.

Mexico’s “restricted zone” primarily refers to areas within 100 kilometers (about 62 miles) of any national border and within 50 kilometers (about 31 miles) of the coastline. Baja California Sur, being located along the coast of the Baja California Peninsula, is within the restricted zone as defined by Mexican law.

Historically, the creation of Mexico’s restricted zone has its roots in the Mexican Constitution of 1917. Article 27 of the Constitution established restrictions on land ownership in Mexico, particularly in areas near the borders and coastlines. The intention was to protect national interests and prevent the massive acquisition of land by foreigners in strategic zones.

Subsequently, in 1973, the Foreign Investment Law was enacted, introducing the concept of “fideicomisos” (trusts) to allow foreigners to invest in real estate within the restricted zone while maintaining restrictions on direct ownership. This legislation facilitated foreign investment in Mexico while retaining control over land ownership in sensitive areas.

In Mexico, when you purchase a property through a trust, the property is not considered an asset of the trustee bank. The trust is a legal structure used to allow foreigners to acquire properties in restricted areas of Mexico. The trust enables a foreigner to acquire ownership rights over the property, but the bank acts as the trustee, not the actual owner.

In simpler terms, the property is held in your name through the trust, and you are the true beneficiary of the property.

In summary, the property you acquire through a trust in Mexico is an asset owned by you as the beneficiary of the trust, not by the trustee bank. The bank’s role is administrative and custodial, and it does not have ownership of the property as its asset.

A Fideicomiso is not a type of lease agreement; it is a legal trust arrangement used in Mexico to facilitate the ownership of real estate by foreigners in restricted zones.

Acquiring property in Mexico through a fideicomiso (trust) is considered a secure and common practice for foreigners. The trust structure is established under Mexican law, and reputable Mexican banks act as trustees, ensuring that property rights and ownership are protected. This arrangement offers legal safeguards and transparency, making property acquisition in Mexico through a fideicomiso a reliable and secure option for foreign buyers. However, as with any real estate transaction, it’s advisable to consult with legal experts and conduct due diligence to ensure a smooth and secure process.

Establishing a fideicomiso in Mexico involves specific legal and financial requirements:

• Legal Representation: You will need to engage legal representation in Mexico, such as an attorney to assist with the establishment of the trust and ensure compliance with Mexican law.
• Trustee Selection: Your closing attorney can assist you in finding the most suitable Mexican financial institution, often a bank, to serve as the trustee. The trustee will hold legal title to the property and oversee the trust’s management on your behalf. This is a critical step, as a lack of knowledge in this area can lead to numerous issues. Some banks can be uncooperative, leading to communication breakdowns, excessively slow processes, and unwarranted charges, highlighting the importance of making an informed selection.
• Compliance with Regulations: Adhere to Mexican regulations and requirements for foreign ownership of property, especially in restricted zones.

The charges associated with creating a trust may include a range of fees and expenses such as legal services, notary fees, trustee fees, property appraisal fees, taxes, government-related costs, escrow fees, certificate of no property tax liability, certificate of lien release, closing fees, as well as registration fees with both the Cadastre (Catastro) and the Public Registry of the Property and Commerce. The exact amount of these charges can vary based on factors like the property’s value, location, and specific legal requirements. We can assist you in providing a detailed breakdown of the closing costs specific to your trust arrangement.

To determine the closing costs for your real estate purchase, whether through a trust or a Mexican company for property development, you should provide the following information:

• Property Value: An estimate or appraisal of the property’s value, as this is a key factor in calculating various fees and taxes.
• Transaction Structure: Whether you are acquiring the property through a trust (fideicomiso) or a Mexican company, as the legal structure can influence the associated costs.
• Intended Use: Clarify whether the property is for personal use, investment, or development, as this can affect tax and fee considerations.
• Legal Documentation: Any legal documentation related to the transaction, such as the purchase agreement, trust agreement, or corporate documents for a Mexican company.

Entering into a private contract while the trust (fideicomiso) is being processed can be advisable in some situations. Such a contract can help clarify the terms and conditions of the transaction, including the purchase price, payment schedule, and any specific agreements between the parties involved. It can provide a level of security and ensure that both parties are clear on their obligations while the trust is being established.

If you wish to establish a private contract, we are the professional who should draft it. We have the legal expertise and knowledge of local regulations to ensure the contract is legally sound and aligns with Mexican law, which is crucial to protect the interests of all parties involved in the transaction.

Using an escrow account when buying is advisable for several reasons:

1. Security: It provides a secure way to hold funds during the transaction. The funds are held by a neutral third party (the escrow agent) until all conditions and terms of the contract are met.
2. Transparency: It adds transparency to the transaction. Both the buyer and seller can track the progress of the transaction and ensure that all steps are completed as agreed upon.
3. Risk Mitigation: Escrow accounts help mitigate risks. Funds are only released when all parties have fulfilled their obligations, reducing the risk of fraud or misunderstandings.
4. Compliance: It ensures compliance with the terms of the purchase agreement, including the transfer of clear title, inspection results, and any other conditions specified in the contract.
5. Efficiency: Escrow accounts streamline the closing process by centralizing funds and paperwork, making it easier to complete the transaction.
6. Dispute Resolution: In case of disputes, an escrow account provides a mechanism for resolving issues, as the escrow agent can mediate and facilitate resolution.

Overall, using an escrow account adds a layer of security, transparency, and efficiency to real estate transactions, making it a recommended practice for both buyers and sellers.

We can provide guidance to help you choose the best option for your needs.

While it is technically possible to establish a trust in Mexico without the assistance of a closing attorney, it’s strongly recommended to seek legal guidance and professional expertise. Mexican real estate laws and regulations can be complex, and the process of creating a trust (fideicomiso) involves intricate legal procedures. An experienced closing attorney can navigate these complexities, ensure that all legal requirements are met, and protect your interests throughout the process. Attempting to do it alone may lead to potential legal issues or complications, so it’s advisable to consult with a qualified attorney familiar with Mexican real estate transactions.

Absolutely, as your closing attorneys, we can certainly assist you in selecting the most suitable notary office for processing your trust. Our expertise in Mexican real estate transactions enables us to recommend a reputable notary with a strong track record in handling such matters efficiently and in accordance with all legal requirements. Your trust’s success is our priority, and we’re here to guide you every step of the way.

Having a closing company like ours, work with a Mexican notary public office offers several significant benefits for our clients:

1. Comprehensive Real Estate Expertise: Our company specializes in real estate closings, and our collaboration with a Mexican notary public office ensures that we can handle all legal aspects of real estate transactions efficiently.
2. Seamless Document Processing: With experience in notarial procedures, we can efficiently manage document authentication and legalization, reducing potential delays and ensuring a smooth transaction process.
3. Expertise in Document Authentication: Notarial procedures often involve document authentication, a critical step in legalizing documents for official use. Our expertise in this area guarantees that documents are properly authenticated and compliant with Mexican legal requirements.
4. One-Stop Service: Clients benefit from a convenient one-stop service for both legal advice and notarial services, eliminating the need to engage multiple professionals and simplifying the entire process.
5. Cost Efficiency: Our integrated services offer cost-effective solutions compared to engaging multiple professionals or entities.

A Key Benefit of Our Collaboration with a Notary Public: Cost Savings on Powers of Attorney and Notarial Fees. A major advantage of our company collaborating with a notary public is that we do not charge for powers of attorney (with a few exceptions), and the notarial fees come with a significant discount.

6. Enhanced Communication: Our collaboration with a notary public office facilitates seamless communication and coordination between the legal and notarial aspects of transactions, minimizing the risk of misunderstandings and errors.
7. Quick Issue Resolution: In the event of issues or discrepancies, our expertise in notarial procedures enables us to expedite the resolution process, ensuring transactions proceed smoothly.
8. Comprehensive Support: Whether it involves contract review, due diligence, or handling notarial formalities, our clients receive comprehensive support tailored to their specific needs.

In summary, our partnership with a Mexican notary public office enhances the client experience by combining our expertise in real estate closings with notarial services. This collaboration streamlines real estate transactions and ensures that our clients receive top-notch support throughout the process.

Trust agreements in Mexico often start with an initial duration of 50 years, and they frequently have clauses that permit extensions for an additional period of 50 years. Upon reaching the 100-year period, a new fideicomiso will be established to safeguard the assets for an additional 50-year term, and the identical regulations will remain in effect.

There is no risk of the government taking ownership of your property after the initial trust term and its extension. The fideicomiso structure is designed to provide secure, long-term ownership for foreign buyers in Mexico.

As a foreign beneficiary of such a trust, you would have the following rights and responsibilities:

Rights:

1. Usage and Enjoyment: You have the right to use and enjoy the property held in the trust, which includes residing in or renting out the property.
2. Income and Profits: You are entitled to receive any income or profits generated by the property, such as rental income.
3. Transferability: You have the right to transfer your beneficial interest in the trust to another eligible beneficiary or heir, subject to compliance with Mexican laws and trust agreement terms.
4. Selling the Property: You can sell the property, and the proceeds from the sale will be distributed to you as the beneficiary.

Responsibilities:

1. Trust Fees: You are responsible for paying the fees associated with the trust, which include annual trust administration fees.
2. Tax Compliance: As a property owner in Mexico, you have obligations related to tax compliance, including property taxes and, in some cases, capital gains taxes when selling the property.
3. Trust Compliance: It is essential to comply with the terms and conditions of the trust agreement and Mexican laws governing property ownership by foreigners.

Once your trust deed is registered in your name, it is crucial to consider several factors to ensure the proper management and achievement of your trust’s objectives. Here are some important guidelines for your attention:

1. Fiduciary Responsibilities: As the trustee, you bear the responsibility for two annual payments:

Trustee Fees to the bank for trust administration: Your trust deed clearly outlines the fees you must pay for both trust administration and any modifications you wish to make to the trust. If you have any questions, please refer to the inquiry: “How, When, and What Is the Process for Paying Annual Trustee Fees?”

Property Tax Payment: If you have any questions regarding this, please refer to the inquiry: “How, When, and What Is the Process for Paying Property Taxes?”

1. Changes in Circumstances: If your personal circumstances change or if you wish to make amendments to the trust, you may need to amend the trust agreement. Reach out to us for proper guidance and consultation.
2. Recordkeeping and Documentation: Maintain accurate records of all transactions and communications related to the trust. This is essential to ensure transparency and proper documentation of trust activities.

The process for paying annual trustee fees for a fideicomiso in Mexico involves understanding how, when, and what fees are involved. Hera es a breakdown:

1. How to Pay Trustee Fees: To pay trustee fees for your fideicomiso, you need to follow these steps:
   • Contact your bank or trustee institution: Get in touch with the bank or institution that is acting as the trustee for your fideicomiso. They will provide you with the necessary information regarding the payment process.
   • Review your trust deed: Your trust deed should specify the trustee fees, including the amount and payment schedule. Ensure that you understand the terms and conditions related to these fees.
   • Set up a payment method: Work with your trustee to set up a suitable payment method. This might involve automatic withdrawals, wire transfers, or other payment options.
2. When to Pay: The timing for paying annual trustee fees will depend on the terms outlined in your trust deed. , these fees are due on an annual basis, but the specific due date can vary. It’s essential to refer to your trust deed for precise information about the payment schedule.
3. What Fees Are Involved: Your trustee fees should be clearly outlined in your trust deed. These fees cover the cost of administering the fideicomiso, managing its assets, and ensuring compliance with legal and regulatory requirements. Additionally, your trust deed may specify any fees associated with making modifications to the fideicomiso.

If you have any questions or concerns about the payment process or trustee fees, please do not hesitate to contact us. We are here to provide you with guidance and assistance tailored to your specific fideicomiso.

1. Property Tax Assessment and Billing:

Property taxes are assessed and billed on an annual basis.

The local government assesses the value of your property to determine the amount of taxes owed.

2. Accessing Tax Information:

Towards the end of the year or at the beginning of the new year, depending on the city, it is possible to access the municipality’s website to obtain information about property taxes.

Through the website, property owners can retrieve a breakdown of the amount owed in property taxes and other related tax details.

3. Payment Schedule:

You can choose to make payments every two months, but it is advisable to make an annual payment to avoid additional charges. Furthermore, each municipality provides discounts for early payment, although the specific methods may differ—these discounts are usually available at the end of the previous year or the start of the new year.

4. Payment Locations:

Property taxes can be paid at designated local tax offices. These offices are located in the city’s municipal buildings.

Some cities also provide online payment options for added convenience.

And don’t forget, always keep your receipts for any questions or clarifications.

While we do not perform due diligence ourselves, we can certainly recommend a specialized company that exclusively provides these services and can offer you the best assistance.

The timelines for property transfer and registration within the fideicomiso can vary depending on several factors, including the specific circumstances of your property transaction, local regulations, and the efficiency of the involved parties. Here is a general overview:

1. Initial Trust Setup: The creation of the fideicomiso takes a few weeks to complete, involving legal documentation and administrative processes. The time starts counting from the moment we have received the complete information.
2. Property Acquisition: The time it takes to acquire the property and have it placed within the fideicomiso can vary. It may depend on negotiations, inspections, and other due diligence processes.
3. Property Registration: Once the property is acquired and placed within the trust, the registration process with the Public Registry of Property can take several months. Delays can occur due to administrative procedures and local factors.

It is very common for buyers and sellers to appoint us as their legal representative or attorney to act on their behalf during the closing process. We can handle the necessary paperwork and formalities.

You may grant us Power of Attorney (POA), allowing us to complete the closing on your behalf. The power of attorney we use is fully bilingual and is strictly limited to facilitating the purchase or sale, as applicable, on behalf of the grantor, with no authority granted to the attorney-in-fact or any third party. Furthermore, this power of attorney is automatically revoked upon the signing of the public deed.

A major advantage of our company collaborating with a notary public is that we do not charge for powers of attorney (with a few exceptions), and the notarial fees come with a significant discount.

If a power of attorney is issued abroad and is intended for use in Mexico, the specific requirements and processes may vary depending on the country of issuance. Our company can provide guidance on the steps you should take to ensure that the foreign power of attorney is legally recognized in Mexico, depending on its country of issuance.

To ensure that a power of attorney issued in Canada is valid in Mexico, follow these steps:

1. Prepare the Bilingual Power of Attorney: We will draft a bilingual power of attorney document that outlines the specific powers being granted. This document will be limited in scope and revocable at the moment of signature. Importantly, it will grant powers solely in favor of the grantor, without granting any rights to us or any third party.
2. Notarization in Canada: Take the bilingual power of attorney document we provide you to a notary public in Canada. The notary public will verify the identities of the parties involved and witness the signing of the document.
3. Personal Appearance at the Nearest Mexican Consulate or Embassy in Canada: After notarization, you, as the grantor, must personally appear at the nearest Mexican consulate or embassy in Canada. There, you will submit the notarized bilingual power of attorney document for legalization.

Before sending the original document, scan it for our review to ensure it is complete and accurate. Once approved, send the original document via courier services such as DHL or FedEx, as postal services can be slow and documents may occasionally get lost.

4. Mandatory Translation: The power of attorney document must be translated into Spanish. We offer official translation services conducted by authorized expert translators certified by the “Superior Court of Justice of the State,” with current and valid credentials.
5. Use in Mexico: Once the bilingual power of attorney is notarized, legalized, , you can use it in Mexico for the intended purposes.

To ensure that a power of attorney issued in the United States is valid in Mexico, follow these steps:

1. Prepare the Bilingual Power of Attorney: We will draft a bilingual power of attorney document that outlines the specific powers being granted. This document will be limited in scope and revocable at the moment of signature. Importantly, it will grant powers solely in favor of the grantor, without granting any rights to us or any third party.
2. Notarization in the USA: Take the document to a notary public in the United States. The notary public will verify the identities of the parties involved and witness the signing of the document.
3. Apostille: After notarization, obtain an Apostille for the power of attorney. This is done through the Secretary of State’s office in the state where the document was notarized. The Apostille certifies the authenticity of the notary’s signature and seal.

Before sending the original document, scan it for our review to ensure it is complete and accurate. Once approved, send the original document via courier services such as DHL or FedEx, as postal services can be slow and documents may occasionally get lost.

4. Mandatory Translation: The power of attorney document must be translated into Spanish. We offer official translation services conducted by authorized expert translators certified by the “Superior Court of Justice of the State,” with current and valid credentials.
5. Use in Mexico: Once the bilingual power of attorney is notarized, legalized, , you can use it in Mexico for the intended purposes.

To ensure that a power of attorney issued in the United States is valid in Mexico, follow these steps:

1. Prepare the Bilingual Power of Attorney: We will draft a bilingual power of attorney document that outlines the specific powers being granted. This document will be limited in scope and revocable at the moment of signature. Importantly, it will grant powers solely in favor of the grantor, without granting any rights to us or any third party.
2. Notarization in the USA: Take the document to a notary public in the United States. The notary public will verify the identities of the parties involved and witness the signing of the document.
3. Apostille: After notarization, obtain an Apostille for the power of attorney. This is done through the Secretary of State’s office in the state where the document was notarized. The Apostille certifies the authenticity of the notary’s signature and seal.

Before sending the original document, scan it for our review to ensure it is complete and accurate. Once approved, send the original document via courier services such as DHL or FedEx, as postal services can be slow and documents may occasionally get lost.

4. Mandatory Translation: The power of attorney document must be translated into Spanish. We offer official translation services conducted by authorized expert translators certified by the “Superior Court of Justice of the State,” with current and valid credentials.
5. Use in Mexico: Once the bilingual power of attorney is notarized, legalized, , you can use it in Mexico for the intended purposes.

An Apostille is a certification used to authenticate the validity of a document issued in one country and intended for use in another country that is a party to the Hague Convention Abolishing the Requirement for Legalization of Foreign Public Documents. This convention simplifies the process of document legalization by eliminating the need for additional certifications and procedures.

The Apostille is affixed to the original document or a certified copy of it by a competent authority designated in the issuing country. This certification confirms the authenticity of the signature of the official who signed or sealed the original document. Once the Apostille is placed on the document, it is considered legally valid in all countries that are parties to the Hague Convention, thereby streamlining the procedures for its use internationally.

When determining whether your power of attorney can be Apostilled or requires a different legal process for use in Mexico, you should consult the list of countries that are signatories to the Hague Convention Abolishing the Requirement for Legalization of Foreign Public Documents. This list will help you identify whether the country where your document or power of attorney was issued is a party to the convention and whether the Apostille process is applicable.

We recommend visiting this link to access the most up-to-date information on the countries that are parties to the Convention and to verify if the country where your document or power of attorney was issued and will be presented in Mexico is included in the list.

https://www.hcch.net/es/instruments/conventions/status-table/?cid=41

Unless there’s a different arrangement agreed upon by the involved parties, you’ll receive possession of the property at the same time the title is transferred, and the funds are released from escrow to the seller.

When it comes to naming your property in Mexico, you have several choices. You can place it under your own name or the names of multiple individuals, use an individual or family trust, establish an LLC or another type of US corporation or partnership, among others. However, determining the most suitable title structure is a decision best made in consultation with your US-based legal or financial advisors. It’s worth noting that the tax and legal implications in Mexico for foreign property owners remain consistent, regardless of the chosen title structure.

In Mexico, property titles and fideicomiso documents are issued in Spanish, as Spanish is the official language of the country. However, you may also request an official English translation of such document for an additional fee.

It’s important to note that while you may receive English translations of key documents, the official and legally binding versions of these documents will be in Spanish. If there are any discrepancies between the English translation and the Spanish original, the Spanish version will prevail in legal matters.

Yes, it is possible to use a Mexican corporation to hold the title for your property in Mexico. This can be a strategy used by foreigners who wish to own property in Mexico, as it can provide certain advantages and flexibility. However, it’s important to be aware of some disadvantages and important considerations to keep in mind:

1. Initial and Ongoing Costs: Establishing and operating a company in Mexico involves initial and ongoing costs. This may include registration fees, legal and accounting fees, and expenses associated with running the company, such as taxes and maintenance fees.
2. Changing Regulations: Mexican laws and regulations can change over time. This means you need to stay informed about any rule changes that may affect foreign-owned companies owning property in Mexico.
3. Tax Implications: Property ownership through a company can have tax implications both in Mexico and in your home country. You should consult with tax advisors in both Mexico and your home country to understand how taxes will apply and how to avoid double taxation.
4. Financial Transparency: In some cases, Mexican tax authorities may require greater financial transparency from foreign-owned companies owning property in Mexico. This may involve financial reporting and compliance with specific regulations.
5. Changes in Ownership Structure: If you ever want to change the ownership structure of the company or sell the property, it can be a complicated and costly process.
6. Liability Risk: If the company faces legal or financial issues, your investment in the property could be at risk.
7. Bureaucratic Processes: Mexico can have a sometimes complicated and slow bureaucratic process, which can result in delays in property purchases.

In summary, buying property in Mexico through a foreign-owned company can offer advantages but also comes with disadvantages and significant legal and financial obligations.

The title to your new property becomes officially yours when it is signed by all parties involved, including the Purchaser, Seller, Notary, and Trustee Officer(bank). This transfer of ownership is irrevocable. However, there is still one crucial step left to complete the process: the Notary must record the deed in the Cadastre and the Public Registry of the Property and Commerce. This recording procedure takes approximately three months, and sometimes it may take a bit longer.

Rest assured, we, as the professionals overseeing your closing, will take responsibility for diligently tracking every step of this process until the trust deed is entirely registered in your name. At that point, we will arrange for the physical delivery of the trust deed to you. This ensures that you have a seamless and secure experience throughout the entire property ownership transfer process.

The trust deed must be registered with the Cadastre and the Public Registry of Property and Commerce for several important reasons:

1. Legal Recognition: Registration with the Cadastre and the Public Registry provides legal recognition of the property transfer and ensures that it is enforceable by law. This step is essential to establish your ownership rights.
2. Public Record: Registration creates a public record of the property transaction. This means that the transfer becomes part of the official public record, and anyone can access this information to confirm ownership and any encumbrances on the property.
3. Property Tax Assessment: The Cadastre uses the registered information to assess property taxes accurately. This ensures that you are billed the correct amount of property taxes based on your ownership and the property”s characteristics.
4. Third-Party Verification: Many stakeholders, such as financial institutions, title insurance companies, and potential buyers, rely on these public records to verify property ownership and any existing liens or encumbrances. Registration adds transparency and trust to property transactions.
5. Property Rights Protection: Registering the trust deed protects your property rights from any potential challenges or disputes. It provides a clear legal basis for your ownership and helps in resolving any conflicts that may arise.

In summary, registering the trust deed with both the Cadastre and the Public Registry of Property and Commerce is a fundamental legal requirement that safeguards property ownership rights, ensures transparency, and facilitates property transactions in a secure and lawful manner.

Buyer’s Responsibilities:

Property Acquisition Tax (Impuesto sobre Adquisición de Bienes Inmuebles or ISABI): This is a tax paid by the buyer upon acquiring the property. The rate is a 2% of the property’s value.

Seller’s Responsibilities:

Capital Gains Tax (Impuesto Sobre la Renta or ISR): Sellers are usually responsible for paying capital gains tax on any profit made from the sale of the property. The rate can vary, but it is a percentage of the gain.

The tax rate for a foreigner selling a property in Mexico is higher than that for a Mexican citizen. The standard rate for capital gains tax (ISR) for foreigners selling property in Mexico is around 35%.

On the other hand, you may have access to certain tax benefits or exemptions, depending on factors such as the property’s value, construction, expenses incurred on the property with invoices bearing the owner’s and property details, among others. These exemptions can reduce the tax burden for Mexican citizens.

Furthermore, we can offer advice to assist you in reducing your ISR (Capital Gains Tax) payment while staying fully compliant with legal requirements.

Foreigners may be eligible for exemptions from Capital Gains Tax (Impuesto sobre la Renta) when acquiring property through a trust (fideicomiso) in Mexico. These exemptions can vary depending on factors such as the property’s use, value, and the specific circumstances of the transaction. A common exemption is when the property serves as your principal residence and meets certain criteria, you may be eligible for a partial or complete exemption from the Capital Gains Tax.

Our company can provide you with guidance to determine whether the tax exemption may apply in your case.

The buyer pays for:

1. Notary Fees: For notarization and document authentication.
2. Closing Attorney’s Fees: Legal fees for closing services.

3. Property Acquisition Tax (Impuesto sobre Adquisición de Bienes Inmuebles or ISABI): This is a tax paid by the buyer upon acquiring the property. The rate is a 2% of the property’s value.

1. Value Added Tax (IVA): In Mexico, the application of Value Added Tax (IVA) can vary depending on the specific circumstances and the nature of the property. Generally, commercial properties such as warehouses or industrial properties may be subject to IVA when acquired
2. Trust Setup and Maintenance Fees: Fees for establishing and maintaining the Fideicomiso.
3. Legal and Administrative Fees
4. Appraisal Fees

The Seller pays for:

1. ISR (Capital Gain Tax)
2. Cancellation of Fideicomiso: If applicable, the expenses associated with canceling the Fideicomiso.
3. Real Estate Commission: paid by the seller, although it may be subject to negotiation.

When considering a trust in Mexico, there are several expenses you should take into account:

1. Trust Setup and Maintenance Fees: These include the initial costs of establishing the trust and annual fees for its ongoing maintenance.
2. Notary Fees: Expenses associated with notarizing and authenticating documents related to the trust.
3. Legal and Administrative Fees: Costs for legal and administrative services required during the trust’s creation and management.
4. Renewal Fees: If the trust needs to be renewed after a certain period, there may be associated fees.
5. Modification Fees: Costs related to making changes or modifications to the trust’s terms.
6. Cancellation Fees: If the trust is terminated, there are fees associated with its cancellation.

All expenses will be specified in the trust contract.

Paying the closing costs upfront when establishing a trust (fideicomiso) can be advantageous for several reasons:

1. Lower Total Expenses: Covering the closing costs at the outset reduces the overall expenses associated with setting up the trust, often resulting in cost savings.
2. Transparent Financial Planning: Paying upfront provides clarity in your financial planning since you won’t need to factor in ongoing costs associated with financing the closing expenses.
3. Avoiding Surprises: For our company, honesty is an important value, and we believe in providing our clients with full transparency regarding the total costs from the beginning of the process. This approach helps our clients avoid surprises and ensures that they have a clear understanding of all financial aspects involved in establishing the trust.
4. Immediate Control: Paying upfront ensures that you have immediate control and ownership of the trust without any lingering financial obligations related to closing costs.
5. Simplified Transactions: Simplifying the transaction by settling closing costs at the beginning can streamline the process and minimize administrative complexities.

In summary, paying the closing costs upfront when establishing a trust can lead to cost savings, greater financial clarity, and a streamlined process, making it a preferable option for many individuals and entities.

While we provide an upfront budget for closing costs and recommend paying them in full, it’s important to note that the taxes and the fees associated with trustees and government agencies may be subject to change. However, we want to assure you that neither the notary fees nor the closing fees will ever increase under our guarantee.

If the purchase price of a property is set in U.S. dollars, but the exchange rate between the U.S. dollar and the Mexican peso experiences changes, the value in Mexican pesos for the purchase will also be affected. These fluctuations in the exchange rate can result in an increase or decrease in the Mexican peso value of the transaction, which can have a significant impact on the total cost of the property for the buyer.

If the U.S. dollar strengthens against the Mexican peso, the Mexican peso value of the purchase will increase, meaning the buyer will need more Mexican pesos to purchase the same amount of U.S. dollars. Conversely, if the U.S. dollar weakens against the Mexican peso, the Mexican peso value of the purchase will decrease, potentially resulting in a lower cost for the buyer in terms of Mexican pesos.

It’s important for buyers and sellers to be aware of exchange rate fluctuations and consider the potential impact on the total cost of the property when conducting transactions in foreign currencies such as the U.S. dollar in Mexico.

The law stipulates that, regardless of the payment being in U.S. dollars, the deed must include the value in Mexican pesos as established in the Official Gazette of the Federation on the date of signing. Final registration fees and tax payments will be calculated based on this specified peso value.

An assignment of fiduciary rights occurs when a beneficiary of a trust decides to transfer his/her/their rights and benefits in the trust to someone else. Essentially, this means that the original beneficiary gives up their rights, allowing another individual or entity to enjoy the trust’s benefits. This transfer of fiduciary rights can occur through selling those rights or making a donation.

In this scenario, if the recipient wants have the trust in a different bank, they would need to close the existing trust and establish a new one. While this process may take a bit more time, it can be a preferable option.

The primary reason for considering a bank change is usually due to issues with the current bank’s services. Even though the bank may have initially appeared to be a good choice, it could now be experiencing problems with communication, fee payment processing, and various other concerns.

It’s important to note, however, that when it comes to properties located within the Municipality of La Paz, this change could entail an additional 2% tax based on the assessed value, which is often much lower than the purchase price

The benefits of a trust agreement compared to a traditional purchase agreement between Mexicans are significant. In Mexico, designating beneficiaries for your property is a straightforward process. You have the flexibility to name them when the fideicomiso (trust) is established or when transferring rights to an existing one. There are no specific requirements, such as a minimum age; you only need to provide a copy of their passports. This simplicity and lack of stringent criteria make it a relatively uncomplicated and flexible way to pass on property to your chosen heirs.

Additionally, within the context of trusts in Mexico, there is a valuable provision called the “substitute beneficiaries clause. This provision empowers the beneficiary to designate substitute beneficiaries who would inherit trust assets in the event of their passing. The uniqueness of this provision lies in its adaptability. The beneficiary can change these substitute beneficiaries as frequently as desired, aligning the trust’s succession plan with evolving circumstances or personal preferences. This flexibility provides a high level of control and customization within the trust structure.

If you purchase property in Mexico through a trust (known as a “fideicomiso”) as a foreigner and later obtain Mexican citizenship, your status as a Mexican citizen would not affect your ownership of the property held in the trust. The fideicomiso is a legal structure established to allow non-Mexican individuals to own property in the restricted zone of Mexico, which includes areas along the coast and near international borders.

Even if you become a Mexican citizen, the property you acquired through the trust will remain in your name, and you will retain all the rights and responsibilities associated with property ownership in Mexico. Mexican law allows foreigners who become citizens to maintain their property holdings without the need to transfer them to another entity or individual.

It is important to note that while your citizenship status does not impact your property ownership, when obtaining Mexican citizenship, it is worth considering the option of obtaining full and direct ownership of the property through the extinguishment of the real estate trust (fideicomiso) in your favor. This means that the property would be transferred directly to your name, eliminating the need to continue paying annual fees to the trustee bank and

This process of extinguishing the trust is an option to contemplate as it can simplify the ownership structure and eliminate the costs associated with maintaining the trust.