Fideicomiso

Fideicomiso is a bank trust in Mexico, and it qualifies non-citizen investors to obtain any Mexican property within the restricted area. Fideicomiso or trust comes from the Latin word “fideicommissum” “Fides” means faith, and “commissus” means commission. Moreover, there are three parties involved with Fideicomiso. The three parties are the Trustee, the Purchaser, and the Seller. The Fideicomiso was instituted in 1973. It serves as a way for foreigners to have all the rights of residential property owners in the Restricted Zone without technically owning the real estate. Since its creation, the fideicomiso has become even more friendly and convenient for foreign investors. 

Fideicomiso is a bank trust in Mexico that permits non-citizens to obtain property indirectly in the restricted zone of Mexico. The foreigner is the trust beneficiary, while the trustee is accountable for keeping the property title. Furthermore, the trustee conducts the needs and wants of the foreigner. Banks are the only institutions licensed to be a trustee or an attorney specializing in trusts. A licensed trustee only opens a Mexican bank trust by Banco de Mexico or the Central Bank of Mexico. Additionally, non-citizens must consider Fideicomiso if the property is for personal use. It intends to have Mexican residency and rent the property to generate income. Consider Mexican tax obligations if the purpose is to rent the property for income. It is necessary to state all revenue with the tax authorities for those gaining income in Mexico. Register with the rules and obtain a Registro Federal de Contribuyentes (RFC). RFC is an ID and registration number in Mexico issued by the tax collection agency. Foreigners with Mexican residency, citizens, or corporations must obtain the RFC. Moreover, property owners lacking residency who rent their properties following a bank trust use online rental companies such as Airbnb. Online rental companies without RFCs need to maintain 36% in taxes. Fideicomiso has advantages and disadvantages. There are seven advantages of Fideicomiso. These advantages are for residential purposes, safe, suitable for 50 years, renewable, appointed beneficiaries, less capital gain taxes and tax returns, and the only maintenance involved paying an annual fee. 

A fideicomiso gives foreigners the right to buy and own coastal and borderline property in Mexico. The Foreign Investment Act allows foreigners to act as beneficiaries of a Mexican trust. The bank is the lawful owner of the property, but for the benefit of the beneficiary of the trust. It means someone is able to have all the rights of the owner without breaking the law or being at risk of losing the property. The process is entirely legal and has been in Mexico since 1973.  

Fideicomiso is vital to Real Estate Investors. Fideicomiso gives the right to buy and own coastal and borderline property in Mexico. Foreigners do not have the right to buy or own land within 30 miles of the coast and 125 miles of the border without a fideicomiso. A large percentage of potential buyers of residential real estate are interested in the Restricted Zone. The restricted zone is one of the most promising directions for foreign investments. It is home to some of the country’s most accessible and idyllic areas.  

There are two main requirements for Fideicomiso bank trust. The two main requirements are investor information and beneficiary information. An investor is any individual or entity entrusting capital hoping to have financial returns. The investor’s information is essential, the name, date of birth, social security number, and address. The Notary and Trustee Bank maintains the information. A non-Mexican investor purchases a property without residency. There are no requirements for non-Mexican to apply for residency status before acquiring real estate. The buyer needs to provide information, including a copy of their identification, a bill of payment indicating the current address, and, if applicable, the visa or any document that validates the legal status to the notary. The documents needed are the following if acquiring property through the buyer’s corporation: the exact corporate name and denomination; and the certified copy of the corporate by-laws and articles of incorporation translated into Spanish. On the other hand, beneficiary information is a person or entity who receives the benefits of the property owned by someone else. Fideicomiso is an arrangement where the trustee holds the property and has a beneficiary in acquiring a property in Mexico. Two beneficiaries are involved in Fideicomiso: the Primary and the Substitute. The primary beneficiary is typically the buyer and enjoys all the rights and attributes of the possession, while the substitute beneficiary is the one who receives the requests upon the death of the primary beneficiary. The needed documents are the following if acquiring property as an individual: the full names of the beneficiaries and the substitute beneficiaries, foreign addresses and phone numbers of the beneficiaries, and the photo identification of the beneficiaries. 

Listed below are the instructions to get a Fideicomiso bank trust.  

1. Approach a Mexican bank: Ask the bank to create one. The bank provides all the necessary paperwork. People are able to have a lawyer to process it on their behalf.  

2. Provide the bank with personal information: Provide personal information to the banks, including the details of the properties which are going to be included in the fideicomiso.  

3. Pay for one-year fees in advance: A one-year advance is needed, including an establishment fee and a government fee upon opening a fideicomiso. 

Choose the trustee bank carefully. There is an initial set-up fee associated with the Fideicomiso. Additionally, banks require an annual fee. These factors vary depending on the bank. It is better to compare prices before committing to a bank trustee.  

Establish a Fideicomiso, through a trusted Mexican Bank, such as ScotiaBank, HSBC, Banamex. The banks are responsible for providing all the requirements, and the buyer must provide all the information needed. The buyer must pay a year’s advance, an establishment fee, and a government fee. Furthermore, the best bank for Fideicomisio processes the legal title of the property in the Fideicomiso. The cost in USD of establishing a Fideicomiso ranges from $2,000 to $3,000, and the annual fees range from $550 to $1,000. These are additional to the typical cost of acquiring a property in Mexico. 

The cost of establishing a fideicomiso is between $2,000 to $3,000. The prices include an establishment fee. The establishment fee includes the first year’s cost and a government fee. Expect to pay the bank between $550 to $1,000 in annual fees. The price is in addition to the usual costs of purchasing a property in Mexico.  

Is Fideicomiso’s fee varies depending on the bank? 

Yes, fideicomiso fees vary depending on the bank. The fees range in different banks. People find that working with a smaller bank is a better option. People believe that smaller banks offer more personalized services and are willing to negotiate on price.  

Yes, fideicomiso fees vary depending on the bank. The fees range in different banks. People find that working with a smaller bank is a better option. People believe that smaller banks offer more personalized services and are willing to negotiate on price.

Yes, there is an alternative way for Fideicomiso bank trust. Anyone is able to buy properties in Mexico, irrespective of their citizenship or nationality, whether locals or foreigners. However, foreign nationals must follow some guidelines. The other way to buy property is by building corporations. Generally, forming a corporation in Mexico is likely to be more complex than setting up a Fideicomiso (trust) to purchase property. A corporation, or a Sociedad Anónima (S.A.), is a legal entity that is separate and distinct from its shareholders. It means that the corporation are able to enter into contracts, own assets, and be held liable for its actions. However, a Fideicomiso is a trust where the trustee (usually a Mexican bank) holds the assets on behalf of the beneficiary (the foreign national). 

Forming a corporation in Mexico typically requires more paperwork, legal and tax compliance and ongoing administrative requirements than setting up a trust. Additionally, corporations are subject to different regulations and laws than trusts, such as labor laws and corporate taxes. 

However, the complexity of forming a corporation in Mexico varies depending on the type of corporation, the size of the business and the industry it operates in. Moreover, depending on the nature of the business, a corporation is likely to be more suitable than a Fideicomiso. For instance, if the business is expected to generate revenues, a corporation is likely to be more suitable as it allows for the separation of personal and business assets and liabilities.  A Fideicomiso is the best way to buy a property in Mexico, based on some investors, considering that the Requirements for Fideicomiso Bank Trust are easy to acquire.

Yes, a fideicomiso is renewable after expiration. A fideicomiso is issued in 50-year increments. It is automatically extended by an additional 50 years at the end of the term. Furthermore, it is based on the current Mexican law that after the combined 100-year term, it is a must for new foreign affairs permits to extend the term.

Yes, fideicomiso is safe for foreigners holding property in Mexico. The fideicomiso is very secure. Only banking institutions are authorized and regulated under Mexican banking laws and are able to act as fideicomiso trustees. The fideicomiso allows foreigners to have all the rights to their owned property through direct deeds.  

No, Fideicomiso, known as a trust, is applicable to both foreigners and Mexicans in Mexico. Fideicomisos are commonly used by foreigners as a way to legally purchase property in Mexico, as foreign nationals are restricted from directly owning property within a restricted zone (typically within 100 km of the coast and 50 km of the border). A foreign national is able to effectively “rent” the property from the Mexican government through a trust, with the trustee being a Mexican bank, by using a fideicomiso. The process allows the foreign national to use and enjoy the property but not technically own it. However, Fideicomisos are not only used for real estate. It is used for other purposes such as to hold assets, vehicles, and even for business operations as well. Foreigners in Mexico must know the process of “how to apply for a Fideicomiso Bank Trust.”