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Preguntas frecuentes

  • What is a fideicomiso (mexican property trust)?

    With the advent of the North American Free Trade Agreement (NAFTA), the Mexican government recognized that it was crucial to make foreign investment in Mexico safer and easier for non- Mexicans. Because the Mexican Constitution prohibits non-Mexicans from purchasing or owning real estate within 60 miles of the U.S. international border, or within 30 miles of the Mexican coast, an innovative and secure method of holding title was created. This method allows non-Mexicans ownership through a Mexican property trust called a Fideicomiso. This is a trust agreement, much like an estate trust in the U.S., which gives the Purchaser all of the rights of ownership.

    In order to gain the rights of ownership, the Department of Foreign Affairs in Mexico City issues a permit to the Mexican bank of the Purchaser#8217;s choice, allowing the bank to act as Purchaser of the property. Essentially, the bank acts as the “Trustee” for the trust and the Purchaser is the “Beneficiary” of the trust. The trust is not an asset of the bank; the banks simply act as the Trustee to hold the trust.

    Much like living wills or estate trusts in the U.S., the Mexican bank, or Trustee, takes instruction only from the Beneficiary of the trust (the Purchaser). The Beneficiary has the right to use, occupy, lease and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to transfer the rights to another qualified Purchaser, or bequeath the property to an Inheritor. The initial term of the trust is 50 years, however the trust is renewed every year for additional periods of 50 years indefinitely, providing for long-term control of the asset.

    The Purchaser holds the same rights as a property owner in the U.S. or Canada, including the right to enjoy, sell, rent, improve the property, etc. This is not to be confused with a land lease. The property purchased is placed in a trust with the Purchaser named as the Beneficiary of the trust – the Purchaser is not a lessee. If the property purchased is already held in a trust, the Purchaser has the option of assuming that trust, or having the property vested in a new trust.

  • How long does it take to establish a trust?

    HERE in Cancun partners with Federal and State notaries for all of our closings in order to secure your trust. A Notario Publico in Mexico is much different than a Notary Public in the U.S. In Mexico, Notarios are specialized attorneys who act on behalf of the state and federal government in relation to any transaction; they are comparable to a U.S. Clerk of Courts.

    On average, you can obtain your trust within 60-90 days. In some cases title has been transferred in as little as two to three weeks. We oversee the entire process and make certain you understand each and every step involved. For your benefit, we can even provide you with a sample trust in English for your review.

    Many real estate purchases in Mexico have only a simple buy/ sell agreement between the Purchaser and the Seller as evidence of ownership. This is not a safe method of ownership and is not recommended by HERE in Cancun or our U.S. Third Party Escrow provider, Stewart Title Guaranty, Houston, Texas.


  • When do I pay for my property?

    The Purchaser should only release funds when the Purchaser holds clear title. By utilizing our U.S. Third Party Escrow service with Stewart Title Guaranty, Houston, Texas, your money is held in an individually numbered escrow account until your trust is complete and the property rights have been transferred to you, the Purchaser.


    We do not recommend that a Purchaser release funds to a Seller until the trust has been received. Purchasing property without receiving a trust is simply buying without receiving the title in your name; this is risky and not recommended.

    Fact: Until the Purchaser has received the trust, and rights to the property have been transferred to the Purchaser, the legal Owner of record in Mexico is still the previous Owner.

    Fact: Purchasers cannot bypass Mexican taxes or fees by not getting a trust, even if the property is sold to someone else before the Purchaser#8217;s trust is in place.


    Whether you purchase real estate in the U.S. or Mexico, we recommends Title Insurance for every property you purchase. We insure our cars, homes and our health – it is just as important to insure one of your largest investments: your property.

    Fact: Title Insurance is available for properties in Mexico purchased by U.S. and Mexican citizens.

    Fact: Just because you have a trust does not ensure you have free and clear title. Title insurance is a necessity.


    In the trust document the Purchaser must name the Beneficiary or foreign Owner of the property. The purchaser can be an individual, multiple partners, a foreign corporation, an estate trust, a living will, or another entity. The Trustee of the trust (the Mexican bank) will take direction from whomever you name as the Beneficiary.

    Fact: You can name a U.S. corporation as the Beneficiary of the trust. This is perfectly legal.

    Fact: If you sell the shares in the U.S. corporation, you have created a real estate transaction in Mexico and all Mexican capital gains taxes apply.*

    Fact: You can own a property in a Mexican corporation and take title fee simple only if the property is for development or\ investment purposes.

    Fact: You cannot own property through Mexican corporation to bypass the trust process.

    Fact: It is against the law for a foreigner to own property in a Mexican corporation for residential purposes.

    Capital Gains in Mexico
    Separating fact from fiction in Mexican real estate

    Understanding Mexican tax law is an integral part of the purchasing process. What you do today dictates your tax liabilities tomorrow.

    The following is an overview of the capital gains tax regulations currently in place for individuals. Note that the information is intended for individuals, not corporations. Over time these regulations may change, therefore it is important to make sure that the process outlined here is still in effect by contacting a certified accountant or Mexican Notario.


    Capital gains tax law in Mexico states that tax is owed on the profit you receive when you sell your home or property. By law, you have two options when it comes to capital gains and you can use whichever is the better of the two options for you:

    1. You pay 28 percent* of the net profit. (There are a variety of deductions included in this option.)
    2. You pay 25 percent* of the gross sales amount with no deductions. Although a 28 percent capital gains tax may seem high, Mexico does have several laws and procedures that will assist you in maximizing your cost basis, thereby reducing your net profit and lowering your capital gains. The key is understanding these laws before you buy, not when you decide to sell.

    *Percentages reflect the 2007 Tax Code.

  • Why should you take on the seller’s capital gains liability?

    The first step in calculating your capital gains is to subtract the value you have recorded in your trust, or Fideicomiso, from the sale price of your property. In the past, some real estate companies have recorded values lower than the actual purchase price in an effort to “save” taxes for their client; they thought they could save money on the two percent acquisition tax. This is a major error. Never record a lower value than what you actually paid for the property. Doing so simply establishes a lower cost basis for the property, which increases your capital gains tax liability.

    An oversimplified example is: You wisely purchase a home site (lot) for $1 million, but unwisely record a value of $500,000. In the eyes of Mexican tax law, your cost basis is now $500,000. If you sell the lot for $1.2 million, you see a profit of $200,000. However, according to your recorded cost basis, Mexico sees a profit of $700,000 and your capital gains tax for Mexico will be 28 percent of $700,000 ($196,000) – a difference of $140,000 in profit. With HERE in Cancun, the approach to ownership in Mexico, specifically the trust process, has been established to protect you and provide you with the legal means to safeguard your investment. Recording your authentic purchase price with proper documentation is the only way to maximize your potential profits. The bottom line is to always secure your property trust for the true value of your purchase as quickly as possible.

    Never allow anyone to convince you to record a lower value than what you have actually paid for your property, or you will assume the Seller#8217;s capital gains tax liability. Recording a lower value today can cost you, should you decide to sell in the coming years. If a Seller can convince a Purchaser to record a lower value, the tax liability is simply passed along, and eventually someone will have to pay. Don#8217;t let anyone tell you, “That#8217;s how we do it here.” Mexico is like everywhere else – the capital gains tax is the responsibility of the Seller.

    Simply, a property is not yours until you have the title in your name. Also, if you don#8217;t record the accurate value of your purchase, you#8217;re most likely taking on someone else#8217;s capital gains liability.

    Fact: Recording a property#8217;s true value benefits you and establishes your cost basis in the eyes of Mexico.
    Fact: The amount you pay for a property has no impact on your yearly property taxes.
    Fact: Capital gains taxes you pay in Mexico can be applied to your U.S. taxes.

  • How do I know if my value is recorded correctly?

    HERE in Cancun we oversee the creation and completion of your trust. We review the documents with you to make certain everything is in order, and we are present when you sign your trust. You can verify the value yourself by examining your trust and noting the amount written in text, which is indicated in U.S. dollars or Mexican pesos and includes the exchange rate of that day. (We will provide a certified translation of your Spanish trust.) Simply divide the current exchange rate into the peso amount and make sure the result reflects the actual dollar amount you have paid. If you would like to review an old trust, simply determine the peso rate for the day and year the trust was executed. We can assist you in finding the exchange rate, as can the bank and the Internet.

  • What is inflationary credit?

    As soon as you pay your two percent acquisition tax to receive your trust, you are eligible to receive an inflationary credit from the Mexican government for each year you own the property. This credit is added to your cost basis when you decide to sell your property. The credit is based on consumer index adjustments (inflation) and can be quite significant. In the past when inflation was higher, we have seen credits in excess of 15 percent per year applied to a cost basis when you acquired your property some years ago. On a million-dollar property, this can be as much as $150,000 USD per year added to your cost basis, significantly reducing your capital gains tax should you decide to sell in the coming years.

    Fact: You are not eligible to receive the inflationary credit unless you have paid your two percent acquisition tax.

  • What about the primary residence capital gains exclusion?

    Mexico, as well as the U.S., provides its residents a capital gains tax incentive for their primary home. The tax incentive in Mexico states that if you sell your “primary residence,” you pay no capital gains. This law is in place for “residents” (Mexican nationals or foreigners) of Mexico only, and there are several items required to establish residency status. In order to claim your home as your primary residence in Mexico, you must be able to prove that it really was your primary residence for a period of five years. At closing, you will be required to provide the Notary with a residence visa or working permit (FM2), as well as a bank account, water, phone and electric bills, paid tax receipts and your Trust – all in your name, all with the address of the home, and all in place for more than five years. In some circumstances, a tax ID number may be necessary. Please keep in mind that this is just a guideline of the requirements. It is necessary to communicate with the Notary prior to closing your transaction in order to know if you are eligible for exemption.

    Based on the 2007 Tax Code:

    You cannot have two primary residences at the same time. Therefore, if you claim the home in Mexico as your primary residence, you give up your primary residency status in the U.S.

    The capital gains tax exclusion is intended for residents of Mexico, not for persons owning second homes or vacation homes.

    Just as there are no shortcuts or legal ways around taxes in the U.S. or Canada, there are no shortcuts around taxes in Mexico. Your home is a sizable investment and following proper legal steps will ensure a safe and enjoyable experience in Mexico. If someone says, “This is Mexico, and that#8217;s the way we do it here,” then beware. Seek another agent or Broker.


    When you sign your new trust, ask the Notary to jot down the exchange rate on the document itself. This will be useful in the future.

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