So, you insist in setting up a foreign owned corporation to buy property in Mexico to avoid the fideicomiso?

Creating a corporation is not for everyone.

For one, it costs no less than $3,000 dollars to create a foreign owned Mexican corporation.

you need to get a tax payers ID number and an accountant to make monthly tax reports even with no income generated.

A CPA will charge you no less than $30 to $40 dollars a month to do those reports, multiply that by 12 months and it sets you off $480 dollars add 16% VAT, that comes to $76.8, resulting in an annual expense of $556.89 for tax reporting, plus the $3,000 you spent in incorporating the company, now you are off $3,556.80 in the first year.

When the corporation buys a property it will only save $2,000 dollars compared to a fideicomiso.

Yes, you could say: "Well the fideicomiso requires an annual handling fee of $550", and you are right, but just the tax reporting of your corporation costs you $556.80, where did you actually save by creating a corporation?

Also, when you create a fideicomiso, you become a homeowner, and if you get legal status, you may save up to $4.7 million pesos on the taxable gain of the sale if you ever do sell the property, whereas as a corporation you do not get this exemption because you are not a homeowner, you own a corporation with an asset. Now if you are to have a business, then you could argue that the situation is different, but still I would challenge that decision, to a point, because under a corporation you do not get the estate planning advantages you would enjoy under a fideicomiso.

If after reading this your response is similar to that from a gentleman who reacted to this article on a FB forum with this: "'what racket to get paid $550/yr just to keep a piece of paper in a file cabinet!" Well, to him and people who think like him, I have this to say:

You have options:

1. Become a naturalized Mexican and save the fideicomiso.
2. Create a fideicomiso.
3 Create a corporation to avoid the fideicomiso.
4. Buy property in the mainland away from the border and coasts where you do not need a fideicomiso nor a corporation, or
5. Not to buy property in Mexico at all.

Photo by Tierra Mallorca on Unsplash
Photo by Tierra Mallorca on Unsplash

Think about it.

Rafael Solorzano.

Managing Partner, Law Offices of Rafael Solorzano.

From the U.S. 011-52-664-188-7001.
Within Mexico: 664- 188-7001

Find us on FB at Baja Legal Advice.

[email protected]


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