Yes. If the company is constituted in Canada or the United States and the shareholders or partners are acquiring one to five properties in the restricted zone, these can be acquired and held through the bank trust, the fideicomiso. In this case the partners or shareholders need not be Mexican residents. Payment of taxes on gross income must be done through a Mexican company or individual but is a simple procedure.
If the company is constituted in Canada or the United States and intends to develop apartment or condo complexes on a larger scale, it will be necessary to register the company with the Mexican National Foreign Investment Registry and to have it officially declared as a foreign company doing business in Mexico.
This is a rather complicated process and will require translation of the company documents and formalization of same before a Mexican notary public, with registration in the National Foreign Investment Registry, the local Public Registry of Property and then, the administrator and possibly all shareholders will be required to obtain the appropriate immigration documents with permission to receive income from a foreign company operating in Mexico.
Since the company is a foreign entity it will still be necessary to place title for any property located within the restricted zone, in a Mexican bank trust.(fideicomiso). This will incur standard fees of approximately 3,500. USD for the permit and initial bank fees, plus notary and transfer costs. Annual fees to the bank for trust are 350.00 to 500.00 USD.
The company must obtain a Federal Taxpayer Identification number and will be required to file a declaration each month with provisional payments on anticipated income. An annual declaration will also be required.
Estimated costs to register the company in Mexico:
Translation, Notary Fees, Registration Fees $5,000. USD, approximately
Monthly tax reporting and accounting $ 300.00 to 500.00 USD,
Plus annual trust fees
A more direct method might be to ESTABLISH a Mexican Limited Liability Company and acquire title directly to the unit(s) to be developed and/or rented.
Set up of the Mexican Company $ 2,000 to 5,000. USD approximately
The administrator must obtain the appropriate immigration status with permission to operate the company
A Tax ID number must be obtained.- Free
Monthly tax declarations and reporting -
No Mexican trust is required. The law specifies, however, that property acquired by a Mexican company can be used for business purposes ONLY, not personal usage. If unit is to be used by administrator and/or family, it should be RENTED to them.
Set up registrations, immigrations, filings included in $3500 to 5,000. above
Monthly fee for declarations and reporting $50 to $600/mo approximately
THE SIMPLE WAY:
Many foreigners, looking forward to a quality lifestyle and retirement in a beautiful area of Mexico, like to acquire properties now, rent them out to cover expenses and perhaps make some income and then, when ready to retire enjoy the appreciation through sale and/or living in it after retirement. This can be done with only a tourist permit and appointment of a Mexican entity or individual to take care of the tax obligations on income. The really good news, through tax treaties between Canada, the US and Mexico, double taxation is not permitted and taxes paid in Mexico can serve as a credit against taxes in the foreigner’s home country.
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About the author:
LINDA JONES NEIL is the founder of The Settlement Company, which specializes in real estate transfers and escrows. Licensed as a California real estate broker, she has pursued her profession in Mexico for over forty years. Her skills and experience in negotiating contracts between parties from three distinct cultures have placed her services in demand as a consultant and for speaking engagements on Mexican law and customs in Mexico, the United States and Canada. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR. Linda is a former member of the National Advisory Council of AMPI and has served as Presidential Liaison for Mexico to the National Association of Realtors®. She is also co-founder of Global Mexico Real Estate Institute (IIGM), an educational institution which provides international real estate classes and designations.
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