Can I hold Mexico property in an LLC or trust?

Authored by the expert who managed and guided the team behind the Mexico Property Pack

Everything you need to know before buying real estate is included in our Mexico Property Pack

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THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Mexico. If you'd like to learn more about us, you can check our presentation page.

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At The Latinvestor, we explore the Mexican real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Mexico City, Cancún, and Puerto Vallarta. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Do foreigners need a bank trust (fideicomiso) to own property in Mexico, or can they use an LLC?

Foreigners must use a bank trust (fideicomiso) for residential property ownership in Mexico's restricted zone, which covers areas within 50 kilometers of any coastline or 100 kilometers of international borders.

Mexican LLCs cannot legally hold residential properties for personal use in these restricted areas. The Mexican Constitution specifically prohibits direct foreign ownership of property in these strategic zones, making the fideicomiso the only viable option for residential buyers.

As of September 2025, Mexican law allows LLCs to purchase property in restricted zones only when the property serves a legitimate commercial or business purpose. Personal residential use through an LLC structure violates federal ownership restrictions and can result in property confiscation.

Outside the restricted zone, foreigners can own residential property directly in their name without needing either a fideicomiso or LLC structure.

Is it possible to hold residential property in the restricted zone through a Mexican LLC, or only through a trust?

Residential property in Mexico's restricted zone can only be held through a fideicomiso, not through a Mexican LLC, when intended for personal residential use.

Mexican law explicitly requires that LLCs holding property in restricted zones demonstrate legitimate commercial activity. Simply forming an LLC to circumvent fideicomiso requirements without actual business operations constitutes legal fraud and can trigger property seizure by Mexican authorities.

The restricted zone covers approximately 40% of Mexico's territory, including all major tourist destinations like Cancún, Puerto Vallarta, Playa del Carmen, Tulum, and Los Cabos. Properties in these areas must use the fideicomiso structure for foreign residential ownership.

It's something we develop in our Mexico property pack.

What are the setup costs for a fideicomiso compared to forming a Mexican LLC?

Fideicomiso setup costs typically range from $2,182 to $2,500 USD, including permit fees, bank trustee fees, and initial notary expenses.

Mexican LLC formation costs range from $1,500 to $3,000 USD, covering notary fees, government registration, and legal structure establishment. However, total initial costs can reach $2,700 to $2,800 USD when including mandatory accounting setup and compliance requirements.

Cost Component	Fideicomiso	Mexican LLC
Government Permits	$400-$600 USD	$300-$500 USD
Notary Fees	$1,200-$1,500 USD	$800-$1,200 USD
Bank/Institution Fees	$400-$500 USD	$200-$400 USD
Legal Documentation	$182-$300 USD	$200-$500 USD
Accounting Setup	Not required	$300-$600 USD
Registration Fees	Included in bank fees	$100-$300 USD
Total Range	$2,182-$2,500 USD	$1,900-$3,500 USD

What are the yearly maintenance fees for both a trust and an LLC?

Annual fideicomiso maintenance costs range from $350 to $522 USD, paid directly to the Mexican bank serving as trustee.

Mexican LLC annual maintenance costs range from $600 to $2,400 USD, primarily driven by mandatory accounting fees of $50 to $200 USD per month. Additional costs include annual tax filings, regulatory compliance, and potential audit fees.

LLCs require monthly bookkeeping, quarterly tax declarations, and annual financial statements filed with Mexican tax authorities. Fideicomiso owners only pay property taxes directly and the annual bank trustee fee.

Corporate structures also face additional costs for annual shareholder meetings, board resolutions, and corporate governance documentation that fideicomiso beneficiaries avoid entirely.

How many years does a fideicomiso last, and can it be renewed indefinitely?

Mexican fideicomisos last exactly 50 years from the date of establishment and can be renewed indefinitely for additional 50-year terms.

The renewal process typically costs $1,500 to $2,500 USD and must be initiated before the trust expires. Mexican banks automatically notify beneficiaries 2-3 years before expiration to begin renewal procedures.

As of September 2025, no legal limits exist on the number of times a fideicomiso can be renewed, effectively providing perpetual ownership rights for foreign beneficiaries and their heirs.

Renewal requires updating beneficiary information, paying government fees, and executing new trust documents through a Mexican notary.

What taxes apply when owning through a trust versus an LLC, both annually and at resale?

Fideicomiso owners pay only property taxes annually, typically 0.2% to 1.5% of cadastral value depending on the municipality.

Mexican LLC owners pay property taxes plus corporate income taxes on any rental income or property appreciation. Corporate tax rates range from 30% on profits, significantly higher than personal income tax rates applied to fideicomiso beneficiaries.

At resale, fideicomiso beneficiaries pay capital gains tax as individuals, with rates varying based on tax residency status and available deductions. Non-resident foreigners typically face 25% capital gains tax on property sales.

LLC property sales incur corporate capital gains taxes at 30%, plus additional transfer taxes and potential VAT obligations depending on property type and usage history.

It's something we develop in our Mexico property pack.

Do rental income and capital gains get taxed differently in a trust compared to an LLC?

Rental income from fideicomiso properties is taxed as personal income for the beneficiary, with non-resident foreign owners facing 20% income tax withholding plus 16% VAT on rental receipts.

LLC rental income is subject to corporate income tax rates of 30% on profits, plus mandatory monthly and annual tax filings with Mexican authorities. LLCs must also charge and remit VAT on rental services.

Capital gains from fideicomiso property sales receive more favorable tax treatment, with deductions available for improvements, inflation adjustments, and holding periods exceeding three years. Non-residents typically pay 25% capital gains tax.

LLC capital gains are taxed at corporate rates of 30% with limited deductions available. The sale process requires corporate resolutions, shareholder approvals, and complex tax calculations that increase transaction costs significantly.

Digital platform rental income (Airbnb, VRBO) faces additional withholding requirements for both structures, but fideicomiso beneficiaries can often qualify for reduced rates through tax treaties.

Can heirs inherit property in a fideicomiso or LLC without major legal hurdles or tax penalties?

Fideicomiso beneficiaries can name substitute beneficiaries directly in the trust documents, allowing seamless property transfer to heirs upon death without probate proceedings.

The inheritance process for fideicomiso properties typically requires only death certificates and beneficiary identification documents submitted to the Mexican bank trustee. No additional taxes or penalties apply to this transfer.

LLC inheritance involves transferring corporate shares to heirs, which may trigger inheritance tax obligations depending on the heirs' tax residency and the total estate value. Mexican inheritance tax rates can reach 30% for non-resident foreign heirs.

Multiple heirs inheriting LLC shares must establish new shareholder agreements and may face corporate governance complications if they disagree on property management decisions.

Fideicomiso succession planning allows naming multiple substitute beneficiaries with different percentages, providing flexibility for complex family situations without requiring formal shareholder structures.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

How quickly can you establish a fideicomiso versus registering a Mexican LLC?

Fideicomiso establishment typically requires 45 to 60 calendar days from initial application to receiving full documentation, assuming all required documents are complete and accurate.

Mexican LLC registration can be completed in 30 business days for basic company formation, but establishing operational banking relationships adds another 30 days to the timeline.

Fideicomiso delays often occur during the Foreign Affairs Ministry permit process, which can extend timelines during peak real estate seasons or when incomplete documentation is submitted.

LLC formation requires multiple government approvals, including tax registration, social security enrollment, and municipal licensing, each adding potential delays to the overall timeline.

Emergency fideicomiso processing is available for additional fees, potentially reducing timelines to 30 days for urgent property closings.

What level of control and decision-making does an owner have in a trust compared to being a shareholder in an LLC?

Fideicomiso beneficiaries maintain full operational control over their property, including rights to occupy, improve, lease, sell, or designate heirs without requiring third-party approval.

The Mexican bank trustee acts solely as a title holder and cannot make decisions about property use or disposition without explicit written instructions from the beneficiary.

LLC shareholders exercise control through corporate governance structures, requiring formal board resolutions for major decisions like property sales, significant improvements, or changes in usage.

Single-member LLCs provide more direct control, but multi-member LLCs require shareholder agreements and potential voting procedures for property-related decisions.

Fideicomiso beneficiaries can modify trust terms, change substitute beneficiaries, or dissolve the trust at any time without corporate formalities or shareholder consent requirements.

Are there restrictions on the type of property (residential, commercial, land) that can be held in a trust versus an LLC?

Fideicomisos are legally restricted to residential properties and cannot hold commercial real estate or properties intended for business operations within Mexico's restricted zones.

Mexican LLCs can hold all property types (residential, commercial, industrial, agricultural land) but residential properties in restricted zones must demonstrate legitimate commercial use to avoid legal violations.

1. **Fideicomiso Property Restrictions:** - Single-family homes for personal use - Condominiums and townhomes for residence - Vacation homes and second residences - Residential land for future home construction - Properties cannot generate significant commercial income2. **LLC Eligible Property Types:** - Commercial office buildings and retail spaces - Hotels and hospitality properties - Industrial facilities and warehouses - Agricultural land and farming operations - Mixed-use developments with commercial components

Properties generating substantial rental income through fideicomisos may face scrutiny from Mexican authorities if the scale suggests commercial rather than personal use.

It's something we develop in our Mexico property pack.

What specific risks or complications should a foreign buyer be aware of when choosing between a fideicomiso and a Mexican LLC?

Fideicomiso risks include dependence on the Mexican banking system, potential bank consolidation affecting trustee services, and renewal requirements every 50 years that could face future regulatory changes.

LLC structures face higher regulatory scrutiny, complex tax compliance requirements, and potential challenges from Mexican authorities if residential use cannot be adequately justified as commercial activity.

Currency exchange fluctuations affect both structures, but LLC annual maintenance costs in USD equivalent can vary significantly due to peso volatility impacting accounting and legal fees.

1. **Fideicomiso-Specific Risks:** - Bank trustee changes due to mergers or acquisitions - Potential increases in annual trustee fees over time - Bureaucratic delays in property transactions requiring bank involvement - Limited recourse if bank trustee provides inadequate service - Future Mexican government policy changes affecting foreign ownership2. **Mexican LLC Complications:** - Higher ongoing compliance costs and administrative burden - Corporate tax obligations even without rental income - Potential audit risk from Mexican tax authorities - Complex dissolution procedures if property ownership changes - Corporate governance requirements for multi-member LLCs

Both structures require experienced Mexican legal counsel, as setup errors can result in property loss, tax penalties, or violation of foreign ownership restrictions.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Settlement Company - Company or Fideicomiso: Which is Best?
2. Mexico Law Clinic - Investment in Mexico's Restricted Zone
3. Homia - Property Purchase in Restricted Zone Under Mexican Corporation
4. Mexico Relocation Guide - Foreigners Own Property in Mexico
5. MexLaw - Foreigners Buy Property: Bank Trusts vs Corporations
6. Baja Memories Real Estate - Steps to Set a Mexican Corporation
7. Reddit - Mexico Expats Discussion on Fideicomiso
8. Global Mortgage Mexico - Restricted Zones