Non-Mexicans are capable of purchasing property in Mexico without worrying about its legality. However, there are restricted zones, which include areas within 50 km (31 miles) of waterfronts/shorelines and 100 km (62 miles) of international borders. You can still own property in these areas, but it must be done through a bank trust or Mexican corporation entity.
What is the difference between a bank trust and a Mexican corporation entity?
Many people believe that these two options for property ownership in restricted areas are perfectly equal, but there are important differences between them.
A bank trust, also known as a fideicomiso, gives you more control over the ownership of the property and the ability to designate beneficiaries. It is designed for personal use only and does not allow for corporate or business use.
If you plan to use your Mexican property for any kind of business or income-generating purposes, you will need to own the property through a Mexican corporation or company. This ensures proper registration and adjusts the expectations for the owner.
How to distinguish personal use from business use
The separation between personal and business use is in place to ensure proper zoning, taxation, and clarity of responsibilities for both parties involved. It is important to determine how you intend to use the property.
Personal use includes using the property as a vacation home, a remote work location, or a place to live with loved ones during your time in Mexico. Remote work is considered personal use because the location of work does not matter. However, you cannot claim any “business use of home” expenses in this case.
If you intend to use your Mexican property for income-generating activities related to the property, a Mexican corporation would be necessary. This includes offering services or selling products to local customers, as well as logistics businesses involving shipping and receiving.
Can I purchase property within the restricted zone under a Mexican corporation entity?
Yes, it is possible to own land within the restricted zone through a Mexican corporation. This is a standard procedure in Mexico, and while there may be some additional paperwork involved due to the property being used for business purposes, it is still a straightforward process.