Before we explain the purchase process, we would like to reinforce the fact that, as stated by National Foreign Investment Law, a Real Estate Bank Trust it is the safest and only legal way to hold title of residential property in México.
In a Mexican Real Estate Bank Trust, you are the sole beneficiary of your Mexican property, both you and a trustee entity are named in the deed. You can treat the real estate as if you held the title yourself; this includes building equity, renting, selling your home, passing it down to other beneficiaries, making, changes to the home and having extra protection provided by a Fiduciary entity.
FOR ALL RESIDENTIAL - TOURISM PROPERTY
The requirement is to set up a REAL ESTATE BANK TRUST
The Real Estate Bank Trust also known in Spanish as “Fideicomiso”, is a trust agreement that you establish with a Mexican bank to hold title to a property (both you and the bank are named in the title documents) (works like a Family Trust or Living Trust entities known in USA, Canada, or Europe. This trust deed assures foreign property buyers of all the rights and privileges of ownership while acquiring an extra protection from Federal government (Ministry of Foreign Affair Offices and the Secretary of Economy).
ADVANTAGES OF THE BANK TRUST
- Allows the property owner to hold the property in perpetuity.
- The bank trust is a 50-year trust agreement that is renewable every 50 years by you or your heirs by simple request. The renewal procedure is an automatic administrative task.
- The Bank Trust can be held by one or more individuals of foreign citizenship or by an entity such as an LLC, Living Trust, or a Family Trust (IRA fund contracts would be subject to extra administrative and legal requirements).
- You can transfer your rights in the bank trust to another foreign buyer.
- One contract can hold more than one property in the same deed, but the investments must be in the same jurisdiction.
- You can enjoy, use, rent out, improve upon the property, expand, build, and sell the Mexico Real Estate and reap 100% of the profit.
- The trust can also be inherited by your family or any person by simply naming them in the Bylaws of your contract as secondary beneficiaries in the event of your death. This chapter is the only one that would be subject to be modified in your deed as many times as required however, changing the owner’s names, or adding additional owners could be done but not as simple as it happens with the beneficiary chapter, this last subject would require the performance of a new sale procedure and to draft a new deed (new closing costs would be involved as well)
- The beneficiary chapter will substitute the need of drafting a Mexican will; no need of passing probate before any Mexican Court would be required plus there is no inheritance tax in Mexico.
- There are tax advantages pertaining to capital gains taxes when you sell. The big del in Mexico is that you would be able to claim a 100% Capital Gains exemption and without paying double taxes in the US nor in CANADA. This means that, once you sell the property and if you are eligible to exempt capital gains, you can collect 100% all your profit without paying capital gains in Mexico nor in the US or Canada.
- The bank trust is easy to maintain by paying an annual fee to the bank that is around $550 to $600 USD (please consult with us). The annual fee can be paid in a local bank or via domestic or international wire transfer.
- Your property cannot be taken from you for any reason as long as you use it for residential purposes, and you can treat the property as if you held the title yourself. The bank trust will act as a safeguard for your property ownership. Renting out your property and generate profit is 100% authorized and you are very welcome to do it.
- You must follow special rules and regulations when holding a property with an area exceeding 2,000 Sqm (21,527 Sqf) specifically, a commitment letter of investment would need to be submitted to the Ministry of Foreign Affair Offices.
GUIDING YOU THROUGH THE PROCESS
In conclusion, the Real Estate Bank Trust system in Mexico offers unparalleled security and flexibility for foreign investors and homeowners. As a leading name in the industry, Platinum Real Estate is committed to guiding you through every step of this process, ensuring a smooth and legally compliant transition into your new Mexican property.
Whether you're looking to invest in a vacation home, a retirement property, or a rental opportunity, the advantages of a Real Estate Bank Trust are clear. From the perpetual holding of the property, the ease of transfer, to the significant tax benefits, this system is designed to protect your interests while allowing you to fully enjoy and benefit from your investment.
At Platinum Real Estate, we understand that navigating foreign real estate markets can be daunting. That's why our team of experienced professionals is here to provide you with the expertise and support you need. We'll help you understand the intricacies of the Bank Trust, assist with the annual maintenance, and offer advice on maximizing your investment.
Remember, investing in Mexico's residential-tourism property isn't just about finding the perfect location; it's about securing your investment in the most reliable and beneficial way. Contact us today to start your journey into Mexico's vibrant real estate market with Platinum Real Estate – where your peace of mind is our priority.
