When buying property in Mexico's “Restricted Zone,” it is necessary for investors to use one of two vehicles – a bank trust (“fideicomiso”) or a Mexican corporation. While the bank trust is the most common choice with some extra advantages, ownership through a Mexican corporation has its own benefits. Here we will review these benefits.The Restricted Zone – DefinitionMexico's Restricted Zone is defined by 50 km along every cost line, which includes all of Baja California, the entire area along the Pacific, a good portion of the Yucatan Peninsula, and the Gulf of Mexico Area. It also includes 100 km along the borders with the United States in the north and Belize and Guatemala in the south. In this entire area, it is necessary for buyers to own by means of a bank trust or Mexican corporation.If the property is located more than 100 kilometers from the border or 50 kilometers from the coast, a foreigner can acquire direct ownership of property directly, or “fee simple,” but some buyers nevertheless choose to own either through a bank trust or corporation because of some side benefits.The Mexican CorporationOwnership of property through a Mexican corporation is an interesting and potentially lucrative alternative. The Foreign Owned Mexican Corporation (FOMC) is a vehicle that allows foreigners to open a business and work in Mexico. The corporation is a Mexican entity, and as such, has the right to hold title to real estate. An attorney or notary can help set up a corporation. It is important to know what your goals are in respect to the property, business and type of investment prior to setting up the corporation.The advantages of the FOMC include:
The disadvantages of the FOMC include:
Each investor should discuss the pros and cons of forming a Mexican corporation with an attorney in Mexico who is familiar with this process.