Foreign buyers in Puerto Vallarta often ask us the same question: should we buy in our own names, through a bank trust, or through a Mexican company? A Mexican corporation can be the right tool for a Mexican corporation property purchase, but it is also one of the easiest structures to get wrong. It solves real problems for some buyers and creates new ones for others, mainly around taxes, ongoing filings, and who can hold residential property near the coast. Here is how we advise clients to decide, and how to set it up correctly.
Table of Contents
- Quick Takeaways
- Why Direct Ownership Is Not Always Available
- When a Mexican Corporation Makes Sense
- Fideicomiso or Corporation: The Real Trade-Off
- Setting Up the Corporation Step by Step
- Ongoing Obligations and Tax Exposure
- Common Mistakes That Undo the Structure
- Comparing Your Three Options
- Frequently Asked Questions
- References
Quick Takeaways
| Key Insight | Explanation |
|---|---|
| Coastal land sits in the restricted zone | Under Mexico’s constitutional rules, the restricted zone reaches 50 kilometers inland from the seacoast and 100 kilometers from international borders. Beachfront property in Puerto Vallarta falls inside it. |
| A company does not skip the trust rule for homes | Mexican companies 100% owned by foreigners must still hold residential property in the restricted zone through a fideicomiso. A corporation changes governance and tax, not that requirement. |
| Choose a company for shared or business use | Multiple owners, rental operations, and buyers who want control through bylaws are the cases where a corporation earns its cost. |
| Budget for annual compliance from day one | A company must keep accounting records, file tax returns, and maintain corporate books every year, even if the property sits empty for months. |
| Match the deed to the company’s purpose | Purchases above 365 times the daily minimum wage must go through a Public Notary and a deed. The corporate purpose and the property use must both match what is written in the deed. |
| Verify title before any deposit | Mexican realtors are not regulated by government, and there are no seller disclosure rules like those in the United States. Caveat emptor still applies. |
Why Direct Ownership Is Not Always Available
Foreigners can own real estate in Mexico, but the rules change sharply depending on where the property sits. Article 27 of the Mexican Constitution vests ownership of land and water in the Nation, and it allows the State to grant foreigners the right to acquire property. The condition is that they agree before the Ministry of Foreign Affairs to treat themselves as Mexican nationals for that property and not to invoke their home country’s protection over it.
The restricted zone is the term that matters most. According to Mexico’s consular guidance, it covers land within one hundred kilometers of an international border and fifty kilometers of the seacoast. Puerto Vallarta’s beachfront, and most of the coastline buyers consider for a luxury purchase, falls inside it.
How the Trust Rule Applies to Residential Buyers
For residential use inside the restricted zone, foreign individuals and foreign companies must hold the property through a bank trust, or fideicomiso, for fifty years. The bank keeps legal title, while the buyer is the beneficiary who can use, enjoy, sell, or pass on those rights. Every operation on the property must be notified to and approved by the bank.
Many buyers assume that a Mexican company removes this requirement. It does not. A company that is 100% owned by foreigners falls under the same trust rule for a home in the restricted zone, so the corporation is not a shortcut around the bank for residential purchases.
What Changes for Non-Residential Use
The consular guidance also notes that Mexican companies with 100% foreign capital may own property directly in the restricted zone for non-residential purposes. That opens a real path for commercial use, such as a business premises or a rental operation run through the company. The line between residential and non-residential use is not a technicality. If the stated use in the deed and the company’s corporate purpose do not line up, you create a problem that surfaces later, usually when you try to sell or refinance.
When a Mexican Corporation Makes Sense
A Mexican corporation earns its place in three situations. The first is shared ownership, such as siblings inheriting a property together, a couple with adult children, or a group of friends who want to hold shares rather than individual trust rights. A company lets owners change shareholdings without reworking a trust arrangement each time someone joins or leaves.
Shared Ownership and Family Planning
In practice, the bylaws and shareholder agreement do most of the heavy lifting here. They define who votes, how distributions are made, what happens when an owner dies, and how a departing owner is bought out. Those rules are far harder to design inside a trust, where the bank’s approval sits between the owners and most decisions.
Business Use and Rental Operations
The second situation is business use. If you plan to run a villa for short-term guests or a commercial space, a company gives you a clear operating entity with its own books. Separate accounts make it much easier to track rental income, deductible expenses, and any maintenance you carry out.
Pro tip: Write down the purpose of the property before you choose a structure. If the honest answer is “our family home,” a fideicomiso is usually the cleaner route. If it is “a shared asset that will earn rental income,” a company deserves a closer look.
When a Corporation Is the Wrong Choice
A corporation does not make sense when the property is a single personal residence, you plan to use it for a few weeks a year, and no one else will hold an interest. In that case, a fideicomiso is typically simpler to maintain. Forming and running a company for one holiday home adds cost and paperwork that rarely pays off.
Fideicomiso or Corporation: The Real Trade-Off
Most buyers compare these two structures as if one of them is automatically safer. Neither is. They solve different problems, and the wrong choice usually comes from focusing on the purchase price instead of how the property will be owned, managed, and eventually sold.
What a Fideicomiso Does Well
A fideicomiso is a contract between the buyer as beneficiary and a Mexican bank as trustee. It is the standard route for a residential purchase inside the restricted zone, and banks, notaries, and future buyers understand it well. Our fideicomiso setup for foreign buyers follows that path, with the trust terms reviewed before the offer is accepted.
The drawback is that every significant decision runs through the bank. Changes that affect the property must be notified and approved, and bringing in a co-owner is far less straightforward than signing a share transfer.
Where a Corporation Pulls Ahead
A corporation gives you direct control through its bylaws and shareholder agreement. You decide who votes, how profits are distributed, and what happens on the death of a shareholder or the sale of a share. For properties with several owners, that governance is often worth more than the cost of running the company.
The structure you choose should fit the people who will live with it for the next twenty years, not the first draft of the purchase agreement.
A company is still subject to Mexican tax and corporate obligations, and a sale is taxed through the entity. The benefit is governance and flexibility, not an automatic tax reduction. Anyone who expects a company to lower the tax on sale without modeling the numbers is likely to be disappointed.
Setting Up the Corporation Step by Step
The setup has several stages, and each one is simple on paper. Each one also becomes expensive to fix if it is skipped or rushed.
Choosing the Company Type and Name
Many foreign buyers use a sociedad anonima promotora de inversion de capital variable, known as a SAPI de CV, because of its flexibility in shareholder structure and capital changes. A sociedad de responsabilidad limitada is another option that some buyers consider. The choice is both a legal and a tax decision, so it should be settled before any offer is signed.
Drafting Bylaws That Match the Property Use
The bylaws must include a corporate purpose that covers holding real estate, and that purpose should reflect how the property will actually be used. A purpose clause that ignores your residential or rental plans creates friction with the bank and the notary. We draft the bylaws and the shareholder agreement together, so ownership, voting, and exit rules are settled before money moves.
Funding, Notary Deed, and Registration
Once the company exists, it needs authority to acquire the property, and that authority must be documented correctly. Under the consular guidance, purchases at or below 365 times the daily minimum wage may be formalized before a notary, judge, or property registrar with two witnesses. Higher values require a Public Notary and a deed. Most luxury transactions sit far above that threshold, so you should expect a notarial deed.
The acquisition can be handled personally or through an agent holding a power of attorney valid under Mexican law. Buyers who are abroad on closing day often use this route, and the power of attorney should be drafted with the specific powers the purchase requires.
Pro tip: Ask for the company’s power of attorney to be drafted with the exact powers needed for this purchase. A generic document can slow the notary down on closing day, and it is far cheaper to fix it a week early.
Ongoing Obligations and Tax Exposure
The setup is the easy part. The company must file tax returns and maintain corporate records every year, and this is where we see the most avoidable trouble after closing.
Annual Filings and Corporate Records
A Mexican company must keep accounting records, file its tax returns, and maintain its corporate books, including shareholder registers and minutes of meetings. These duties apply even when the property sits empty for most of the year. Budget for an accountant and a compliance calendar from the first day the company owns the property.
Tax on Income, Rent, and Sale
Rental income received by the company is taxed in the company’s hands, and expenses reduce that income only when they are properly documented. When the property is sold, the gain is generally calculated at company level, and the outcome can differ from a personal sale handled through a trust. The result depends on the purchase price, the cost of improvements, and how profits are distributed to owners.
Many sellers ask whether a corporation lowers capital gains tax. Our view is that it can change the result, but only after careful modeling, and it often adds complexity that the savings do not justify. Sellers who want to estimate and reduce their tax should start that review before listing, not after an offer arrives.
Common Mistakes That Undo the Structure
Most problems we see come from preventable shortcuts. These are the ones that cost clients the most time and money.
Buying Before the Structure Exists
Some buyers sign a purchase agreement in their own names and plan to move the property into a company later. Transferring the property after the fact can trigger additional taxes and paperwork. Choose the structure before the offer, and write the purchase contract in the name of the entity that will hold title.
Relying on an Unregulated Intermediary
Mexican realtors are not regulated by state or federal government, and there are no seller or realtor disclosure requirements like those in the United States. Caveat emptor remains the rule, and that is why the buyer has to do the verification work. Check the title, the seller’s identity, and any encumbrances at the public property registry before you commit funds.
Pro tip: Insist on a title and encumbrance review before you pay any deposit. A deposit paid to an unverified seller is difficult to recover if the title turns out to be encumbered.
Leaving the Shareholder Agreement for Later
A shareholder agreement written after the purchase is a weak agreement. Once the property is titled, a co-owner who wants out has all the leverage. Settle exit rights, deadlock procedures, and transfer restrictions in writing before closing, and confirm that the notary deed reflects the company’s exact legal name and tax identification number.
Comparing Your Three Options
The table below compares the three routes we discuss most with buyers in Puerto Vallarta and Bahia de Banderas. Use it as a starting point, then test each option against your own plans and the current rules.
The table is a simplified view. It does not replace a review of the specific property, the buyer’s tax residence, and the company’s ownership structure.
| Structure | Best Fit | Main Drawback |
|---|---|---|
| Direct ownership (outside the restricted zone) | Buyers purchasing inland property that is outside the restricted zone and who want title in their own name | Not available for coastal or beachfront property inside the restricted zone |
| Fideicomiso (bank trust) | Single-owner residential purchases inside the restricted zone with minimal ongoing structure | Bank approval is needed for operations, and co-owner changes are cumbersome |
| Mexican corporation (SAPI de CV) | Multiple owners, rental or business use, and buyers who want control through bylaws | Annual filings, corporate tax exposure, and higher setup and maintenance costs |
Our practical default is a fideicomiso for a personal residence, and a company when the property has several owners or a business purpose. Any other arrangement should be reviewed before you sign, because the cost of changing structure later is almost always higher than the cost of choosing correctly now.
Frequently Asked Questions
Can a foreign buyer purchase property in Puerto Vallarta through a Mexican corporation?
Yes, a Mexican company can hold property. For a residential property inside the restricted zone, however, a company that is 100% owned by foreigners must still use a fideicomiso. A corporation is most useful for shared ownership or business use.
Does a Mexican corporation avoid capital gains tax when I sell?
No structure eliminates tax automatically. A company can change how gains are calculated and taxed, but it also adds corporate obligations. Model the outcome before you buy, and sellers should begin that review before listing the property.
How much does it cost to set up a company to buy property?
Costs depend on the company type, the complexity of the bylaws, notary fees, and the power of attorney needed for the purchase. We do not quote a generic figure because the right number depends on the file. Ask for a written fee breakdown during the free initial consultation.
Do I need a notary to buy the property?
It depends on the value. Purchases above 365 times the daily minimum wage must be made through a Public Notary and recorded in a deed. Lower values can be formalized before other officers with two witnesses, but most luxury purchases will require a notarial deed.
Can I move a property from a fideicomiso into a company later?
It is sometimes possible, but the move is a transfer that can carry taxes, notary costs, and bank approvals. Decide on the structure before you buy, because changing it afterward is usually more expensive than choosing correctly at the start.
Is a corporation worth it if I am the only owner and will use the home personally?
Usually not. A single personal residence typically gains little from a company, while the annual filings and maintenance costs remain. A fideicomiso is normally the simpler and more economical choice in that situation.
If you have set up a Mexican company to hold property, or you are weighing that option now, we would like to hear what worked for you and what you would do differently, so please share your experience with our team.