Corporations and LLC

Corporations and LLC’s

If you intend to use your property in the “restricted zone” as commercial and non-residential, then you can own it through a Mexican Corporation or LLC— and both of these entities can be 100% foreign-owned.

Some people argue that renting out your property counts as commercial use, and so in this way it is, in fact, possible to hold an essentially residential piece of property through a Mexican Corporation/LLC. The letter of the law makes a clear distinction between commercial property and residential property that is rented for income. For instance, if you buy a seaside bungalow as a commercial property, you can’t legally live in it; if you buy it through a bank trust as a residential property, you can live in it or rent if for income” or both. In short, if you’re not really doing business in Mexico, what do you gain by holding your property in a Corporation/LLC as opposed to a bank trust? Not much.

And you probably won’t save money. A Mexican Corporation/LLC must either produce a profit or show losses through formalized receipts (called facturas). You’ll have to have an accountant file your corporate taxes monthly which can become costly ” you could easily pay $100US per month for his services.

To form a Mexican Corporation/LLC, you’ll need at least two shareholders but, as already stated, it is not necessary for either to be a Mexican national.

It will cost you between $1,500—$3,000US to set up a Mexican Corporation/LLC, and while you won’t have to pay an annual fee as you would to maintain a bank trust, you will incur costs to file your corporate taxes monthly and pay a Mexican accountant to do it for you.

Another advantage of the Corporation/LLC is that a single Corporation/LLC can own as many pieces of real estate as it wants, individuals must establish a separate bank trust for each piece of property they purchase.

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