On April 23rd, 2013, Mexico’s House of Representatives changed the fideicomiso law and voted to reform Article 27 of the Mexican Constitution to directly allow foreigners to own residential real estate within the restricted zone. Before the results become law, the bill will need to pass through several more steps, including the following:
- Approval by the Federal Senate,
- Approval by a majority of the State congresses
- Signed into law by the President
- Published and announced in the daily government newspaper
LSL CPAs believe that all of these steps will most likely happen. Supported by a large majority, the reforms will likely navigate the legislative process and become official law. However, the Mexican Senate’s session ends on April 30th, and they will not meet again until September. As a result, this reform should be among the first orders of business. As a central initiative of the multi-party alliance Pacto por México, the reforms will be a priority.
Once the reforms are approved, the fideicomisos (trusts) currently in place will remain so, even though they will no longer be required. After all, the Mexican land trust, the fideicomiso, is just a contract with a financial institution that stipulates that the bank will hold onto a piece of property (can be real estate, a corporation, a liquid asset, etc.). As a result, any contracts currently valid should remain in place and stay legally binding.
LSL CPAs believe reforming the fideicomiso law is a step in the right direction. If you need accounting help with a fideicomiso or a new investment in Mexican real estate, particularly regarding the tax implications in the United States, don’t hesitate to contact the international tax experts at LSL CPAs.
Although this content contains accurate information, it is inherently limited because of the length of the article and the complexity of the issues at hand. As a result, it presents only a partial view of the subject matter. To learn more about how these issues might apply to your particular case or tax situation from a more three-dimensional perspective, please call LSL CPAs international tax expert Yana Weaver at 714.569.1000.
Here is a link to an interesting article about recent IRS rulings on Fideicomiso.
