On April 23rd, 2013, Mexico’s House of Representatives changed the fideicomiso law and voted to reform Article 27 of the Mexican Constitution to allow foreigners to directly own residential real estate within the restricted zone. Before the results actually 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
ELLS CPAs believes that all of these steps most likely will happen. Supported by a large majority, the reforms are likely to navigate the legislative process and become official law. The Mexican Senate’s session, however, 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) that are currently in place will remain so, even though they will no longer be a requirement. After all, the Mexican land trust, the fideicomiso, is really just a contract with a financial institution that stipulates that the bank is going to hold onto a piece of property (can be real estate, a corporation, liquid asset, etc.). As a result, any contracts currently valid should remain in place and stay legally binding.
ELLS CPAs believes that the reform of 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 in terms of the tax implications in the United States, please contact the international tax experts at ELLS CPAs.
Although this content contains accurate information, it is inherently limited on account 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 ELLS CPAs international tax expert Yana Weaver at 714.569.1000.
Here is a link to an interesting article about some of the recent IRS rulings on Fideicomiso.