Can I use my US LLC when purchasing real estate in Mexico?

I recently had a buyer who wanted to purchase a property strictly as an investment, and his question was whether he could set it up under a business LLC formed in the United States. The answer is yes, but with some important conditions. Many clients with more sophisticated estate planning structures do purchase real estate through an LLC, but in Mexico it must always be done through a bank trust, known as a fideicomiso. In this arrangement, the U.S. LLC serves as the beneficiary of the trust.

A U.S. LLC—often even a single-member LLC—can be used for both privacy and tax purposes. From a privacy standpoint, public property records will reflect “123 LLC” instead of the individual’s personal name. Even if someone were to obtain a copy of the deed, it would list the LLC and possibly its legal representative, such as an attorney, rather than the individual buyer. The Mexican trustee, however, always has the full record of the ultimate owner behind the LLC.

From a tax perspective, a U.S. LLC typically qualifies for partnership status, meaning it is treated as a flow-through entity. This allows the property to be reported on the individual’s U.S. tax return, helping to avoid double taxation under the U.S.–Mexico tax treaty. Corporations may also serve as trust beneficiaries, but the process is similar. The key requirement is that the LLC must be properly formed in the United States, with a valid Certificate of Formation issued by the Secretary of State in the state of registration. That document must then be apostilled so that a Mexican notary can recognize it and the trustee can formally accept the LLC as the beneficiary of the trust.

An apostille is essentially a certification that validates a document for use abroad. For example, if an LLC is formed in Connecticut, the Connecticut Secretary of State can issue an apostille confirming the authenticity of the formation documents. This process was established by the Hague Convention of October 5, 1961, which Mexico joined in 1995. Apostilles are also required for powers of attorney granted to LLC representatives. Once apostilled, the documents must be translated into Spanish by a court-authorized translator before they can be used in Mexico. In most cases, the required documents are minimal: the certificate of formation and a few pages showing the managing or sole member of the LLC. Once complete, the Mexican trustee—by law a bank or financial institution—can accept the LLC as beneficiary.

Historically, some Mexican banks were hesitant to allow LLCs as trust beneficiaries. Their concern was the lack of transparency when ownership interests in the LLC were sold or transferred. Even though the LLC remained the beneficiary, the individuals behind it may have changed, and Mexican tax law requires these changes to be reported. In certain cases, such as a transfer of membership interests between unrelated parties, the change can even create a taxable event in Mexico despite no formal change to the property title. Family transfers—between spouses, parents, or children—are easier to explain, but still must be reported.

Today, however, more trustees actively accept LLCs, and new trust divisions in Cabo and La Paz are comfortable working with these structures. As long as the LLC is properly formed, apostilled, and transparent about its ownership, it can serve as an effective vehicle for both privacy and tax planning.

By contrast, U.S. living trusts create more complications. Living trusts are designed to be flexible, and their beneficiaries and trustees often change over time as grantors amend them. This fluidity makes it difficult for a Mexican trustee to confirm who has the legal authority to act at any given moment. Because of these uncertainties, many Mexican banks are reluctant to accept U.S. living trusts as fideicomiso beneficiaries.

In practice, LLCs tend to be much simpler and more straightforward. While direct ownership of property in Mexico by a foreign entity is not possible, the use of a fideicomiso—with a U.S. LLC as beneficiary—provides a clear, legal, and widely accepted solution for investment buyers.

For real estate in Cabo, contact Fletcher Wheaton - fletcher@remexico.com or contact jetzlaw.com for legal help in Cabo.