Why an American Buying in Mexico City Should Still Use a Fideicomiso

Why an American Buying real estate in Mexico City Should Still Use a Fideicomiso

I put a specific scenario to Eduardo Tapia, a real estate attorney here in Cabo: a U.S. citizen, asset-heavy in the United States, entire family also U.S. citizens, looking to buy a nice condo in Condesa or Roma in Mexico City. Since it's nowhere near the coastline or the border, he could legally take title in his own name. So why would his attorney still recommend a fideicomiso?

Eduardo's answer, paraphrased: because it's simpler, and because it avoids probate in Mexico, period.

The Math Actually Favors the Trust

Eduardo broke down the cost comparison plainly. A fideicomiso runs roughly $800 to set up, plus $500 to $600 a year to maintain. Compare that to the time and legal cost your heirs would face navigating Mexican probate to get a directly-owned property retitled after you're gone — and the trust fee starts looking less like an expense and more like insurance.

He's seen this play out from the notary's side of the desk for decades. Even 30 years ago, when Mexican law changed to allow direct ownership without a trust in certain areas, the calculation didn't really shift. It's still simpler to have the trust in place than to make your heirs prove their standing to a Mexican court after the fact.

The LLC Trap

Here's where it gets more interesting for anyone with a larger estate. Many American buyers use an LLC to hold Mexican property for privacy reasons — keeping their own name off public records. It's a legitimate strategy, but it comes with a structural problem Eduardo flagged directly: an LLC doesn't die, so it can't be replaced the way a person can be.

An LLC can serve as a trust beneficiary, and thanks to a tax treaty between the U.S. and Mexico avoiding double taxation, LLCs are generally treated as pass-through entities similar to partnerships. But when the LLC itself is what's on title — without a trust in the picture — there's no mechanism to name a substitute beneficiary the way an individual can within a fideicomiso. The entity just gets liquidated, and untangling who inherits what becomes a separate, more complicated problem.

The Workaround People Try — And Why It Backfires

Eduardo has also seen buyers try to solve the privacy question by quietly selling membership interests in the LLC while leaving the entity itself in place, assuming that keeps things simple. It doesn't. Mexico treats a change in beneficial ownership as a transfer of title, whether or not it's dressed up as a membership sale. If that transfer isn't properly reported, it's still taxable — transfer of title tax in Los Cabos and La Paz currently runs 3%, up from 2% a few years ago. Skipping the paperwork doesn't skip the tax exposure; it just delays when it gets discovered.

The Takeaway

If you're an American with meaningful U.S. assets and heirs, buying property in Mexico City, Cuernavaca, or anywhere else foreigners can legally own directly — the fideicomiso is still very likely your better option. It's not about the law requiring it. It's about giving your family a death certificate and a trustee bank instead of a Mexican courtroom.

For real estate assistance in Los Cabos and throughout Baja California Sur, contact Fletcher Wheaton at fletcher@remexico.com

For legal guidance on real estate matters in Los Cabos, contact real estate attorney Eduardo Tapia at info@jetzlaw.com