Fideicomiso Explained: How Foreigners Buy Property in Oaxaca, Mexico

What is a Fideicomiso and Why Do You Need One?

Constitutional Background

A fideicomiso (pronounced fee-day-ee-koh-MEE-so) is a Mexican bank trust established specifically to allow foreign ownership in Mexico's "restricted zones." Mexico's Constitution, written in 1917, prohibits direct foreign ownership of land within:

50 kilometers (31 miles) from any coastline
100 kilometers (62 miles) from any international border

These restrictions were originally designed for national security reasons, as Mexico had faced multiple invasions and lost significant territory to foreign powers.

How Fideicomiso Works in Practice

The Mexican fideicomiso system operates as a three-party trust arrangement:

Fideicomitente (Grantor)

The property seller

Fiduciario (Trustee)

A Mexican bank authorized to hold property

Fideicomisario (Beneficiary)

You, the foreign buyer

Your Rights as Beneficiary

As the beneficiary of a fideicomiso in Oaxaca, you receive all practical ownership rights, including the ability to:

Use and occupy the property indefinitely

Lease or rent the property for income

Sell the property by transferring trust beneficiary rights

Mortgage or finance the property

Improve and modify the property

Inherit or bequeath the property to heirs

Add beneficiaries to avoid Mexican probate

"The beneficiary of the property enjoys all the rights he would if ownership were fee-simple," according to established legal precedent.

Does Oaxaca Require a Fideicomiso?

Oaxaca City Properties

Oaxaca city real estate typically does NOT require a fideicomiso because:

The city is located more than 50km from the coast
It's beyond the 100km border restriction zone
Foreign buyers can own property directly through escritura pública (public deed)

Coastal Oaxaca Properties

Oaxaca coast properties in areas like Puerto Escondido, Huatulco, and Zipolite DO require a fideicomiso because they fall within the 50km coastal restriction zone.

Required for Coastal Areas

All properties within 50km of the coastline must use the fideicomiso system for foreign ownership.

When You Might Choose Fideicomiso Anyway

Even in unrestricted areas like Oaxaca city, some foreign buyers choose fideicomisos for:

Estate planning benefits: Simplified inheritance process

Asset protection: Property held separately from personal assets

Tax advantages: Potential capital gains exemptions for residents

Resale flexibility: Easier to sell to both Mexican and foreign buyers

The Fideicomiso Process: Step-by-Step Guide

Choose Your Trustee Bank

Select from authorized Mexican banks with trust departments:

BBVA Bancomer

Banco del Bajío

ScotiaBank Inverlat

Banco Interacciones

"It is worth mentioning that the properties held in trust are not assets of the bank and size of the bank is not necessarily a sign of better trustee service," note real estate professionals.

Apply for SRE Permit

Obtain approval from Secretaría de Relaciones Exteriores (Ministry of Foreign Affairs):

Submit required documentation
Pay permit fees (approximately $1,600 USD)
Wait for government approval (typically 2-3 weeks)

Notario Público Process

Work with a Mexican notario público who will:

Verify property title and legal status
Draft the fideicomiso deed (32-40 pages)
Calculate and collect taxes from both parties
Register the trust with public property registry
Coordinate with all parties for closing

Trust Registration

The notario will register your fideicomiso with:

Public Registry of Property (Registro Público de la Propiedad)
National Registry of Foreign Investment
Local cadastral office

Fideicomiso Costs and Fees

Initial Setup Costs

Fideicomiso establishment fees typically include:

Bank Trust Fees

Setup fee$1,000-$2,500 USD

First year paid in advance$700-$1,000 USD

Total initial cost$2,000-$2,500 USD

Government and Legal Fees

SRE permit~$1,600 USD

Notario público fees0.3%-1.0% of value

Public registry0.03%-1.15% of value

Property appraisal$1,000-$1,500 USD

Acquisition tax~2% of price

Ongoing Annual Costs

Annual fideicomiso maintenance requires:

$700-$1,000

Bank trustee fees per year

Minimal

Property taxes in most areas

Basic

Trust administration services

Cost Comparison: Fideicomiso vs Corporation

Aspect	Fideicomiso	Mexican Corporation
Setup Cost	$2,000-$2,500 USD	~$1,500 USD
Setup Time	2-3 months	2 weeks
Annual Fees	$700-$1,000 USD	Minimal
Best For	Personal/residential use	Rental/business income

Ready to Navigate the Fideicomiso Process?

Connect with qualified Mexican attorneys and real estate professionals who can guide you through each step of foreign property ownership in Oaxaca.

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