# Mex Corp to buy beach land with IRA?



## GJStephens (May 4, 2011)

Seemingly simple question but I can't find an 'straight' answer. Does anyone know or know where I can find out:
Can I use my self-directed US IRA to buy Mexican beach property through my setting up a Mexican Corp?
I think this is the only way....
Thanks, Greg


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## sparks (Jun 17, 2007)

It sounds like you want to buy on credit and somehow use your IRA as security. If you just take out the cash needed then I would say yes ... but credit is rare in Mexico. At least big down payment and high interest

I assume you've checked into the legalities of the Corp and land ownership. I would start talking to lawyers and Notarios


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## bigfootbill (Feb 2, 2011)

Where are you doing this
Bill


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## TundraGreen (Jul 15, 2010)

It sounds like you want to treat the Mexican property as a US IRA investment, some sort of IRA roll-over. I think you need to talk a US tax adviser about how the IRS would view that.


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## Guest (May 5, 2011)

GJStephens said:


> Seemingly simple question but I can't find an 'straight' answer. Does anyone know or know where I can find out:
> Can I use my self-directed US IRA to buy Mexican beach property through my setting up a Mexican Corp?
> I think this is the only way....
> Thanks, Greg



Yes, you can do this, BUT you can't live in or use the property personally. It must be used as a rental property which you or certain family members don't get to enjoy. As soon as you use / live in it, the entire amount of money you invested is considered by the IRS as a taxable distribution of your IRA, and they consider the entire amount as taxable income that year. If you are under 59 1/2, you also get nailed for the 10% early distribution penalty, as if the income taxes aren't enough.

You must set up the self-directed IRA with a third party company in the US acting as the custodian. There are many companies offering this type of service, some with total control where you must ask them each time for a check / wire, and others that allow you to control the checkbook. Not all custodian companies in the US will allow their clients to own foreign property either. The custodian does the annual filings for the IRA. Costs widely vary and so does the frustration level here.

To buy a property in MX, you must also form a MX corporation with the US IRA as the owner of the MX corporation, and you as the appointed representative/signatory. The annual costs here in MX are about another $500 a year. You would need to deposit rental income into the MX corporation's bank account, pay property expenses through the MX corporation's bank account and pay MX taxes on the net rental income, and tax filings. I was told that it would take the bank about 3 months to set up the MX corporation, and there were fees involved. They were also poor in follow-up to my questions.

Not sure (others here will be) but foreigners cannot buy property near the coasts - instead one gets something like a 99 year lease of the land, and ownership of the building.

I understand your question, as I had considered doing the same thing. The advantage to me was getting some part of my assets out of their (Big Brother's) reach / scrutiny, or whatever. There were enough obstacles to me that I changed my mind about doing this.

Best of luck.


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## chicois8 (Aug 8, 2009)

Carlos, 
When My parents bought a house in Tonala during the 70's there was a 99 year lease, that is no more...That all changed in the 90's,now a foreigner can buy and own land in the Federal Restricted Zone via the fedicomiso route ( or bank trust) ...I am a foreigner and own a beach house in Nayarit and a ranch in GTO....


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## Gringo Dog (Dec 13, 2010)

Just a footnote: If this were a 401k (instead of a self-directed IRA), he might have been able to borrow money from his 401k as a loan. And repay the interest and principle directly to his own 401k. It can be a pretty nifty deal if it's done properly.

Note of warning: If you leave your employer, or your employer dumps you, the loan must be repaid within 60 days or it becomes a taxable event as an early withdrawal. That's a HUGE risk for most people. 

I've known several owners of businesses who have used a loan from their 401k plans to purchase the office building for their business.


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