# Fideicomiso Problem



## glenndee (Mar 25, 2011)

:confused2: Hello, I am hoping for some guidance. I recently made a an offer on a home in Merida. During my house hunt I explained to the agent that this purchase would be made with mine and my wife IRA funds via Self directed IRA. The IRA's are setup as a self directed LLC with SUNWEST Trust as the custodian. Sunwest needs the deed to reflect that Sunwest is the custodian of the IRA(s) involved. So the Fideicomiso ( according to SunWest) needs to say some like " Sunwest as custodian for JOHN DOE Traditional IRA " or something similar to this affect. Now the rub. The bank in Merida ( Scotia ) is telling the real estate agent that the fideicomiso can not be in the name of the bank or trust, but must be in a individuals name. Anyone else used a self directed IRA to purchase property in Mexico ? I am told it is done a on a fairly regular basis in Cancun, but can't seem to find an example of this. Any help would be appreciated.

Glenndee
Washington State at least for now :-(


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## winddancer49 (Mar 7, 2011)

*Property purchases and self directed IRAs*



glenndee said:


> :confused2: Hello, I am hoping for some guidance. I recently made a an offer on a home in Merida. During my house hunt I explained to the agent that this purchase would be made with mine and my wife IRA funds via Self directed IRA. The IRA's are setup as a self directed LLC with SUNWEST Trust as the custodian. Sunwest needs the deed to reflect that Sunwest is the custodian of the IRA(s) involved. So the Fideicomiso ( according to SunWest) needs to say some like " Sunwest as custodian for JOHN DOE Traditional IRA " or something similar to this affect. Now the rub. The bank in Merida ( Scotia ) is telling the real estate agent that the fideicomiso can not be in the name of the bank or trust, but must be in a individuals name. Anyone else used a self directed IRA to purchase property in Mexico ? I am told it is done a on a fairly regular basis in Cancun, but can't seem to find an example of this. Any help would be appreciated.
> 
> Glenndee
> Washington State at least for now :-(


It seems you are trying to title your property with your IRA as owner/custodian of it. Sunwest LLC appears to be the custodian of your IRA.

You can use funds withdrawn from a self directed IRA to purchase a house (or anything, for that matter). When the funds are withdrawn, that will generally trigger a "taxable event". The funds withdrawn will be treated as income by the state and federal governments (at least), and taxed in the same manner as any other income that you would receive. The exact amount of taxes due will depend upon your individual tax circumstances. 

To my knowledge, (and I've worked in the operations side of financial services for several years, but I am not an accountant or tax person) one cannot hold property used for one's own residence inside an IRA, whether the property is located inside the US or elsewhere. This is a restriction from the IRS. You may want to review IRC 4975(c)(1) and IRS Publication 590 for more details and specifics.

Hope this helps you.


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## glenndee (Mar 25, 2011)

winddancer49 said:


> It seems you are trying to title your property with your IRA as owner/custodian of it. Sunwest LLC appears to be the custodian of your IRA.
> 
> You can use funds withdrawn from a self directed IRA to purchase a house (or anything, for that matter). When the funds are withdrawn, that will generally trigger a "taxable event". The funds withdrawn will be treated as income by the state and federal governments (at least), and taxed in the same manner as any other income that you would receive. The exact amount of taxes due will depend upon your individual tax circumstances.
> 
> ...


 You are correct I believe regarding the tax situation. I do not plan to live in the house. The home will strictly be for investment purposes. That is why an IRA custodian must maintain control of the property. I am not having a problem with the US tax laws, simply getting the trust issued in Mexico under the name of LLC. 
Has anyone had any luck having a LLC listed on the trust in mexico ? I can sign as manager of the LLC.

I appreciate the Help.

Glenndee


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## Guest (Mar 27, 2011)

I too had considered doing this in MX, but my understanding was this (and I could probably be wrong about the whole thing too):

1) I had to form a US corporation for my self-directed IRA, with associated costs of $3-5k upfront.

2) I had to use a service provider for that new corporation, even for a self-directed IRA, and there would be costs somewhere in the order of $1k per year for doing this (my understanding was that this was to prevent self-dealing and to file the necessary annual reports to the IRS). Yes, I could have the corporation's checkbook so that I could pay the associated bills on the property through the MX corporation's bank account.

3) I had to form a MX corporation, open a bank account for this corporation, and also file annual MX taxes for this corporation, and more annual costs somewhere in the order of US$500 or so per year tothe bank, plus the annual taxes to MX. All rent receipts would go directly into the MX bank account.

Talking to the MX banks, self-directed IRA providers in the US, etc, I figured it was going to take several months to set this all up. I looked at the returns I have been getting on my money already versus the returns I would get by going through this process and stopped my research.

I am no longer patient enough to jump through bureaucratic hoops, and said to myself "phooey". My primary motivation in the first place was to move my money out of Uncle Sam's easy reach in case things NOB blew up with QE, QE2, (and probably QE3 and4), and the value of the US$ goes to heck. If that happens now, I'll just make a large withdrawal, change it all into pesos and let them come find me. Good luck to you if you are smart enough and have the patience to do so.


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## glenndee (Mar 25, 2011)

GringoCArlos said:


> I too had considered doing this in MX, but my understanding was this (and I could probably be wrong about the whole thing too):
> 
> 1) I had to form a US corporation for my self-directed IRA, with associated costs of $3-5k upfront.
> 
> ...


Thanks for the reply. Here is couple things I do know.

1. I did setup a US corp. It took about 3 weeks using legal zoom to file all the paperwork and cost about 300.00 when done here in Washington state

2. I am using Sunwest Trust out of New Mexico as the custodian for the IRA. That does cost 200.00/year and you must have an agent in the US for the LLC. That cost is between 39.00 and 100.00 depending who you use. If you let legalzoom choose your agent, it will be about 89.00/year.

3. Looks like my sticking point would be if I have to setup a MX Corp. Which Like you, I would not be willing to do. Too much headache.

Thanks again folks for all your advice.

Glenndee


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