by Plalla Real Estate 
Should I buy property as an individual or through a company? This is one of the most common—and most important—questions for anyone looking to invest in real estate in Mexico. The choice between buying as a private individual or through a legal entity can significantly impact your taxes, financing access, asset protection, and long-term profitability.
This guide explains the key differences between both options, when each is more advantageous, the legal and tax implications to consider, and which strategy can help you grow your portfolio safely and profitably. If you’re about to make an important real estate decision, this article will give you the clarity you need to choose with confidence.
GENERAL COMPARISON BETWEEN INDIVIDUAL AND COMPANY OWNERSHIP
When investing in real estate, one of the first strategic decisions is whether to purchase property as an individual or through a company. This choice will directly affect your tax burden, asset protection, financing options, and operational structure.
Buying as an Individual
- Simpler process: No need to establish a company or take on corporate obligations.
- Greater access to financing: Banks typically offer longer terms (up to 20 or 30 years) and more flexible conditions for individuals.
- Lower administrative burden: You only need to fulfill your personal tax obligations.
- Less asset protection: Properties are directly in your name, potentially exposing personal assets to unforeseen risks or legal liabilities.
- Progressive taxation: Income is added to your annual personal tax return and may be taxed at higher rates depending on your earnings.
Buying Through a Company
- Greater legal protection: The property is under a legal entity’s name, helping to separate personal and business assets.
- Tax advantages for large portfolios: After a certain threshold of properties, a holding company may apply fiscal deductions and optimize taxation.
- More efficient for commercial strategies: Ideal for buying, renovating, and selling properties, or managing multiple rental units.
- Higher operational complexity: Requires formal bookkeeping, monthly tax filings, and compliance with additional regulations.
- Limited access to mortgages: Companies generally face shorter loan terms, stricter requirements, and limited mortgage options.
Which Option Is Better?
It depends on your investor profile, intended use of the property, number of properties you own, and long-term tax planning. Throughout this guide, we’ll explore detailed comparisons to help you make an informed decision aligned with your financial and investment goals.
TAXATION: TAXES, DEDUCTIONS AND FISCAL ADVANTAGES
One of the most decisive factors when choosing whether to buy property as an individual or through a company is taxation. The tax treatment varies significantly between both cases, and understanding these differences can help you optimize your profitability and avoid costly mistakes.
Taxes when buying a property
Both individuals and companies must pay taxes such as VAT (in case of new developments), the Real Estate Acquisition Tax (ISAI), and notary and registration fees. However, there are notable differences in the ongoing tax treatment, especially if the property is intended as an investment.
Taxation on rental income
- Individual: Rental income is taxed under personal income tax (ISR) with a progressive scale ranging from 1.92% to 35%. If the property is used for residential leasing, you may apply a 35% flat deduction or declare actual deductible expenses, helping reduce your tax burden.
- Company: The company pays corporate income tax (ISR) at a fixed 30% rate on profits. If dividends are distributed to the owner, an additional 10% tax is applied, potentially increasing the total tax burden if earnings are not reinvested.
Tax deductions
- Individual: Deductions are limited and must be directly related to the property’s operation (property tax, maintenance, legal fees, mortgage interest, etc.). The main benefit is a 60% net income deduction for residential leasing, which does not apply to companies.
- Company: Deductions are broader. You can deduct all business-related expenses including accounting, notary fees, salaries, maintenance, promotion, property depreciation, and more. This enables greater tax efficiency if the operation is well structured.
Capital gains from property sales
- Individual: Capital gains are subject to personal income tax, with a progressive rate, although you can apply a full exemption if it’s the sale of your main residence (once every three years) and certain conditions are met.
- Company: All gains are considered corporate income and taxed at 30% under the ISR. No personal exemptions apply. However, reinvesting the income allows deferral of dividend taxes and helps leverage accumulated deductions.
Which option is more fiscally advantageous?
- For individual owners with one or two rental properties, buying as an individual is usually more beneficial due to simpler deductions and lower operational overhead.
- For investors managing a larger real estate portfolio, setting up a company provides scalability, broader deductions, and a more professional structure—although it involves greater tax and administrative obligations.
FINANCING: BANK TERMS AND CREDIT ACCESS
Access to financing and banking terms can differ significantly depending on whether you’re buying as an individual or through a company. This is a crucial factor, especially if your investment strategy relies on financial leverage to grow or preserve liquidity.
Access to credit as an individual
Banks usually offer more favorable conditions to individuals, as they are considered lower risk clients. The main advantages include:
- Longer loan terms, which can reach up to 20 or 30 years.
- More competitive interest rates, especially for primary residences or residential use.
- Access to traditional mortgage loans, including Infonavit or Fovissste programs.
- Evaluation based on personal income, credit history, and job stability.
This type of financing allows for lower monthly payments and greater long-term financial stability, making it ideal for those who intend to live in the property or begin investing with low risk.
Access to credit as a company
Purchasing through a company (legal entity) presents more restrictions when it comes to credit access, especially if the company is newly created or lacks a solid credit history. Key characteristics of company financing include:
- Shorter loan terms, typically between 5 and 15 years maximum.
- Higher interest rates, as companies are seen as higher risk by banks.
- Stricter evaluations, including analysis of the company’s cash flow, years in operation, business activity, and payment capacity.
- Often requires personal guarantees or additional collateral.
However, a company with a well-structured operation, steady income, and real estate assets can negotiate better terms over time as it builds financial history.
Which option is better?
- If you’re looking for easier credit access with manageable payments and long terms, buying as an individual is usually the best option.
- If you already have an active company with income and are willing to take on larger short-term commitments, business credit could enable you to manage bigger deals or multiple investments.
LEGAL SECURITY AND ASSET PROTECTION
One of the most important factors when deciding whether to buy as an individual or through a company is legal protection and personal asset security. This distinction is especially relevant for those with multiple properties or who want to reduce legal and financial risks.
Buying as an individual
When purchasing property personally, the owner assumes full responsibility for any issues: lawsuits, debts, foreclosures, or other legal liabilities. In the event of a dispute, personal assets (including other properties) may be at risk.
Buying through a company
One of the biggest advantages of using a company is the separation between personal and business assets. This means:
- Legal and tax liabilities are limited to the company.
- In case of a legal dispute, the partner’s personal assets are protected.
- A real estate portfolio can be structured under different legal entities to strategically distribute risk.
- Inheritance planning can be optimized, helping avoid family conflicts.
This level of protection is particularly useful for investors with multiple properties or those who want to operate with greater legal structure and shielding.
COSTS OF CREATING AND MAINTAINING A COMPANY
Setting up a company to purchase real estate is not free. There are initial setup, administrative, and accounting costs that should be factored in before making a decision. These expenses can affect profitability, especially in the early stages or if you only own one property.
Initial Setup Costs
- Notary fees and commercial registry expenses.
- Registration with the SAT and opening of a business bank account.
- Drafting of bylaws and articles of incorporation.
- Time and legal advice to define the corporate purpose and company structure.
Operational and Administrative Costs
- Payment to an accountant or tax firm to manage monthly electronic accounting.
- Filing of monthly and annual tax returns.
- Financial reports, corporate books, and compliance with legal obligations.
- Costs for renewing powers of attorney, holding meetings, and other legal processes.
- Maintenance of the business bank account (fees, transfers, etc.).
Is it worth taking on these costs?
It depends on the size of your investment and your goals. If you’re only acquiring a property for personal use or basic rental income, the costs of maintaining a company might outweigh the benefits. However, if you plan to build a portfolio with multiple properties or want to operate more formally, a company can provide a more solid, professional, and efficient structure in the long run.
INVESTMENT STRATEGIES ACCORDING TO YOUR PROFILE
The way you purchase a property should align with your goals as an investor or buyer. Buying a home for personal use is not the same as buying properties to rent or flip for profit. Below are the most common strategies and how they relate to the most suitable legal entity:
- Buy to live in: If you’re buying your primary residence or a second home for family use, the most advisable option is to do so as an individual. This will allow you to access tax benefits and more favorable mortgage terms.
- Buy to rent long-term: If you’re planning to acquire one or two properties for traditional rentals, you can operate as an individual and take advantage of specific deductions. However, if the volume of properties increases, it may be more profitable to use a company.
- Buy for vacation rental (Airbnb or other platforms): This depends on the scale of the business. A single property can be managed as an individual, but if you’re building a broader portfolio or need to hire staff, a company provides greater formality and operational efficiency.
- Buy to flip: This type of strategy has a business focus. Buying, renovating, and selling involves frequent transactions, so a company offers greater tax optimization and legal structure.
- Construction or real estate development: If your goal is to develop projects or participate in construction, it’s essential to do so through a company. This activity is regulated and requires specific tax and accounting controls.
WHEN IS IT BETTER TO BUY AS AN INDIVIDUAL?
Buying as an individual is advisable when:
- It’s your first property or your primary residence.
- You only have one or two rental properties.
- You want to access mortgage loans with lower interest rates and longer terms.
- You prefer to keep your operation simple, without additional administrative costs.
- You are not engaged in an intensive real estate investment strategy.
- You need immediate liquidity or want to have direct, personal control over the property.
Additionally, as an individual you can benefit from tax deductions on rental income, including a 60% reduction on net rental income, provided the conditions set by law are met.
WHEN IS IT BETTER TO BUY THROUGH A COMPANY?
Buying through a company is advisable when:
- You have or plan to have more than three rental properties.
- You want to separate your personal assets from your business assets for greater legal protection.
- You plan to frequently buy, renovate, or flip properties.
- You want to optimize your real estate portfolio through deductions and accounting control.
- You want to partner with other investors or attract external capital.
- You need to manage your operation as a formal business with internal processes and contracts.
A company structure allows access to scalable tax benefits (such as up to 100% deductions in certain rental cases) and provides a solid framework for advanced investors or those with a high volume of assets.
In the next section, we’ll address the most common questions buyers have when choosing between buying as an individual or through a company.
FREQUENTLY ASKED QUESTIONS (FAQs)
Can I buy property through my company if I’m a foreigner?
Yes. In Mexico, both foreign individuals and incorporated companies can acquire real estate, including through bank trusts (fideicomisos) if the property is located in restricted zones such as the Riviera Maya.
What happens if I buy as an individual and later want to transfer the property to a company?
It is possible, but it is treated as a new sale, meaning you’ll need to pay taxes as if it were a new transaction. That’s why it’s important to choose the right structure from the beginning according to your investment strategy.
Can a company obtain a mortgage loan in Mexico?
Yes, but under different conditions: shorter terms (8 to 15 years), slightly higher interest rates, and stricter requirements regarding financial and tax history.
What tax benefits does a company have over an individual?
Companies can deduct a wider range of operational expenses, depreciation, management services, and accounting costs. Additionally, in some cases, they can apply for special tax benefits if they manage a rental portfolio of more than eight properties.
Can I buy as a company for personal use?
It is not advisable. If a company purchases a property for a partner’s personal use, it is considered a benefit in kind and must be invoiced at market value, creating a tax liability.
CONCLUSION: WHAT’S BEST FOR YOU?
The decision to buy property as an individual or through a company fully depends on your investor profile, goals, intended use of the property, and long-term plans.
If you’re just starting out, want a home to live in, or plan to invest occasionally, buying as an individual is usually the simplest and most tax-efficient route. However, if you plan to scale, operate regularly, or professionalize your real estate activity, forming a company may offer you structure, tax advantages, and asset protection.
Before making a decision, we recommend analyzing your specific needs and consulting with a legal and tax advisor. At Plalla Real Estate, we can help you find the best path to invest smartly in real estate in Mexico.
