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Marla Daily
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Registered: 9-2-2003
Location: Loreto, BCS
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CORPORATION VS FIDEICOMISO
Probably time to separate the existing Fideicomiso thread. Any opinions re: benefits of Fideicomiso vs Corporation? Seems lots of folks in Loreto are
opting for formation of a corporation in purchasing land, especially former ejido lots—declaring the business to be some form of rentals around their
own home. We were told by a notary this is seen as a legal loophole to getting a Fideicomiso. To what end?. I don't get the advantage????? Monthy
accounting fees? Annual taxes? What am I missing here? Corporations sound like a royal pain to me.
I can say that our annual Fideicomiso fee is $330. Our Municipal property taxes are $11/year.
FIDEICOMISOS: If property is already in a fideicomiso, probate and transfer tax are avoided when the property is transferred.
Regarding Inheritance: Nonresident individuals inheriting Mexican property are taxed at a flat rate of 20%. The tax base is the official assessed
value of the property. No deductions are allowed. No inheritance tax is levied on the gross inheritance of nonresident individuals, other than on
immovable property located in Mexico. Resident Foreigners: Inheritance or gifts of residents are not subject to tax in Mexico. No Value Added Tax
(Sales Tax) is payable on residential property.
[www.property-mexico.com.arproperty_transaction_costs_fees_mexico.html]
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REGARDING MEXICAN CORPORATION TAXES:
A Mexican company will be subject to the following taxes during its operation:
A corporate tax assessable at a maximum rate of 35% must be paid ANNUALLY to the tax authorities on the company's taxable profits. The procedure to
calculate such profits is by deducting certain allowed expenses from the total accruable gross income. Most of the company's income is considered
accruable for income tax purposes at the time any of the following situations occur:
invoices are issued;
goods are delivered to the buyer or services are rendered;
when total or partial amounts of the transaction is collected or is payable, including advance payments.
Basically, the allowed deductions are all costs and/or expenses strictly necessary to carry out the company’s business. Except for the first year of
operations, all Mexican corporations must file their income taxes through monthly provisional payments. These provisional payments will be credited
against the annual income tax return.
A Mexican corporation may be 100% foreign-owned, and may purchase property in a restricted zone without a fideicomiso. But property owned by a
corporation is commercial property, and pays higher water, electric, and telephone rates. However, a Mexican corporation MAY NOT own a single-family
residence.
The Tax Authority may choose to perform a commercial appraisal after the purchase. If appraisal value is 10% greater than the declared value, the
difference between the two amounts is subject to 20% Appraisal Tax, payable within 15 days after the appraisal. Commercial Property transactions are
liable to VAT (sales tax) at the current rate in addition to the Acquisitions Tax.
And what happens if someone has a corporation, wants to close the business, and wants to change to a Fideicomiso? Anyone with experience out there?
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Osprey
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Marla, Skeet and Capt. George both said they bought/held/sold pieces of property in Loreto via corporations. There are countless threads on here that
will give witness to this fact. Perhaps they will jump in, tell you how they did it. If not you could contact them privetly U2U or otherwise to learn
more about how they fared. Skeet said he bought many, many pieces of land in the Loreto area using corporations.
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Marla Daily
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2008
Thanks for your tips. We know Skeet and remember well his extolling the virtues of a corporation. We also remember when he received an unexpected
knock on the door from the Feds asking to see his corporate accounting books. This was many years ago. He's got great memories on how he was able to
do things back when.
That was long before the Loreto ejido broke out lots, long before Loreto Bay and San Bruno and Villas Group, and all the other mega developments and
foreigners here. Many laws have changed and I'm sure he would be the first to tell you that 2008 is a very different Loreto. I think it would be great
to get some current views and experiences. There are lots of them happening right now as people wait for their titles to come in from purchasing ejido
certificados.
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Diver
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| Quote: | Originally posted by Marla Daily
I'm sure he would be the first to tell you that 2008 is a very different Loreto. |
Nope, it's all the same; especially the fishing !! 
We have a corp for our lots but I don't claim any expertise in the area.
No requirement to invest and no income for now.
Still have to do the accounting even for $0.
Any homes built on the property must be for rent, lease or sale except for a potential manager's quarters ? 
Right Bob ?? 
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Pescador
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If my info is correct, the cost to disband a corporation is even more expensive than the money to set it up in the first place. But that would only
happen when you go to sell or otherwise stop doing busiess as the corporation.
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Diver
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So what happens if you sell all the properties owned by the corp and then dissolve it ?
Or transfer some of it to a Fido ?
I am not aware of a high cost to close the business other than gains or income taxes.
Not to say they don't exist, I just haven't heard of this before.
Where is Bob when you need him ? He is the "corp" guy.
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Bob and Susan
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i'm no expert and make ALOT of errors...but...
this is what i understand
corps MUST conduct business...always
diver is correct...
"No requirement to invest in the property
and no income needed (immediately) for now"
"Still have to do the accounting even for $0."
"Any homes built on the property must be for rent,
lease or sale except for a potential manager's quarters ?"
(the homes MUST look or act like a business...
you'll get burned if they don't)
when you split the property from the corp into lots
you take the sales price of each lot as income and
pay the tax to the government...
the tax (value) is paid in the year when the fido closes with the bank
don't think you can split a lot that cost you 100k into 4 pieces and
sell each for 25k and
have NO TAX...WRONG...
you pay tax on 25k for each of the lots...
each time you sell
EVEN if you DO NOT make a profit
you CANNOT live in a single family house with a corp title
you must file monthly taxes even if you dont make any money that month AND complete BIG report at the end of the year
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capt. mike
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Bob - if and when you ever parcel.............you'll be a gazillion aire!!
formerly Ordained in Rev. Ewing\'s Church by Mail - busted on tax fraud.......
Now joined L. Ron Hoover\'s church of Appliantology
\"Remember there is a big difference between kneeling down and bending over....\"
www.facebook.com/michael.l.goering |
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ncampion
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| Quote: | Originally posted by Bob and Susan
"Any homes built on the property must be for rent,
lease or sale except for a potential manager's quarters ?"
(the homes MUST look or act like a business...
you'll get burned if they don't)
you CANNOT live in a single family house with a corp title
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Bob,
I believe you live on your property, are you considered the "manager" and is your home the "manager's home". We are building guest rooms on our
property for rent and we intend to live in the same structure and serve as "managers". Is this withing the regulations as you understand?
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Gadget
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Our friend Bill, who owns El Pozo Hondo B&B in Pescadero also indicates that along with the above you need to have, if you are reporting income, a
full time Mexican national employee on the books.
He has a guy, who even in the off season when he has no income, show up every day. He rakes and waters and pulls weeds. Worked one day putting it
the vegy garden. The place is always immaculate. This could be a drain on valuable resources.
"Mankind will not be judged by their faults, but by the direction of their lives." Leo Giovinetti
See you in Baja
http://www.LocosMocos.com
Gadget |
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Diver
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I do not believe that you need a Mexican employee if you have an FM3 lucrativo which allows you to work in Mexico. But then, who else would you hire ?
And isn't that part of the reason we are there ?
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flyfishinPam
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| Quote: | Originally posted by Diver
I do not believe that you need a Mexican employee if you have an FM3 lucrativo which allows you to work in Mexico. But then, who else would you hire ?
And isn't that part of the reason we are there ? |
you need a Mexican employee if immigration says you do. they always ask for my list of employees as shown on the IMSS forms.
some expenses in having a mex corporation that I have-
accountant $1,900/mo
bank internet fees $220/month (you have to pay taxes each month via the internet)
you have to have a brick and mortar office so either you'd have to build that or rent
you must have a phone line (Telmex) in the corp's name
you must be conducting business every month through the established bank account that you pay monthyl taxes from
there are other things too like local and state permits, state taxes, etc.
yeesh its much easier to have a fideio than this.
the new tax law is tightening things up even for my independent panguero husband who is a persona fisica and also pays taxes. as someone stated this
is 2008 and technology has changed and hacienda has become and continue to become more efficient in their checking. I'd really hate to be a property
owner in the wrong position and have them come knocking to check on things.
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longlegsinlapaz
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Hmmmmmm...could the accountant be considered the one full-time employee? Just a thought. Nothing I've ever heard about corporations seemed
beneficial or easier than a fideicomiso in my personal situation; seems like they're much more labor intensive & costly in the long run. The bulk
of people I know that I'm aware has a corp has it primarily to avoid having a fideicomiso on their primary residence! I
KNOW there are a lot of people out there who DO have a legitimate business reason for having a corp; like Bob & Susan;
but I know many people take that route feeling they'll save in the long run on the fideicomiso fees; nothing I've ever heard/read has convinced me
that's remotely true. One of these days when someone knocks on their doors to audit, there might be some pretty unhappy campers!
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bajabeachbabe
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Found this on a website about buying property in Mexico. It was written by an attorney. Looks like a potential "catch 22".
Some people put title in corporations to avoid the bank fee and because they feel more secure having a title instead of having title in a trust. A
foreigner can set up a Mexican corporation. You only need two shareholders and one can be a U.S. LLC. You cannot live in a house that is owned by your
Mexican corporation. There is ambiguity in the law as to whether you can own residential rental real estate in a Mexican corporation if you don’t
live in it.
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Cypress
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And on and on! Just when you think you've followed all the rules and regs., paid
your dues etc., there just happens to be a little problem, but for a small fee it can be taken care of.
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LaTijereta
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Why not just get through your mexican citizenship..
Then you can hold title to "all" your properties
Many persons here in Loreto have now completed the process, and are up to holding titles on their properties.
In the mean time keep the titles in a fideicomiso, unless you find the need to run a project
Democracy is like two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.
Ben Franklin (1759)
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Bob and Susan
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yes ncampion...
we have a full time employee...martha
she works in the kitchen and takes care of the place
she does all the real work
and yes we manage the work and the place and live here
and yes the accountant idea worked for a while and
was argued by our accountant when he was audited during construction but...
in the end you need a fulltime employee or more...
and la tiera i dont think you can hold title in the "forbidden" zone unles you are born in mexico...unless the law has changed
immigrados cannot hold title...i'm pretty sure
[Edited on 5-23-2008 by Bob and Susan]
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fulano
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At the risk of stepping on a lot of people toes, I can see no advantage to ever owning residential real estate anywhere in Baja. It makes more sense
to just rent the house you like. Let's assume, for discussion purposes, that the average house a gringo would want to live in in Baja costs $250,000
outright. Let's assume that the opportunity cost of your money is 6%. (The means you could either invest your money at 6% in the stock market, or in a
CD, or it would cost you 6% to borrow the $250,000 in the US to buy the Baja house).
6% on $250,000 works out to $15,000/year or $1,250/month. $1,250 per month will rent you a lot of house anywhere in Baja. Even in the resort areas.
Some would argue that if you rent you give up on the up-side appreciation, which is true, if there is any. But you also avoid a whole lot of downside,
such as:
1. You don't need a fidecomiso to rent a house. Also no annual fees.
2. You don't have to deal with a notario and a lawyer to buy or sell the property.
3. You don't have to deal with the extremely inefficient Mexican real estate market to sell, e.g you are not trapped in your house.
4. If you don't like your colonia or your vecinos, you can just move to another rental.
5. You don't have to pay for repairs.
6. And the best of all... you don't have to worry that some pocho is going to show up at your door with a piece of paper in Spanish that says he owns
the property.
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Gadget
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OK, and I hope this is not hijacking your thread Marla,
But I am still working on this info and seem to be getting at least somewhere???
My interest is regarding BoLA. Our folks have a place there and Chubasco has receintly made them an offer to sell it. They have a double wide lot,
and with it layed out back to the main dirt road its about 2.5 arcres. With a beach you can launch a boat off, close to town, but far enough away,
its a great place as many of you know.
If there is fideicomiso in BCN, why does Chubasco say it is not for sale with one?
Can the seller choose or not, to sell the land into a trust?
Or is there just not fide in this area for some reason?
Some have jumped on the land coming for sale and are forming corps.
Our folks rent now and have a good deal as the math above by fulano proves out. Only problem fulano, is a lease is only good for 10 yrs less a day
legally, and there are no legal rental contracts in Baja. So you are at the mercy of the landlord regarding their ethics, hikes or the boot. Not so
secure if you really like a place and want to grow some roots.
But us kids are looking at the offering from a longer term and the prices now are pretty darn good.
Anyone have a link for legit BCN fedeicomiso info?
"Mankind will not be judged by their faults, but by the direction of their lives." Leo Giovinetti
See you in Baja
http://www.LocosMocos.com
Gadget |
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Bob and Susan
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the fido may take up to a year to complete...
the cash may get to the seller later not sooner
he may want cash NOW!!!
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