BajaNomad - For US tax payers..re: Fideicomisos

For US tax payers..re: Fideicomisos

bajagrouper - 8-7-2009 at 09:54 AM

On a couple of other Mexico message boards folks are talking about an IRS amnesty program for Americans who own property in the federal restricted zone and have a Fideicomiso or a Mexican bank account who have not reported this on Sch.B of their tax returns...I have tried to search this subject on this board but have found nothing, did I miss something? The amnesty program ends Sept. 23rd. 09...

Hook - 8-7-2009 at 10:09 AM

Where did you find info about this amnesty program?

I am aware of the controversies surrounding the question of filing or not. It's very murky. I have read statements by two individuals who say the IRS told them you have to file and you dont have to file. Who knows?

But if there is an amnesty program, I'd like the details as we have not filed in the two years we've owned our property in a fide.

bajagrouper - 8-7-2009 at 11:04 AM

Posted by John Dillinger, CPA, MS.tax

http://fideicomiso.wordpress.com/

Once the IRS announced their Offshore Voluntary Disclosure Program, March 23, 2009, foreign reporting requirements began receiving greater press coverage. When the program was announced, all late forms were required to be sent to IRS Criminal Investigation with mandatory penalty frameworks that had no reasonable cause exceptions.

I believe my repeated communications with the IRS helped provide the opportunity for those who did not know they were supposed to file Forms 3520 & 3520-A do so without fear of penalty. However, the IRS is only currently granting this relief until September 23, 2009.

If and when the IRS discovers that you have not filed the required forms, there is no guarantee of penalty relief. Now that the public is being made aware of the filing requirements, if you don’t file, there is no reasonable cause exception. In fact, the reason for not filing would be considered “willful neglect”. You now know that you were and are required to file, and did not.

Hook - 8-7-2009 at 11:20 AM

This CPA seems to think that the IRS is only interested in income derived from foreign accounts/trusts. That would exempt those of us who simply hold a fide for title and DO NOT ACCRUE INCOME FROM RENTING IT OUT.

http://www.vernonjacobs.com/voluntary-compliance.html

bajajazz - 8-7-2009 at 11:26 AM

The use of this board to drum up personal business for creeps shilling for the IRS makes me want to puke.

The Gringo Gazette is particularly guilty of this, giving away column inches of space to tax consultants and PR types to scare the hell out of people, scare them into using "professional" services they probably don't really need.

This kind of crap is destroying what most of us came down here to find . . . a simpler life without Big Brother and other officious chitheads looking over our shoulders.

DianaT - 8-7-2009 at 11:33 AM

Quote:

Originally posted by Hook
This CPA seems to think that the IRS is only interested in income derived from foreign accounts/trusts. That would exempt those of us who simply hold a fide for title and DO NOT ACCRUE INCOME FROM RENTING IT OUT.

http://www.vernonjacobs.com/voluntary-compliance.html

Our accountant knows we own property in Baja and has never said anything about needing to report it, unless we sell it.

It is a second home---no income from it

Is there something we are missing? Why would we need to report it?

Diane

dtbushpilot - 8-7-2009 at 11:34 AM

Quote:

Until you sell it and are required to pay US capital gains along with Mexico taxes.....dt

Hook - 8-7-2009 at 11:34 AM

Quote:

Originally posted by bajajazz
The use of this board to drum up personal business for creeps shilling for the IRS makes me want to puke.

And who are you accusing of being complicit with chitheads on this issue, on this board????? :?:

Hook - 8-7-2009 at 11:39 AM

Quote:

Originally posted by dtbushpilot

Quote:

Until you sell it and are required to pay US capital gains along with Mexico taxes.....dt

Correct, as I read it.

So, at that point you would file form 3520, or is it some other form?

k-rico - 8-7-2009 at 01:42 PM

Read "Reportable Event" on page 4:

http://www.irs.gov/pub/irs-pdf/i3520.pdf

k-rico - 8-7-2009 at 01:47 PM

Has anybody established that a fideicomiso is a "foreign trust" in the eyes of the IRS?

If so, how?

pacside - 8-7-2009 at 02:50 PM

Just received this email from my tax guy:

The IRS recently granted taxpayers who are required to report ownership or authority over foreign financial interests an amnesty for late filing of their 2003 through 2008 reports. Proper late filing under the amnesty program will waive the onerous late-filing penalties normally associated with these reports.

Who this applies to

: U.S. citizens (or other domestic legal entities) who own or have signature authority over foreign financial account(s) whose aggregate value(s) exceeds $10,000 at any time during the calendar year. Such accounts may include, but are not limited to:

foreign bank accounts;
brokerage accounts;
mutual funds;
unit trusts.

What must be filed

: For each calendar year in which the ownership/authority criteria is met, Form TD F 90-22.1, Report of Foreign Bank and Financial Authority (or "FBAR") must be filed by June 30 of the following calendar year to disclose such ownership or interest.

What happens if I don't file

: Account holders who do not comply with the FBAR reporting requirements may be subject to civil and/or criminal penalties:

Non-willful violations can result in penalties up to $10,000 for each violation;

Willful violations can result in penalties of the greater of $100,000 or 50% of the balance of the account at the time of the violations;

Criminal violations can result in a fine and/or ten years in prison.

How the 2009 Amnesty program applies and works

: The due date for 2008 fillings was June 30, 2009, however, the IRS established a short amnesty period for such filings. Account holders who have only recently learned of their FBAR filing requirement, and who appropriately reported and paid taxes due on all income for years in which they should also have filed an FBAR can file a delinquent FBAR for calendar years 2003 through 2008 before September 23, 2009 without incurring penalties. The delinquent FBAR must be filed with a copy of that year's tax return and have a statement attached explaining why the report is filed late. For taxpayers with 2008 tax returns due after September 23, 2009, the tax return does not need to accompany the 2008 FBAR.

If you think that you may need to file a FBAR before the September 23, 2009 deadline, or have any questions as to how the amnesty may affect you or your business, please contact your accountant.

end of email

For what it's worth my accountant's opinion was that if you just own land or a home via a fideicomiso and do not plan on producing income with it (i.e. not an income producing investment) and you don't plan on deducting expenses from said asset than it isn't necessary to file any additional forms. Obviously, if you want to claim expenses on investment property on your u.s. taxes then you need to file form. He is very good at representing folks in court over tax audits and is conservative.
pacside

arrowhead - 8-7-2009 at 03:04 PM

Quote:

Originally posted by k-rico
Has anybody established that a fideicomiso is a "foreign trust" in the eyes of the IRS?

If so, how?

The IRS has established it. What a "foreign trust" is, is defined in the Internal Revenue Code, somewhere in the 6000's, as I recall. There is supposedly a project at the IRS to review these fideicomiso's that only hold residential property to see if they can be made exempt. But that project is on the back burner as a low priority item. The IRS won't grant a blanket exception for fideicomiso's as they are worried about tax abuse.

The rub is that if you own property in Mexico outside the restricted zone, then there is no fidei and nothing to report to the IRS. So, you have two standards for the same ownership. The whole purpose of the trust reporting to the IRS is to catch income tax cheats.

By the way, there is another way out of the mess. You can ask for a private letter ruling. This is a process where you explain the situtation and then ask the IRS to grant an exemption from the reporting requirements on the specific basis explained in the letter. A private letter ruling is only good for the person to whom it was granted.

By the way, just as an aside, a fideicomiso is not a trust. Mexican law does not recognize trusts as in English Common Law. In Mexico, a fideicomiso is actually a contract between the property owner and the bank. This has no bearing in the IRS definition of what a trust is though.

bajagrouper - 8-7-2009 at 03:33 PM

From another CPA in Puerto Vallarta:

There was a recent article by John Dillinger, CPA in the Banderas News that discussed this issue. As a CPA, I agree with most of what Mr. Dillinger had to say. The IRS regulation is applicable to all foreign trusts, with few exceptions, that have at least one US citizen as an owner. Unfortunately, a fideicomiso is a trust that qualifies under these regulations. Attempts to have an IRS revenue ruling exempting fideicomiso's from these regulations have not yet been successful. Because of the deficits the US is accumulating, the IRS is aggressively seeking sources of revenue. If you own a home through a fideicomiso and do not earn income from that property, it will probably not create a tax liability for you. However, failure to file could subject you to having penalties assessed against you. In my opinion, the prudent choice for those in this scenario where no income is earned is to file the 3520A before September 23, 2009. For those that have earned income, you should contact a CPA and discuss your specific situation with them.

k-rico - 8-7-2009 at 04:55 PM

"In my opinion, the prudent choice for those in this scenario where no income is earned is to file the 3520A before September 23, 2009."

Can't argue with that. Guess I'll file amended returns for 2006, 2007, and 2008. What fun!! I don't generate any income off the property so I guess it can't hurt.

I wonder if there is a downside.

bajagrouper - 8-7-2009 at 07:05 PM

Hola K-rico, I don't like this news either, trying to find out more info this afternoon I called the IRS Trust Dept. It took a while and I thought my phone battery was going to die but after about a half hour on the phone the very nice agent gave me the bad news...

Even if one is not making money or renting their property the IRS still insists a Fidi. is a foreign trust, she told me to fill out Form 3520 for the tax year 2008 and report the year the trust was made, the fill out form 3520A for each year trust has been in place, adding a note that I paid for the trust, am paying a fee each year to bank, there is no distribution from trust and no money is being made from rental of property...

Just one more thing to do before I leave for my place in Mexico...

arrowhead - 8-7-2009 at 07:31 PM

Quote:

Originally posted by k-rico
I wonder if there is a downside.

The downside is that the IRS penalties for failure to file the forms on a timely basis are 20% of the assets of the trust -- as I think I recall. So, if the only thing in the fideicomiso is your $300,000 baja beach house, you can get hit with a $60,000 penalty, and then they start adding interest onto that.

Isn't it strange that in all the presentations on buying Mexican real estate, whether on the web, in brochures, or in person, not one presentation has ever mentioned the IRS foreign trust tax reporting requirements? Imagine that. :rolleyes:

slimshady - 8-7-2009 at 08:20 PM

Don't for one second even think the IRS knows anything about a FIDO. GIving them info that they don't have is rediculous. Providing them with info that they turn around and use on you, is financial suicide.

Simply don't have more than 10 k in an account .

Hook - 8-7-2009 at 08:46 PM

Quote:

Originally posted by slimshady
Don't for one second even think the IRS knows anything about a FIDO. GIving them info that they don't have is rediculous. Providing them with info that they turn around and use on you, is financial suicide.

Simply don't have more than 10 k in an account .

But our fideicomisos are worth more than 10k. How do you propose getting around that?

BajaBella - 8-7-2009 at 08:49 PM

Quote:

Originally posted by pacside
: For each calendar year in which the ownership/authority criteria is met, Form TD F 90-22.1, Report of Foreign Bank and Financial Authority (or "FBAR") must be filed by June 30 of the following calendar year to disclose such ownership or interest.

Quote:

We had to fill out for each Dollar and each Peso account we are signers of. The form asks for the highest balance amount during the calendar year.

And now, part of my accountant's response to this:

"The Forms referred to have to do with information to be reported for transactions with a Foreign Trust with a US owner, and gifts of $12,000 or greater to or from a Foreign Trust.

I think the focus of this effort is to start reporting, and to tax income that was sent directly to a foreign country (like the Cayman Islands or Bermuda into offshore bank accounts owned by a US owner), in order to avoid paying US income taxes on it. This has been an enormous effort by the IRS in the past few years."

[Edited on 8-8-2009 by BajaBella]

Kimpatsu_Hekigan - 8-8-2009 at 07:54 AM

Here's an entire blog devoted to this topic:

Tax Implications of Having a Fideicomiso

FWIW,

-- K.H.

Real Case Scenario

Marla Daily - 8-8-2009 at 08:04 AM

American friends with an eco-tourist business for a decade (beach land + house included), in the name of a Mexican corporation, sold out to a large developer. They had never filed form 3520. Their US accountant never advised them of it.

End result: The IRS fined them $10,000 each for 10 years. Fine was $200,000. That was on top of both US and Mexican capital gains.

The Gull - 8-8-2009 at 08:53 AM

If people were not trying to avoid US taxes as much as they are, things like this would not worry them.

There have been ways to report the taxable events of renting Mexican property and selling Mexican property within a Fideocomiso without the form 3520A. It is called a 1040 or even a schedule C of that same form. All the IRS wants is the tax. If you sold property, you could always report it under the normal capital gains forms along with your 1040.

Failure to file 3520A may be something which the IRS can scream about, but only until they discover that ALL taxable events have been previously reported. A penalty can only apply to under-reported or un-reported taxable events.

arrowhead - 8-8-2009 at 10:56 AM

Quote:

The US and Mexico have a tax treaty which requires each country report the financial activity of its citizens in the other country. In theory, at least, if you sold a house in Mexico, it would be reported to the IRS. I couldn't tell you if they actually do it.

SDRonni - 8-8-2009 at 08:01 PM

Does this mean that, when we sell, we will pay capital gains in Mexico AND the US? Will the percentage be the same as usual capital gains, i.e. 30% in Mexico and whatever they are in the US? YIKES! :wow:

oxxo - 8-8-2009 at 08:16 PM

Quote:

Originally posted by SDRonni
Does this mean that, when we sell, we will pay capital gains in Mexico AND the US? Will the percentage be the same as usual capital gains, i.e. 30% in Mexico and whatever they are in the US? YIKES! :wow:

My accountant has said that you pay Mexican capital gains tax first on a Mexican property. That amount is then credited toward your US capital gains requirement. If the Mexican capital gains tax is greater than your US capital gains tax,.....then you owe nothing to the US IRS. If the Mexicaqn capital gains tax is less than your US capital gains tax obligation, you pay the difference to the US IRS.

SDRonni - 8-9-2009 at 08:57 AM

Thanks, oxxo, that makes more sense....

The Gull - 8-9-2009 at 09:00 AM

Right now, selling Mexican property purchased in the last five years would not result in a gain, so no tax problem.

SDRonni - 8-9-2009 at 09:35 AM

Gull,

True, but I'm thinking about 10 years into the future and who knows what values/tax laws/etc. will be by then????

The Gull - 8-9-2009 at 05:55 PM

Getting advice today on Nomads board for a tax event 10 years from now???????????????????

:wow:

wessongroup - 8-10-2009 at 03:03 PM

Seems to be much to do about nothing... the IRS is always looking for someone in noncompliance with their regulations.
Give them a call and ask if they enforce their Code to the letter of the law... Gee, wonder what their answer will be.
It's a stretch to think that the IRS is linked by main frame to the Mexican Government's Tax Administration Service, in order to find individuals from the United States who are tourists living in Baja California on leased land, in a Trust created by the Mexican Government, to allow the American tourists to enjoy their country.
Please follow the link to the IRS for additional insight to the issue

http://www.irs.gov/newsroom/article/0,,id=104361,00.html

Perhaps under extreme circumstances the IRS might come after you, however, a Trust does not make money, unless set up to do that. And in this case I do not believe this a Trust which has been set up to make a profit, rather to facilitate the ability of foreigners to live on property in the Baja in a "restricted zone". Not to make money...

Hope this is what you are talking about...

bajabeachbabe - 8-10-2009 at 03:27 PM

Quote:

Originally posted by Marla Daily
American friends with an eco-tourist business for a decade (beach land + house included), in the name of a Mexican corporation, sold out to a large developer. They had never filed form 3520. Their US accountant never advised them of it.

End result: The IRS fined them $10,000 each for 10 years. Fine was $200,000. That was on top of both US and Mexican capital gains.

Just to clarify, the form that applies to foreign corporations is form 5471, and yes, it needs to be filed every year. The form related to foreign trusts is 3520. So the bottom line is that whether you have a corporation or a fidi you will need to file forms with the IRS.

slimshady - 8-10-2009 at 07:53 PM

The only thing I realized is that nobody really has an answer. The only thing I know is that the IRS really does not know or care to know what a FIDO does and are vague on what they are looking for. Voluntary information to a gov't agency whose sole purpose is to separate you from your money is an issue that each one of us has to deal with financially. Yes I pay taxes and alot of it annually. I find it my duty to avoid taxes at all costs and that means not disclosing every detail of my personal financial business to the gov't.
Remember the Gov't is not looking out for your best interest, They just want your money.

IRS focus

wessongroup - 8-12-2009 at 07:57 AM

Quote:

Originally posted by Hook

Quote:

But our fideicomisos are worth more than 10k. How do you propose getting around that?

Agree that the IRS may do something with folks bouncing along down in the Baja.. with all the money they are hiding (gains on investment property? that is in a Trust) from the American Government. However would appear their focus is else where...

The Swiss just agreed to pay almost a Trillion Dollars US to not be prosecuted by the United States for their "hiding" of funds transfered by the nice folks here in the States ,that just flat ripped us off.. The names of some of these U.S. folks that did this will be disclosed for prosecution, under an "agreement" just worked out in Switzerland with the courts there.. now that is some $$$ that the IRS will actively go after.. with a bunch of Mexican tourists with Visa's, staying in the country to relax and enjoy for various periods of time away from the United States is not a "front burner item" I would think. I certainly don't know the breakdown of trustor's citizenship in the Baja and I'm not sure that Mexico could and/or would disclose the information, if they have it in a data base, unless directed to by the IRS through our State Departmentand I'm not sure under the current Treaties this would be possible......aaaahhhh, don't think so..

http://www.bloomberg.com/apps/news?pid=20601087&sid=a491...

CortezBlue - 8-12-2009 at 08:06 AM

Spoke to my accountant yesterday and he advised that I fill out and send the 3520A.
He also told me to attache a document that describes the Fidi as a legal form of ownership in Mexico and to explain that we do not rent out the property and that it is for personal use only.

My 2 pesos

bajabeachbabe - 8-13-2009 at 12:14 PM

I was just doing a bit of research on the IRS website (yes I DO need to get a life) and I found this nice littler reminder:

http://www.irs.gov/pub/irs-utl/foreign_trust.pdf

Not only do you need to file the form 3520-A, but you're supposed to get a tax ID number for your trust in order to file the form.

arrowhead - 8-13-2009 at 01:52 PM

Quote:

Originally posted by bajabeachbabe
I was just doing a bit of research on the IRS website (yes I DO need to get a life) and I found this nice littler reminder:

http://www.irs.gov/pub/irs-utl/foreign_trust.pdf

Not only do you need to file the form 3520-A, but you're supposed to get a tax ID number for your trust in order to file the form.

I mentioned it earlier in this thread, but I'll have to repeat it. A fideicomiso is not a TRUST. Although it is called a TRUST in everyday language, Mexico has no enabling laws that recognize a trust as a legal entity. TRUSTS generally exist in countries which follow English Common Law. A fideicomiso is really a Mexican contract between the bank and the property owner. A fideicomiso has no fiscal year-end and is not a seperate taxable entity under Mexican law. The IRS regulations currently describe a fideicomiso as a TRUST for US tax purposes, which requires a 3520-A filing. IRS regulations do not a TRUST make.

The last thing you would want to do is ask the Mexican bank on your fideicomisio to apply for a EIN and file an annual tax return.

k-rico - 8-13-2009 at 07:18 PM

"The IRS regulations currently describe a fideicomiso as a TRUST for US tax purposes, which requires a 3520-A filing. IRS regulations do not a TRUST make."

Isn't that a contradiction? Where does the IRS describe a fidei as a trust?

"for US tax purposes" That's what we're talking about.

"The last thing you would want to do is ask the Mexican bank on your fideicomisio to apply for a EIN and file an annual tax return."

Why don't I want to do that?

Please explain.

arrowhead - 8-13-2009 at 08:03 PM

Quote:

Originally posted by k-rico
"The IRS regulations currently describe a fideicomiso as a TRUST for US tax purposes, which requires a 3520-A filing. IRS regulations do not a TRUST make."

Isn't that a contradiction? Where does the IRS describe a fidei as a trust?

IRC § 6048

Quote:

"for US tax purposes" That's what we're talking about.

"The last thing you would want to do is ask the Mexican bank on your fideicomisio to apply for a EIN and file an annual tax return."

Why don't I want to do that?

Please explain.

Form 3520 is attached to the individual's tax return, and can be prepared by you or your tax preparer.

Form 3520A reports to the IRS the taxable income of the trust and allocation of that income among the trust's U.S. owners. If the trustee fails to file Form 3520A, the responsibility rests with the U.S. owner, e.g you -- and not the bank -- you can file Form 3520A. Now, why would you want to pay a Mexican bank $1,000 or more of fees to fill out a simple form - in English -- which they cannot comprehend?

MitchMan - 8-15-2009 at 08:10 PM

Has anyone ever heard of a US citizen that owned real estate (personal use residence not actually held for production of income) in the baja via a Fideicomiso who did not file IRS Form 3520, but, was discovered by the IRS as an owner of said baja real estate (not having ever sold the subject property), and thereafter fined for not having filed said form 3520?

The same question for US owners of Mexican corporations who have not filed form 5471? The same question for US persons who are signatories on Mexican bank accounts but who have not ever filed the appropriate IRS forms?

The reason for the question is to learn whether or not there is any real connection between what actually transpires in the real world versus scare tactics by tax accountants.

Even if there are the above-mentioned IRS filing requirements, but, if there is no actual tangible communication and/or disclosure by the Mexican governnment or its agencies to the IRS of US taxpayers involved with fideicomisos, signers on Mexican bank accounts, or holders of Mexican corporations, then how are there any consequences to those who do not file those forms? I am talking about whether or not it is a realistic expectation to be discovered by the IRS. No discovery, no consequences.

I can see a POSSIBILITY of discovery if there are electronic funds transfers or US checks issued from US taxpayer bank accounts (in the USA) to Mexican recepients/financial institutions and vice versa. But, OTHER THAN VISIBLE TRANSACTION INVOLVING USA SOURCES, simply owning real estate via a fido or being a signer on a Mexican bank account or owning a Mexican corporation wherein no monies ever flowed into or out of US financial sources or institutions to/from Mexican banks/institutions, all would probably forever go unnoticed unless the US taxpayer unwittingly and/or inadvertently disclosed it himself (or someone else expressly disclosed it).

For example, in California, if you are domiciled in California and you buy something from another state and receive it in California, you owe sales tax on it to California (i.e., internet purchases). However, thousands of those transactions transpire every minute of every day and no sales taxes are remitted by either the out of state seller nor the California buyer. Such tax evasion goes by uneventfully all the time. The problem is DISCOVERY!

Now, there will be those fear mongers that talk about the world will end if you are ever discovered, but the reality is what is the probability of discovery? Every time you drive on a two lane highway with only a painted line separating the opposing traffice, you avoid a head on collision with every oncoming car, but you still drive on the street because the probability is so low that there will be a collision. We all know that planes crash and people die, but we fly all the time. It's because of the low probability of an accident actually occurring.

I refer to my original question stated above which boils down to this..."What's the probability of discovery if you never transact money across the border and you never file any IRS disclosure forms?"

arrowhead - 8-15-2009 at 08:24 PM

Quote:

Originally posted by MitchMan
I refer to my original question stated above which boils down to this..."What's the probability of discovery if you never transact money across the border and you never file any IRS disclosure forms?"

Simple enough to answer, if you would tell me what the probability is that Mexico would send a data file to the IRS with the names of every beneficiary of a fideicomiso registered with the Foreign Ministry. I would say over the long run, the probability approaches 100%.

MitchMan - 8-15-2009 at 10:45 PM

Arrowhead, , if I would tell you what the probability is that Mexico would send a data file to the IRS with the names of every beneficiary of a fideicomiso registered with the Foreign Ministry, that would be answering my own question. Arrowhead that is my question, restated in another way.

Why would you say over the long run, the probability approaches 100%. Define "long run". Also, why would you say 100% and not 90% or 10%? I mean, based on what specifically?

I don't intend to come across argumentatively. If you know something specifically and objectively, please share it with us as that would be extremely value info. Personally, I have my "hunches" as well, but they don't really translate to fact.

As in my references above to oncoming traffic, air travel, etc., tangible accurate statistics exist and human behavior takes these stats into account and feel the pro bability of danger is so remote as to discount it completely and people continue to fly and drive on two lane highways.

The other question still remains, does anyone know of anyone who was discovered to have a fido or be a signer on a Mexican bank account or own a Mexican Corp and did not file the requisite IRS annual disclosure forms?

MitchMan - 8-15-2009 at 10:46 PM

Arrowhead, , if I would tell you what the probability is that Mexico would send a data file to the IRS with the names of every beneficiary of a fideicomiso registered with the Foreign Ministry, that would be answering my own question. Arrowhead that is my question, restated in another way.

Why would you say over the long run, the probability approaches 100%. Define "long run". Also, why would you say 100% and not 90% or 10%? I mean, based on what specifically?

I don't intend to come across argumentatively. If you know something specifically and objectively, please share it with us as that would be extremely value info. Personally, I have my "hunches" as well, but they don't really translate to fact.

As in my references above to oncoming traffic, air travel, etc., tangible accurate statistics exist and human behavior takes these stats into account and feel the pro bability of danger is so remote as to discount it completely and people continue to fly and drive on two lane highways.

The other question still remains, does anyone know of anyone who was discovered to have a fido or be a signer on a Mexican bank account or own a Mexican Corp and did not file the requisite IRS annual disclosure forms?

arrowhead - 8-15-2009 at 11:28 PM

Here's the US-Mexico Tax Treaty. Read Article 27 on information sharing. All the IRS has to do is ask Mexico for the names on the fideicomisos and Mexico is obligated by treaty to report it.

http://www.irs.gov/pub/irs-trty/mexico.pdf

tick...tick...tick...

toneart - 8-16-2009 at 12:18 PM

Arrowhead,

This treaty concerns taxes on income. It also provides for the exchange of information as it pertains to income. This treaty has been in existence since 1992 and I don’t know anybody who has filed a form 3520 or 3520-A or has heard from the IRS regarding their 2nd home residence in Mexico.

This exchange could be accelerated due to the sudden negotiations with Switzerland and new attempts to obtain records of all other hidden offshore investments. So, even if Mexico should exchange information about holders of Fideicomisos, as long as we aren’t renting out our houses, why would the IRS care?

We pay property taxes to the municipal government in Mexico. If the IRS should be concerned, then I would start writing off losses incurred in two floods, without compensation, being situated in the flood zone of The Mulege River. That would seem to be a wash (pardon the pun).

If we should sell out houses and incur a Capital Gain, then we would pay that to the Mexican Government. My understanding is that there would be no double taxation under this treaty. By the way, under current and foreseeable market conditions, I doubt seriously whether there would be a Capital gain.

“THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF
AMERICA AND THE GOVERNMENT OF THE UNITES MEXICAN STATES FOR THE
AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME, TOGETHER WITH A RELATED PROTOCOL,
SIGNED AT WASHINGTON ON SEPTEMBER 18, 1992”

Lastly, we have nothing to hide by owning a house in Mexico in a Fideicomiso. For one thing, the Fido only covers the stated value of the land portion. It does not wrap the value of the structure. I would think that if we were cited for not filing the forms 3520/3520-A, the IRS would not exercise the application of a fine as long as we can prove the ownership of the house is for owner occupancy only. Again, we are not evading any taxes! (Of course, they could do anything they want, but it is my opinion that they wouldn’t. I think it is worth the chance to not involve the IRS).

slimshady - 8-16-2009 at 09:37 PM

Its appears from the above references that one should report the sale to the IRS should they wish to bring funds from the sale of a mexican property. The paying of taxes in either the U.S. or Mexico applies to the treaty. As should be expected you should pay your taxes on such a sale.

Now reporting something to the IRS that produces no income and is purely a holding mechanism for mexican property in the restricted zone, is ridiculous.

The IRS is concerned about income and not reporting it. If you rent or sell your property they may be interested in taxing you.

Simply don't list the asset as a deduction and don't bring the money in and you should be fine.

One of the above posters said you should get an EIN number for your trust and file a form ss44, and then use the number on your 3520 form. Seems like a alot of work for something that is questionable.

MitchMan - 8-17-2009 at 02:32 PM

A couple of things that we are all missing the point on. You have to be DISCOVERED by the IRS for non-filing, that is, the IRS has to know about your non-filing before they impose a penalty on you, right?

There are two considerations here. It has already been established that if you have a Fido, are a signer on a Mexican bank account, or are a managing owner (usually the majority shareholder) of a Mexican corporation, you are required by the IRS to file certain IRS forms for each of those items disclosing such, probably every year. That these are IRS requirements are not in question here. The other item not in question is that there is a treaty that provides for sharing information between USA and Mexico.

The question is whether or not information is actually shared leading to actual knowledge by the IRS of persons holding Fidos, signing on Mexican bank accounts or owning a Mexican corporation.

If no one has ever heard of anyone getting in trouble for simply non-filing, that could be a reliable indication that info between the countries is not being shared. The treaty has been around since 1992!

Above posts reflect one person saying that they have never heard of the IRS discovering or imposing a fine on anyone for non-filing of the discloser pertaining to a Fido. That could be a reliable indication that info exchange has not and is not being exchanged. It would appear that US taxpayer/Fido holders/non-filers will not encounter fines upon discovery so long as they themselves don't inadvertently disclose it to the IRS and do not transfer money across the border using either countries' financial institutions. An extension of this could hold true for those that are signers on Mexican bank accounts and/or own Mexican Corporations.

Again, has anyone ever heard of anyone ever getting in trouble FOR NOT FILING the IRS disclosure forms regarding 1)owning a Fideicomiso, 2)being a signer on a Mexican checking account or 3)being an owner of a Mexican corporation WHEREIN the US citizen has not sold property subject to the Fido not transfered funds to/from Mexico using either countries' financial institutions and not inadvertently disclosed it to the IRS themselves?

In other words, is there any real possibility of getting in trouble with the IRS for non-filing of disclosure forms in any of the three instances above so long as you do not transfer money between either country's financial institutions nor sell a fido property or disclose it yourself inadvertently? The proof of the pudding is whether or not anyone has ever heard of anyone getting in trouble in spite of the preceding conditions?

BTW, there could be (I don't know myself in this instance) a separately enforceable penalty for simply not filing a disclosure form whether or not there is ever a taxable transaction.

[Edited on 8-17-2009 by MitchMan]

k-rico - 8-18-2009 at 08:20 AM

Mitchman, I get a chuckle out of your reasoning. The criminal mind, you have to be caught to be penalized. But I get you, not following IRS rules is more of a tradition than a crime, right.....................?

Here's a real world scenario, let's say my tired uninsured body gets real sick and the doctors force me into bankruptacy.

Will telling the IRS about my foreign trust require me to liquidate it so the doctors can make their next yacht payment?

slimshady - 8-18-2009 at 08:38 AM

It's not about being of the criminal mind or not. Its about reporting to the taxing authority information about an entity that they really don't understand or care to understand. The IRS is clearly interested in taxing you and separating you from your money.

We all love baja for its various reasons. I particularly like the somewhat unorgainized way things run and the remoteness. If I wanted something else I would hangout here in the O.C. and live like sheep.

Will I report my everyday situations to the feds "just because" and the answer is "No!". Will I pay taxes to the Mexican tax authority when I sell and the answer is "yes".

So until any of that happens I will do nothing.

Also is getting South Dakota plates illegal too? Should we report ourselves too? I think not.

MitchMan - 8-18-2009 at 09:38 AM

K-rico, got a flash for you. Did you know that there are major US companies, right now, that commit the illegal act of tax evasion, all the time, every day, every minute? They go out of their way to deliberately stay under the radar and do not report the truth. In the world economy and locally here in the USA it is known as "prudent business practice".

There are many huge successful long standing companies that openly keep funds in reserves in the magnitute of millions of dollars in what is known as the "cushion" to absorb a hit in taxes when they are discovered by taxing authorities. Keeping the reserve and paying on the occasional discovery is much, much cheaper than being 100% honest and disclosing/paying all that is legally due. If any company did that, they couldn't afford to be competitive with all the competition that maintain the "cushion" instead. Keep in mind that the corporate tax rate takes a substantial portion of profits.

If you, as an American citizen, feel that 100% disclosure "because it's the Law" is the only moral way to be, then you would never have a place in wall street, you couldn't be a politician, you couldn't run a big company like General Motors, or AIG, work for the FBI or CIA, or have much of a chance at being rich and maintaining your equity. In short, you would be ruinously naive and would be the endless subject of exploitation and at a great, great disadvantage in a capitalistic society. Secrecy, in our society, is insurance, just ask VP Cheney if you don't believe me.

Again, has anyone ever heard of a US taxpayer who is a Fido holder, and/or a Mexican checking account signer, and/or a Mexican corp owner ever being discovered by the IRS for non-filing of the IRS disclosure forms wherein the taxpayer did not inadvertently disclose it him/herself and where no monies were transfered between Mexican and USA financial institutions?

k-rico - 8-18-2009 at 11:20 AM

ok, ok, ok mitchman you've switched from it's OK if you don't get caught to everyone else does so it's OK. whatever....

What about my real world scenario?

[Edited on 8-18-2009 by k-rico]

DENNIS - 8-18-2009 at 11:46 AM

Quote:

Originally posted by slimshady
Also is getting South Dakota plates illegal too? Should we report ourselves too? I think not.

I hope not. Can't see why it would be. Insurance while driving in the states should be the issue.

slimshady - 8-18-2009 at 12:38 PM

If you register CA plated car in South Dakota even though the car has never been there and you probably haven't either, with the sole intent of not paying the high CA registration fees, smog checks, and mandatory insurance, then you are committing a crime. Should one report it to the South Dakota authorties? I think not. Loopholes exist and smart people figure things out. Sheep just follow and get slaughtered.

Same with the FIDO. If one is to clearly involve the government in their personal as well as business financal situations, they must be idiots. You will only open yourself to audits and more scrutiny as well as a cluster in obtaining various tax and bank statements, receipts, FIDOs, EIN number, SS-4m 3520 form, both Mexican and USA accounting service charges, time and money for the sake of giving the feds info on something they know nothing about.
Its a simple matter of privacy and personal financial discretion. The least they know the better off you are.

MitchMan - 8-18-2009 at 01:06 PM

Slimshady,
Your response is the most rational, realistic, experiencial, and sanist response to this thread. I can tell that your experience with both Mexican and USA administration has been the same as mine.

I thank the gods for people like Slimshady and many others that contribute to this forum.

DENNIS - 8-18-2009 at 01:31 PM

Quote:

Originally posted by slimshady
If you register CA plated car in South Dakota even though the car has never been there and you probably haven't either, with the sole intent of not paying the high CA registration fees, smog checks, and mandatory insurance, then you are committing a crime.

What do you mean.. crime. What crime? I mentioned having insurance. If my Ca. license is alive and well, the car is currently registered in SD, and I'm insured to be on the USA roads, what's the crime? Is it a crime to repell from exorbitant taxes? What crime are you referring to?

DENNIS - 8-18-2009 at 01:34 PM

Quote:

Originally posted by slimshady
with the sole intent

Gawwwdallmity....I can't get over this. Who's going to be the judge of my sole intent? Arnold? Who?

BajaGringo - 8-18-2009 at 01:35 PM

Quote:

Originally posted by DENNIS
What crime are you referring to?

It's those evil thoughts Dennis...

:lol:

DENNIS - 8-18-2009 at 01:41 PM

Quote:

Originally posted by BajaGringo
It's those evil thoughts Dennis...

They're taxing those too. Why am I not surprised. They tax the demons and they tax the meds that deal with them. This is Karl Marx's finest hour.

BajaGringo - 8-18-2009 at 01:46 PM

Quote:

Originally posted by DENNIS

Quote:

Originally posted by BajaGringo
It's those evil thoughts Dennis...

They're taxing those too. Why am I not surprised. They tax the demons and they tax the meds that deal with them. This is Karl Marx's finest hour.

Personally I think Orwell had it right, except he was just 25 years ahead of his time...

slimshady - 8-18-2009 at 03:01 PM

Don't take it personally about the registration thing. I have done the same and really don't care about what the out of control State of Califonia thinks. Same with the FIDO, less info the better. Loopholes exist and we will take care of them.

BajaGringo - 8-18-2009 at 03:04 PM

Quote:

Originally posted by slimshady
Loopholes exist and we will take care of them.

Do you mean take "advantage" of them???

:?:

oldlady - 8-18-2009 at 03:18 PM

I can't imagine any of you not following the spirit and intent of the law.
But given the complexity of the tax codes and the difficulties of their interpretations I am also sure that you would not do anything on a universally accessible forum that could be interpreted as confession to a sin of omission.

slimshady - 8-18-2009 at 03:29 PM

Advantage, thanks. Since the tax code is vague on the subject, and that's how they (the feds) like it. They will never really give you a straight answer. So why comply on something that is vague.

k-rico - 8-19-2009 at 02:56 PM

I'm getting ready to prepare (or have prepared) Form 3520.

Here are some pertinent links. I have not found a single opinion by any CPA / tax attorney / specialist that says that Fideicomiso beneficiaries do not need to file form 3520. Every opinion I've read by tax specialists says that it should be filed.

This is probably the truth of the matter:

"Amy Jetel, who works with high-net-worth clients discuss the fact that she has to decide how to advise her clients on how the fideicomiso should be taxed and reported under U.S. tax law. The Internal Revenue Service’s representatives with whom her firm has spoken acknowledge that fideicomisos are not the types of tax-avoidance structures that are targeted for U.S. reporting requirements for foreign trusts. Nonetheless, because IRS agents also admit that the service has no idea what a fideicomiso really is, they recommend that foreign-trust reporting be done, just to be safe."

Has anybody here plowed their way this 6 page form with 12 pages of instructions?

I've spoken to one tax attorney so far that wants $7,000 to $10,000 to file the form. Yikes! I'm shocked.

Good info on the 23 Sep deadline - http://foreignbankaccountamnesty.com/

http://fideicomiso.wordpress.com/2009/08/16/it%e2%80%99s-dar...

http://us-mexicantax.blogspot.com/2009/02/us-tax-return-fili...

http://www.mexicorealestateinvestment.org/the-irs-wants-to-k...

http://www.emeraldcoastinvest.com/Investment/OverseasInvesti...

http://subscribers.trustsandestates.com/plus/international_l...

k-rico - 8-19-2009 at 05:17 PM

Quote:

Originally posted by morgaine7

Quote:

Originally posted by k-rico
Every opinion I've read by tax specialists says that it should be filed.
[...]
I've spoken to one tax attorney so far that wants $7,000 to $10,000 to file the form. Yikes! I'm shocked.

OK, I've been bursting to say this, and now I gotta. Has it occurred to anyone else that these professionals who are dead certain that the labyrinthine trust reporting requirements apply to us ... and who are blasting the message all over the internet, kindhearted souls that they are .... stand to profit bigtime from scaring the bejesus out of us?

I'm not saying they're wrong (how would I know?), and I'm plowing through the forms, too. But so far I've yet to find a single one of these public-spirited souls giving us a clue about how to fill the damned things out.

Kate

You're absolutely right, especially this John Dillinger, CPA guy. He's all over the Inet offering his services.

Isn't he an FBI most wanted dude?

http://fideicomiso.wordpress.com/2009/08/16/it%e2%80%99s-dar...

LB - 8-21-2009 at 07:28 PM

After reading all the information here and after having a fidi for 10 years and
another fidi for a lot for 3, we visited with our long time CPA. We printed some
info off this site and they researched and this is the advise.

Best to File, maybe a 10 percent chance you get caught but the fines are huge.
He felt this was a CP's dream....mucho dollars to file the forms!!! He felt that it was a way for the IRS to catch the properties sold and trace if it was not reported to IRS. Remember Switzerland.

We need a corp number but as a corp. we already have that.

He need the fidis, thank God, we have copies of both here and in BAJA, or
we would not be able to meet the Sept deadline. ( Baja House is boarded up
impossible to enter)
As for cost. The first year would be $200.00 and each year after would
be "minimal"

So we are going for it. No taxes to pay, just CPA fees, we have been with
this CPA for 26 years.

Just my 2 cents

arrowhead - 8-21-2009 at 10:02 PM

Yeah, well to bring everybody back down to earth, here is an article is today's Tribune De Los Cabos:

http://www.tribunadeloscabos.com.mx/newpage/index.cfm?op=por...

It' too long to translate, but basically this local businessman is complaining that millions of dollars are being made by Americans who rent out their Baja homes like hotels. They are complete packages that include the house, a car, a panga and prepaid meals. His complaint is that all of the money is paid to the owners in the US, so Mexico doesn't get anything. He wants something done about it.

Of course, I didn't see where he complained about the 7-8 million Mexican's working illegally in the US who send home billions of dollars each year, without paying much in US taxes and using all the taxpayer provided public services.

bajalou - 8-22-2009 at 08:00 AM

Quote:

Originally posted by arrowhead
Of course, I didn't see where he complained about the 7-8 million Mexican's working illegally in the US who send home billions of dollars each year, without paying much in US taxes and using all the taxpayer provided public services.

Why didn't their employers in the USA deduct the taxes and SS from their pay as the USA law requires?

k-rico - 8-22-2009 at 08:07 AM

I've been told by a CPA that the Sep 23rd deadline is amnesty from criminal prosecution. If you have unreported income from the fidei, like rental income, you still need to pay the tax, pay the interest on the tax, and pay the penalty. If you have no income, the penalty for not filing the forms will be waived because you have reasonalbe cause (you didn't know you needed to file the forms). The not knowing reasonable cause waiver ends, or will be alot tougher to pull off, after the 23rd.

I have four years of returns that need to be amended. I have no fidei income so there will not be any tax liability or penalties. I found a CPA that will do it for $750.

I also called the IRS and after being transferred to the appropriate department that specializes in foreign trusts, I explained my situation and asked if I need to file Form 3520. I was told my question is "out of scope" and was advised to write to the IRS at the address in the 3520 instructions and include in the letter the Form 3520 completed to the best of my ability. That would get the process started before the deadline and therefore get me under the wire. I've decided not to do that.

The Gull - 8-22-2009 at 09:33 AM

Morgaine,

Very clear analysis. Thank you.

MitchMan - 8-22-2009 at 10:15 AM

Again, has anyone ever heard of anyone ever getting in trouble FOR NOT FILING the IRS disclosure forms regarding 1)owning a Fideicomiso, 2)being a signer on a Mexican checking account or 3)being an owner of a Mexican corporation WHEREIN the US citizen has not sold property subject to the Fido not transfered funds to/from Mexico using either countries' financial institutions and not inadvertently disclosed it to the IRS themselves?

This will be the fourth time that I have asked the question. So far , no one has answered. Could this mean that no one reading this forum has ever heard of any one being discovered by the IRS under the conditions that I mentioned?

Makes me wonder if info is ACTUALLY shared between the countries pursuant to the 1992 treaty. 1992! That's a long time ago. There are thousands of US Fido holders. No one discovered as far as anyone knows on this forum? Hmmmm. What do you think that means?

k-rico - 8-22-2009 at 10:22 AM

No I've never heard of anybody getting in trouble.

But I've never seen a black swan either.

Perhaps nobody has answered your question because it is irrelevant.

arrowhead - 8-22-2009 at 01:33 PM

Quote:

Originally posted by k-rico
I have four years of returns that need to be amended. I have no fidei income so there will not be any tax liability or penalties.

Oh yeah? What about that apartment in TJ you have been advertising for rent here?

***busted***

Yet another Nomad who doesn't know when to STFU.

toneart - 8-22-2009 at 02:57 PM

I had been leaning against filing the IRS form 3520-A. My Fideicomiso covers my 2nd home and I have never rented it out. No income has been derived from owning it. The Fido is for the land portion only. It has a stated value of $20K. I calculated the maximum possible fine and weighed it against the cost and risk of filing it and decided that:

1. The IRS is not interested in declaration because it is irrelevant to their main purpose; to collect hidden income from income producing properties or bank accounts or off shore investments.

2. Even though the blanket treaty agreement technically includes Fideicomisos (Not even sure about that. That is what some have stated on this string), the IRS wouldn't be interested.

3. If and when I sell the property, and if there is a Capital Gain, then I would report it to IRS. That would reflect Capital Gains I will have paid to the Mexican Government. They would be happy with that.

These are my own opinions and each person should be responsible and make their own decisions, depending on their own calculations, opinions and type of investment they own.

Now, after I had made these calculations I asked my CPA. Her advice:
The prudent thing to do is to file. But she suggested an easy way to do it; She gave me the form 3520-A with only my name and address filled in at the top. I would have to sign and date it at the end of the form. Attach a short statement saying, "This is a 2nd home for personal use only. It is never rented and it earns no income."

I really grilled her on this. I asked, "wouldn't I need to give the Fido number, which bank and also the address of the property?" She answered, "No, the shorter the better. It is standard procedure and I have many clients who do this. If the IRS is really interested, they will ask for more, but they probably won't."

I have never been audited but if any of her clients are audited, she will appear in their defense.

So, I will take her advice and send it in. By the way, it shouldn't be filed with your yearly income tax statement. It should be filed in a separate envelope. The IRS address where it is to go is in the instructions portion of the form.

Again, I am just passing this information on as to what I will do. You will have to make your own decisions. I will report here if there are ever any adverse results from my action.

Bob and Susan - 8-22-2009 at 03:34 PM

i think tony is correct

until you actually make money on your fido the irs doesnt really care
to know

now...when you sell...thats another ballgame

blacksswan.jpg - 28kB

k-rico - 8-22-2009 at 03:55 PM

Quote:

Originally posted by arrowhead
Oh yeah?...............

Yeah. The condo is owned by a Mexican. No fidei.

[Edited on 8-22-2009 by k-rico]

don't ask unless you know the answer

wessongroup - 8-23-2009 at 08:41 AM

Quote:

Originally posted by k-rico
No I've never heard of anybody getting in trouble.

But I've never seen a black swan either.

Perhaps nobody has answered your question because it is irrelevant.

Thanks much for your thoughtfull and systematic insight into the "issue".

Very logical and shows wisdom based on reality.

aldosalato - 8-24-2009 at 09:50 PM

Just spoke today to a La Paz executive of a major bank. He has been in charge of Fideicomisos for past 15 years. Out of 700+ fidei he holds in the name of the bank his understanding is that probably only 1-2% of people are filing since he only received till now one request to be signed in the name of the bank.
Now question is what is going to happen to the 98% of people that is not going to file form 3520.

LB - 8-25-2009 at 09:04 AM

Quote:
_____________________________________________________________________
Just spoke today to a La Paz executive of a major bank. He has been in charge of Fideicomisos for past 15 years. Out of 700+ fidei he holds in the name of the bank his understanding is that probably only 1-2% of people are filing since he only received till now one request to be signed in the name of the bank.
Now question is what is going to happen to the 98% of people that is not going to file form 3520.
______________________________________________________________ :light:

I just looked at the 3520 and 3520-A forms and yes the forms ask for the
"trustee" signature. Hmmmmm. As we were getting set to take the fideis
to our CPA, we now will have to ask how he is going to get the Mexican banks to sign the forms. The IRS wants the fideis in English. Our CPA said he who knows someone who will translate them; however I don't think they no how thick these things are :lol:

More and more questions.

As for sending in form 3520-A with only name and address; that sounded
good but brought up more questions :?:

What about form 3520 that goes along with form 3520-A. Also with no SS# where will these papers end up
at? How will they get into your file to show you sent them something?

Just more questions? Sure glad there is a few weeks left to sift thru this.
Now I read there is a amnesty program for people who do not report
business income, rent income, bank accounts ect. This was posted on another site by a CPA of course.

:?:

LaRibereña - 8-25-2009 at 10:47 AM

We followed toneart's CPA suggestions. I downloaded the form, filled out the first page with our names, SS#, signatures, and appended a signed letter noting that the trust is a fideicomiso for our 2nd home which is for personal use, and never rented. Wish us luck.

slimshady - 8-25-2009 at 02:23 PM

The link from a morgaine seems the best reference on the subject.

http://www.sjbt.com/repository/pub-res/What's a fideicomiso.pdf

Only file if you have a taxable event such as a sale or rental income.

LB - 8-25-2009 at 03:21 PM

Thank you slim lady!!!!!!!!!!! :bounce:

I wish I had
read morgaines link days ago. It is nice to read an article that is written
by an International lawyer!!..

We will not be filing. :bounce:

slimshady - 8-25-2009 at 03:33 PM

Me neither. If I sell and wish to bring the money back here to the states then it would be wise to file something. But I am neither moving income or profit from any entities to qualify as a taxable event.

wessongroup - 8-26-2009 at 08:42 AM

Not sure if this information is true and correct, as the author states he has done his best on translation.

"Conclusion, for a foreigner who has been smart enough to hold an FM-3 during the past five years or more there is a light at the end of the tunnel, he can apply for his Mexican nationality, ask the bank to convert the FTD contract to an “escritura” thus acquiring Real Rights on the property which will enable him to claim the capital gain exemption at the time of the sale."

http://www.bajainsider.com/baja-real-estate/capitalgainsmexi...

[Edited on 8-26-2009 by wessongroup]

[Edited on 8-26-2009 by wessongroup]

bajagrouper - 8-26-2009 at 08:55 PM

I believe your are correct about his translation in your post wessongroup, I would bet that there is a typo in the article, just one letter or number...

I know there are folks on this board who refuse to believe that one must have an FM3 to buy real estate in the restricted zone and you can not do this with an FMT but here is another source, this is what Mexexperence has to say on the subject:

Tourist Permits
The Mexican Tourist permit is known at the "FMT" (see above); it is very simple to fill out, and available from airlines and ports of entry.

This permit allows visitors to remain in Mexico for a maximum period of 180 days*. If the officer at the port of entry does not assign 180 days leave of stay at your point of entry, this permit can be extended to the maximum permitted stay if the original term granted (written on the form at the port of entry) was less than 180 days, by visiting one of the local immigration offices in Mexico, completing the paperwork and paying the administration fee.

You can use a FMT permit to enter Mexico for leisure and also if you plan to scout for and/or invest in Mexican real estate. When you are closing a real estate deal, you will need to show evidence to the Notary Public that your stay in Mexico is legal and a FMT is a valid document for this purpose.

http://www.mexperience.com/

[Edited on 8-27-2009 by bajagrouper]

arrowhead - 8-26-2009 at 10:18 PM

Quote:

Originally posted by bajagrouper
I know there are folks on this board who refuse to believe that one must have an FM3 to buy real estate in the restricted zone and you can not do this with an FMT but here is another source...

Here is a link to a webpage from the Mexican Consulate in San Diego with their requirements to issue a FM3:

http://consulmexsd.org/doc/non-mexican/fm3.htm

Quote:

6. YOU MUST ALSO PRESENT A COPY OF YOUR FIDEICOMISO ( PROPERTY ) OR RENTAL AGREEMENT FROM MEXICO

Note that their requirements are that an applicant have a fidecomiso or rental agreement before applying for the FM3. Most people would conclude from that that Mexico will issue a fideicomiso without having an FM3.

Bienvenido a Mexico, donde todo es confundido.

bajaguy - 8-26-2009 at 10:31 PM

We had neither when we applied for our FM-3's at the Consulate in San Diego.......we used our signed purchase agreement/contract which showed an address, and that was done on an FMT.

We had to show the FMT at time of FM-3 application and they took the FMT when they issued the FM-3 booklet at the Consulate.......

However our FM-3 application was done on a Thursday....who knows what the requirements are on a Monday............

[Edited on 8-27-2009 by bajaguy]

k-rico - 8-27-2009 at 05:32 AM

The plot thickens. I posted that I needed a FM-3 to establish a fideicomiso. The developer I bought the property from, the notario, my lawyer, and the Scotia bank rep all said so. So I got one in San Diego, no problem.

A friend of mine recently bought a house in the same development, all the same people involved except he didn't hire a lawyer. He was told a FM-T is sufficent.

??????

Maybe if the market gets worse, all you'll need is to be able to fog a mirror with your breath.

[Edited on 8-27-2009 by k-rico]

slimshady - 8-27-2009 at 08:00 PM

I first bought my property, then with the FIDO I obtained my FM3. You don't need an FM3 to buy anything. Buying a property has nothing to do with ones immigration status. Money talks.

Ignorance will always be bliss

The Gull - 8-28-2009 at 03:30 AM

I have bought homes and raw land for 25 years using a fido and all one needs is the FM-T. Good night.

Bliss

wessongroup - 8-29-2009 at 07:54 AM

Quote:

Originally posted by The Gull
I have bought homes and raw land for 25 years using a fido and all one needs is the FM-T. Good night.

Also, "if it ain't broke, don't fix it"... comes to mind..

rochellemegan - 11-8-2009 at 10:34 PM

I can't imagine any of you not following the spirit and intent of the law.
But given the complexity of the tax codes and the difficulties of their interpretations I am also sure that you would not do anything on a universally accessible forum that could be interpreted as confession to a sin of omission.

regards,
rochelle
Simulation prêt

Forms 3520-A

k-rico - 3-12-2010 at 03:55 PM

are due Monday. Just completed mine.

Beware of the Ides of March.