BajaNomad

New Real Estate Laws in Mexico

Mulegena - 8-7-2014 at 02:17 PM

From online source Banderas News.
This report comes from the mainland and may apply nationally.
We'll see how this bears out here in Baja and Baja Sur.

"Puerto Vallarta, Mexico - On July 4, 2014,
the Secretary of Hacienda and Public Credit, the Mexican version of the IRS or Revenue Canada, issued a miscellaneous fiscal resolution that as of September 1, 2014 will affect all buyer and sellers of real estate in Mexico, regardless of their nationality.

... the tax authority has made the determination that in order for the costs involved in real estate transaction that is taking place be tax-deductible in the future for the party that is purchasing the real estate, the purchaser must provide, at closing, proof of a CURP (Clave Unica de Registro de Poblaci�n, similar to a Social Security Number of Social Insurance Number) and a RFC (Registro Federal de Contribuyentes or Taxpayer ID Number).

Furthermore, since it is the notary public that will issue the tax-deductible electronic receipt (CFDI or Comprobante Fiscal Digital a trav�s de Internet), the current criteria of the local notaries here ["here" being Puerta Vallarta, I asume] so far is to insist on having both buyer AND seller show proof of the CURP and RFC in order to fully complete the receipt or CFDI.

... what does it mean for you? In a nutshell, if you are buying or selling real estate after September 1, 2014, you will need to have both the CURP and the RFC.

If you happen to be a foreign national, you will need to have either a permanent or temporary residency card as well, as right now it is a precursor to obtaining the CURP. (In practice those with a tourist visa are not being allowed to request a CURP).

Those who do not have the residency permit must apply for the card at the nearest Mexican Consulate in the country of your origin and it should not take more than a few days. The card that you are issued should show the CURP. Once you have your CURP, you can apply for your RFC online. I would strongly recommend having a local accountant help you in order to make sure that the information you are providing is correct. He/she can walk you through the process and coordinate the appointment to finalize the procedure.

Although these procedures can be done online, you will eventually have to be present in Puerto Vallarta to register your residency permit with the local immigration office and to pick up the proof of your RFC at the local office of the tax authority (SAT) so when planning your closing dates I would also allow for time to have these things completed...

This new regulation just passed a couple of weeks ago and as with any new law, we expect that there could be changes as it is gradually implemented. The reasoning behind this is to ensure fiscal transparency in all purchase sale operations for everyone - both national and foreigner alike. I will keep you informed of any subsequent modifications in these regulations...

About the author:
O'Connor is the In-House Legal Council for Tropicasa Realty. As an attorney specializing in real estate transactions, Mar�a has been at the forefront of the Puerto Vallarta legal community for many years, providing an important service for foreign and Mexican real estate clients alike. Contact her at maria(at)tropicasa.com"

[Edited on 8-8-2014 by Mulegena]

[Edited on 8-8-2014 by Mulegena]

chippy - 8-7-2014 at 07:21 PM

Glad I�m a Mexican citizen.

bajajudy - 8-7-2014 at 07:27 PM

September 1, 2014 will affect all buyer and sellers of real estate in Mexico, regardless of their nationality
Quote:
Originally posted by chippy
Glad I�m a Mexican citizen.

redmesa - 8-7-2014 at 09:22 PM

This is going shake things up. Oh, mexico...first they were going make buying and selling easier but forget that idea, instead lets make it harder. Who can keep up?

Bajaboy - 8-7-2014 at 09:27 PM

Basically this will devalue real estate in Mexico by reducing liquidity. I never really understood the opposition to the prior movement to allow foreign investment in coastal areas.

Cliffy - 8-7-2014 at 11:12 PM

Are they talking land or condos? If condos WHOA NELLIE! this will be fun to watch.

mtgoat666 - 8-8-2014 at 12:10 AM

Quote:
Originally posted by redmesa
This is going shake things up. Oh, mexico...first they were going make buying and selling easier but forget that idea, instead lets make it harder. Who can keep up?


Always look on the bright side of life!

If they can modernize the tax recording system for RE transactions, perhaps they can then modernize the recording system for property titles. Title insecurity is biggest problem in Baja RE.

Anywho, relative to the time/complexity involved in a RE transaction, is it really much extra effort for foreign buyer to get a visa and tax ID number?

SFandH - 8-8-2014 at 07:09 AM

The original post said:

"the tax authority has made the determination that in order for the costs involved in real estate transaction that is taking place be tax-deductible in the future for the party that is purchasing the real estate, the purchaser must provide, at closing,.........."

specifically: "tax-deductible in the future ....."

is this about tax considerations when you sell?

redmesa - 8-8-2014 at 07:25 AM

Quote:
Originally posted by mtgoat666
Quote:
Originally posted by redmesa
This is going shake things up. Oh, mexico...first they were going make buying and selling easier but forget that idea, instead lets make it harder. Who can keep up?


Always look on the bright side of life!

If they can modernize the tax recording system for RE transactions, perhaps they can then modernize the recording system for property titles. Title insecurity is biggest problem in Baja RE.
Anywho, relative to the time/complexity involved in a RE transaction, is it really much extra effort for foreign buyer to get a visa and tax ID number?


Tourist Visas do not have CURP #s so for those folks it could be an added cost and 6 months time maybe. Just saying. I agree title security is important.


[Edited on 8-8-2014 by redmesa]

ncampion - 8-8-2014 at 08:08 AM

Wonder how this will affect timeshare sales. They are "fractional" ownership and seems like it would have the same requirements. That would really put a damper on those sales. As was said earlier, the Mexican government just seems intent on making it harder and harder for foreigners to invest/live here.
Oh well...........

DianaT - 8-8-2014 at 08:34 AM

Quote:
Originally posted by Bajaboy
Basically this will devalue real estate in Mexico by reducing liquidity. I never really understood the opposition to the prior movement to allow foreign investment in coastal areas.


It is a pride issue with solid roots in their history, especially with the United States. Before the law was past that stopped the outright ownership, huge amounts of land was owned by people in the US --- shoot, I forget the number, but Hearst alone owned a vast part of Northern Mexico. In some ways, it was like how the US oil companies exploited the Mexican oil reserves, until that was stopped. The feeling of being dominated by the colossus of the north has not gone away. I am sure you heard and saw that sentiment in BA as we did when that bill first past their house. Many felt it was just giving away their beaches!

Yes, on the surface it seems to not make a lot of sense because we can still use corporations and or a fideicomisso to "buy" coastal and border land. But we have seen beach front owners in BA and elsewhere who try to deny access to "their" beach to locals. We have seen entire gringo communities who try to stop access, or at least make it really difficult, and there is fear that more of that would happen.

It may not make total sense from an economic standpoint, but perhaps pride never does.

Meantime, this new tax law may make things more difficult. I still don't know how we got a CURP number. Once when we renewed our FM3, it came back with a CURP number and that was that. We never applied for it separately, but local immigration told us it was important and could not really tell us how we obtained it.

This new law appears to just add more confusion to the entire process, but will probably be clearer in the future, maybe.

danaeb - 8-8-2014 at 09:24 AM

I'm a bit suspicious of this claim. I'm in the middle of finalizing the purchase of a lot in BCS via fideicomiso, so I have great interest in confirming the veracity of this news. So far, I have not been able to find any link to an official Mexican government website that confirms this information. The Hacienda website (shcp.gob.mx) has a list of all it's press releases, and there is nothing there on this subject.

I would think that this month-old "news" would have been widely posted before now, and would not be limited to blog posts from realty companies selling property to gringos. I opened my fideicomiso after July 4th and the notario made no mention then, or since, of this requirement.

dasubergeek - 8-12-2014 at 09:42 AM

Your CURP is just an identification number that's built off of your personal data. It gets created the first time you need a federal identification number for anything, including a residency visa or a work permit. You can look them up online for anyone, it's not treated like a secret, like Social Security Numbers or Social Insurance Numbers.

It's an 18-character string.

1. First initial of your first (father's) last name.
2. First internal vowel of your first (father's) last name.
3. First initial of your second (mother's) last name.
4. First initial of your first given name.
5-6. Last two digits of the year of your birth.
7-8. Month of your birth.
9-10. Day of your birth.
11. Gender (H for men and M for women)
12-13. State code for place of birth (BC, DF, etc.)
14. First internal consonant of your first (father's) last name.
15. First internal consonant of your second (mother's) last name.
16. First internal consonant of your given name.
17. Sequential number in case of duplicates.
18. Checksum digit.

If you have an �, it gets changed to X.

For digits 12-13, if you were born outside Mexico your code is NE ("nacid@ en el extranjero")

So if your name is Enrique Pe�a Nieto and you were born on 20 July 1966 in Atlacomulco, Edomex., your CURP is something like PENE660720HMCXTN01, except that his is PXNE660720HMCXTN06. Not sure why his first vowel turned to X. You can look them up on the government's website.

[Edited on 8-12-2014 by dasubergeek]

Gaucho - 8-12-2014 at 10:26 AM

Actually, timeshares and fractional ownership are two entirely different things. Timeshares you don't own anything except your "time slot". With fractional you own a piece of real estate.
Quote:
Originally posted by ncampion
Wonder how this will affect timeshare sales. They are "fractional" ownership and seems like it would have the same requirements. That would really put a damper on those sales. As was said earlier, the Mexican government just seems intent on making it harder and harder for foreigners to invest/live here.
Oh well...........

BajaLuna - 8-13-2014 at 10:07 AM

Thanks for posting this info on this change in Mexico RE. Just another thing to complicate it all, ugh!


Yep, time-shares and fractional ownership are different!

rhintransit - 8-13-2014 at 10:19 AM

So...one needs a curl and a ric, what's so earth shatteringly different or difficult about that? What am I missing?

[Edited on 8-13-2014 by rhintransit]

Bob53 - 8-13-2014 at 10:51 AM

Welcome to the "new" Mexico.