Looking for advice/info on ISR, (Homeowner Primary House Tax Exemption) from sale.Russ - 7-28-2021 at 10:13 AM
I've not heard of that and I'm in the prosess of selling. Email Jose Morales he's my guy and is one of few licensed realtors he should have the info
or can research it.
jose@mulegerealty.com SFandH - 7-28-2021 at 10:40 AM
See the part of the following titled "Taxes on the sale of residential property in Mexico". The info is as of February 2021.
I did a look at that website. My Q. is: On that website they might have forgotten to mention that there are residents w/o any tax ID. i.e. folks older
than...? I know that Mexican residents older than ??? do not have to pay any taxes.
Anyboday around who knows the age limit for tax examption in Mexico?
And what about pensioneers? They do not have a tax ID. JC43 - 7-28-2021 at 08:21 PM
I've not heard of that and I'm in the prosess of selling. Email Jose Morales he's my guy and is one of few licensed realtors he should have the info
or can research it.
jose@mulegerealty.com
Russ, your advice is o.k. But if anything goes wrong with any advice a dirt pimp has given you, YOU as a seller are responsible for that mistake.
Isn`t it better to ask a CPA or Notary about any tax examption? If a notary is making a mistake, you can point your finger in him. Russ - 7-29-2021 at 07:52 AM
JC43, Good advise. Jose is using both and with both they are delaying progress. Jose has the experience for the complete package and is also an
official translator, soon to be licensed. The Notary has been a real pain and missed 4 appointments to complete a power of attorney. The CPA may be
the one to figure out the taxes on both sides but I trust Jose to review all documents.JC43 - 7-29-2021 at 08:56 AM
@Russ. Thanks for the info, Russ. Can you tell which Notary? It`s always good to know which one to avoid I do have bad experiance w/ a notary in
Santa Rosalia who was first only a lawyer. Then became a notary as well. Manuel Rodriguez Osuna. Left to the street paralell to the main drag driving
into S.R. Russ - 7-29-2021 at 09:19 AM
I think all Notarios started as lawyers and seems they are a political appointment. I don't remember the name of the one Jose is using but evidently
his staff were unable to complete the documents when promised. Or they was an issue with mordida. My issue was only getting the power of attorney
started. I'm in the States now and have had to have the document notarized and now sent to the sec. of State. After I get it back I'll send back to
Jose and back to the notary for the final approval and recorded. So much fun! Once the final payment is made we get to deal with the Fideocamiso And that will include figuring out all the taxes.
[Edited on 7-29-2021 by Russ]gnukid - 7-29-2021 at 09:22 AM
These rules can change anytime. Your Notario makes the decision. Speak to your Notario to ask if they will work with you to approve you prior to
agreeing to use them in the sale. If they will not approve you go somewhere else.
I have done this successfully, and helped others, do your homework and build your case with evidence. In my case, at the last minute, they said I
needed to have a new home in mexico I was moving to and have evidence, CFE and/or declaration of residential address, it can be any address, but you
need to have an address. If you have SAT RFC Persona Fisica you can create a declaration of direccion de residencia, in person or online, the Notario
is the one who agrees with approval from their accountant... helps to have online access to SAT, CFE, SAPA, bills in your name, RFC, old and new
address with copies of bills.
Capital Gain Tax Exemption of Primary Home sale applies to those full time residents who have lived in their home as their primary home for more than
3 years.
The exemption is 700,000 UDIs, which is a formula that equals about 4.816 million pesos, today. 700,000x6.885040=4,816,000
Improvements, maintenance and 2% acquisition tax are also deductible.
Capital gains reductions include a 3% per year inflationary credit that reduces the property’s basis every year (10 years of ownership = 30%
reduction, but I understand that there is a 5% floor of minimum taxes or minimum 20% Basis of the original listed sale price).
Property Sale Capital Gains Tax (ISR) Exemption Requirements:
ISR Tax Law has 3 major options for determining property sales taxes on the gains:
1. No taxes are owed on sales of the owners primary residence, when sold after 5 years by qualifying residents of Mexico (Primary Residence exemption
~ changing to 3 years for 2016~). or
2. 25% of the Gross Sales amount. or
3. 35% gains tax on the net profit/gain (reduced by various deductions and depreciation).
You should not pay twice, in Mex and in your home country.
You must live in Mexico primarily, with the home as your principle home, for more than 3 years, and be living on Mexico "fiscally", meaning you have a
tax id RFC (persona fisica), and be Temp or Perm resident.
No rental or commercial properties qualify for this exemption. Approval for people living "full-time" on FMM can be approved at discretion of Notario
based on a formula of time spent, proof, and additional evidence support.
Generally, your proof includes copies of CFE bill for more than three years, you may be required to show the actual bills, or some notaries accept
electronic copies, plus most recent original. You can log in to CFE/SAPA and associate your account to yourself and be able to download all the
bills, electronically plus show recent originals.
The sellers Notario makes the decision to approve the capital gain exemption with their accountant's approval. Speak to your Notario to confirm the
recognize your qualification, before agreeing to do business with them.
[Edited on 7-29-2021 by gnukid]Russ - 7-29-2021 at 09:34 AM
Thanks gnukid for all that info. I've sent it to Jose and let him digest it too. It will take awhile though and there may be more changes....JC43 - 7-29-2021 at 09:36 AM
@gnukid. Thanks for the First-Class- Info !!! That`s something to know. Remeins one little question for me: What about those sellers age 65 or older
and having no tax ID? ? Are they automatically exampt b/c of age??gnukid - 7-29-2021 at 09:48 AM
@gnukid. Thanks for the First-Class- Info !!! That`s something to know. Remeins one little question for me: What about those sellers age 65 or older
and having no tax ID? ? Are they automatically exampt b/c of age??
I didn't find an age exemption. I'll look more in Spanish. There are a lot of arcane details. you can only do this once every few years.
My suggestions is to prepare a hard copy binder and electronic folder of info now, put your bills in your name, make online access to accounts, get
your SAT RFC, you probably have one, already.
Be clear with evidence about, size of lot, house, use, time spent, SAT, CFE, improvements, depreciation, maintenance, purchase price in pesos at time
or purchase, projected sale price etc.
Print all the versions of the relative law, translate it, be certain and be confident. As you are speaking, you may be unaware they are asking
question to create a problem, or create confusion, so be very consistent and very clear, don't react to nonsensical requests.
The primary qualifier is "must live in mexico at least 3 years fiscally" so answer yes to this question.
If the Notario is working for you, they will help, if not, they will discover a "problem", right at the last minute, say at 10pm the night before you
plan to leave, to attempt to get you to give in and agree to pay, you must say, nope, I am not going to close, until all issues are resolved to
qualify for exemption. The sale will not proceed until you resolve the issues, goodbye.
In every case, we got every penny back.
[Edited on 7-29-2021 by gnukid]cabobaja - 7-29-2021 at 10:49 AM
After representing buyers and sellers as a broker and real estate agent in Baja Sur for the past 26 years there is an exemption in the amount of
$175,000usd for those who hold residencia permanente with Mexican Curp. Also, if a home, you can hire a licensed engineer
to complete a Manifestation of Construction. As an example: My client purchased his property in 1994 for $30,000usd. Built a home and the property is
now under contract in the closing process. We just completed the Manifestation for 12,432,000pesos. The home is under contract for $550,000usd. There
will be very little if not any capital gains. The manifestation is not cheap. Government gets their share of pesos, but client saves about $175,000usd
minus cost of manifestation in capital gains. Remember, if you hold a trust in a fideicomiso, your bank trust/fideicomiso will state your purchase
price in dollars/usd and pesos. Your basis at closing is pesos and the
peso exchange at time of closing is relevant. gnukid - 7-29-2021 at 02:18 PM
The amount exempt from gain on sale of the home for those qualified to declare fiscal residence is not a static number, it is an amount based on
700,000 UDI, referring to today's rate of 6.885040.
700,000x6.885040=4,816,000mn=~240,800us exemption from gains for fiscal resident today
Manifestation is the declared value of the construction upon completion. Manifestation is a tool that is especially helpful for people who do not have
a fiscal residency qualification for capital gains or whose capital gain exceeds the exemption, by a large amount, in order to reduce the gain.
There is no need to show a manifestation for homes whose capital gain projected is valued below the limit for sellers who qualify for the fiscal
resident exemption, because there is no benefit, but there is a cost and potentially opens up more issues.
It should be pointed out that many people in the RE industry, agents, notarios, lawyers, government employees etc have no idea what they are talking
about in reference to FOREIGNERS, qualifications for capital gain exemption, and simplifying transactions, not at all. Nor do they have a fiduciary
requirement to the best they can for you to save money, and not cause errors, mistakes, they have no liability for the financial damages they cause.
They lack empathy because they have not personally been in the situation where these issues apply to you, the more it costs you, the more they earn,
so they feel no pain.
Be very careful who you engage, be careful what you say, go slowly, ask a lot of questions, take charge, talk to many notaries, agents, and let them
know they will earn their money, they work for you, drive the process, because, these associated people have zero responsibility, no liability, and
will generally make mistakes and give wrong information that will cause you harm, while it's your job to clean it up, so, you may as well take charge
right from the beginning and manage them to complete tasks and validate all information, double check, translate, don't rush, never sign without
reading multiple times and checking all pertinent data.
[Edited on 7-29-2021 by gnukid]SFandH - 7-29-2021 at 04:05 PM
Yikes, I'm glad my heirs (and not me) are going to deal with this stuff......if they sell.
And that will include figuring out all the taxes.