volcano
Nomad
Posts: 348
Registered: 3-5-2007
Location: Cave Junction, Oregon and Boca Del Salado area, Ea
Member Is Offline
Mood: always pining to be there
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manifestation again
So I went to the public works office in La Ribera to start my manifestation process. All she wanted from me was : retired building permit, original
plans, photos of completed work, and current payment of taxes. She didn't want my receipts, construction contract, proof of Seguro Social payment of
workers. (I asked how they would determine the value of my structure....she said the estimate on the building permit is what they use. This figure
is in keeping with my investment.) so here is my confusion: At what point would my receipts, construction contract stating builders reponsibility to
pay s. s. of workers (which he didn't do) come into play? If I sell? or if the value stated on my building permit wasn't accurate and I needed to
prove otherwise?
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Paulclark
Nomad
Posts: 357
Registered: 10-13-2008
Location: Castillo de Arena
Member Is Offline
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Talk to a Notary, they do the calculation and are the only people qualified to answer your question.
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longlegsinlapaz
Super Nomad
Posts: 1685
Registered: 11-18-2005
Location: La Paz
Member Is Offline
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Paulclark, respectfully, the notario is out of the loop well before manifestation time rolls around.
volcano, Seguro Social is the responsibility of a separate agency from Catastro/public works. Each agency is only responsible for
what falls within their jurisdiction & one agency or group within an agency will RARELY volunteer anything about the next step in
the process within their own agency, let alone a different agency! The gal you talked with could/should have told you that Seguro Social is who cares
about true value of construction, as it equates to how much workers were paid to build a higher quality finished product than the local construction
standards default. There is a "Tourista" classification which is calculated at a higher rate & results in a higher value, but the builders opt to
never use that classification when they apply for the building permit, because it's less profit in their pocket!
There are two ways to manifest value....
1. They use a fixed "magic formula" they've come up with for typical local construction & apply their average rate to your total sq meter of
construction. Unfortunately the "magic formula" they use is for a much lower quality of construction that most gringos build to. This becomes a
problem when you sell & get hit with Capital Gains on the difference between the understated manifested value & your selling price. It's my
understanding that Capital Gains went up the first of this year, along with the other tax increases & that it went up from 27% to 30% from
dollar-one of profit.
This is the route they always push for....it's easier for the agency to simply plug the "magic formula" in & most locals opt for this as a "quick
fix" because they don't sell properties like gringos do, they pass them on within the family, plus Mexicans who pay income taxes are not subject to
Capital Gains taxes as well.
2. It is possible to have the property manifested at full construction cost, but it requires an authorized architect to do a re-valuation & file
it with the appropriate agencies & it's not cheap. I explained it in detail at:
http://forums.bajanomad.com/viewthread.php?tid=43112#pid4763...
This can either be done now or at the time of sale. IMO, I'd let it ride until when/if you decide to sell. Because over time your property should
naturally increase in value. If you wait until you sell, you'd have it re-valued closer to or higher than the selling price & just have to go
through (pay) the process once.
Your SS issues need to be addressed directly with Seguro Social. I'd take the contract & other paperwork into SS & tell them you want to
verify that your builder did indeed pay SS on your construction as he stated was his responsibility in your contract.
If you're lucky, they'll let you off the hook & go after the builder as they did in my case. My theory is that if you go in now, they'll respect
the fact that you do know something about their laws & you want to be in legal compliance. If you wait to be audited they'd probably view you as
having been complacent in SS & associated taxes not being paid & they'd probably go after you for the unpaid SS, along with fines &
interest penalties.
There is a SLIM chance SS wouldn't ever get around to auditing your construction project, but personally, I wouldn't be willing to
take that risk. My second casa was audited nearly 3 years after completion & 6-8 months after I'd sold it! Because of the situation with my
first casa, I'd personally paid SS on casa #2, so I had all the records, including facturas, receipts, etc. & I was found to be in compliance.
Hope this helps....I'm curious, how do you know that your builder didn't pay SS? You assuming, or you have some factual
information?
Kudos to you for wanting to stay legal & in compliance with all the local laws!
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volcano
Nomad
Posts: 348
Registered: 3-5-2007
Location: Cave Junction, Oregon and Boca Del Salado area, Ea
Member Is Offline
Mood: always pining to be there
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manifest
| Quote: | Originally posted by longlegsinlapaz
Paulclark, respectfully, the notario is out of the loop well before manifestation time rolls around.
volcano, Seguro Social is the responsibility of a separate agency from Catastro/public works. Each agency is only responsible for
what falls within their jurisdiction & one agency or group within an agency will RARELY volunteer anything about the next step in
the process within their own agency, let alone a different agency! The gal you talked with could/should have told you that Seguro Social is who cares
about true value of construction, as it equates to how much workers were paid to build a higher quality finished product than the local construction
standards default. There is a "Tourista" classification which is calculated at a higher rate & results in a higher value, but the builders opt to
never use that classification when they apply for the building permit, because it's less profit in their pocket!
There are two ways to manifest value....
1. They use a fixed "magic formula" they've come up with for typical local construction & apply their average rate to your total sq meter of
construction. Unfortunately the "magic formula" they use is for a much lower quality of construction that most gringos build to. This becomes a
problem when you sell & get hit with Capital Gains on the difference between the understated manifested value & your selling price. It's my
understanding that Capital Gains went up the first of this year, along with the other tax increases & that it went up from 27% to 30% from
dollar-one of profit.
This is the route they always push for....it's easier for the agency to simply plug the "magic formula" in & most locals opt for this as a "quick
fix" because they don't sell properties like gringos do, they pass them on within the family, plus Mexicans who pay income taxes are not subject to
Capital Gains taxes as well.
2. It is possible to have the property manifested at full construction cost, but it requires an authorized architect to do a re-valuation & file
it with the appropriate agencies & it's not cheap. I explained it in detail at:
http://forums.bajanomad.com/viewthread.php?tid=43112#pid4763...
This can either be done now or at the time of sale. IMO, I'd let it ride until when/if you decide to sell. Because over time your property should
naturally increase in value. If you wait until you sell, you'd have it re-valued closer to or higher than the selling price & just have to go
through (pay) the process once.
Your SS issues need to be addressed directly with Seguro Social. I'd take the contract & other paperwork into SS & tell them you want to
verify that your builder did indeed pay SS on your construction as he stated was his responsibility in your contract.
If you're lucky, they'll let you off the hook & go after the builder as they did in my case. My theory is that if you go in now, they'll respect
the fact that you do know something about their laws & you want to be in legal compliance. If you wait to be audited they'd probably view you as
having been complacent in SS & associated taxes not being paid & they'd probably go after you for the unpaid SS, along with fines &
interest penalties.
There is a SLIM chance SS wouldn't ever get around to auditing your construction project, but personally, I wouldn't be willing to
take that risk. My second casa was audited nearly 3 years after completion & 6-8 months after I'd sold it! Because of the situation with my
first casa, I'd personally paid SS on casa #2, so I had all the records, including facturas, receipts, etc. & I was found to be in compliance.
Hope this helps....I'm curious, how do you know that your builder didn't pay SS? You assuming, or you have some factual
information?
Kudos to you for wanting to stay legal & in compliance with all the local laws! |
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volcano
Nomad
Posts: 348
Registered: 3-5-2007
Location: Cave Junction, Oregon and Boca Del Salado area, Ea
Member Is Offline
Mood: always pining to be there
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thanks L.L the builder failed to provide copies of his paperwork after several inquiries, and then left the area.
I think they must have used the native formulka....which is accurate at this time...thanks for your great advice
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Woooosh
Banned
Posts: 5240
Registered: 1-28-2007
Location: Rosarito Beach
Member Is Offline
Mood: Luminescent Waves at Rosarito Beach
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Great current info from LongLegs every nomad should keep in mind when building. thanks
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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wessongroup
Platinum Nomad
Posts: 21152
Registered: 8-9-2009
Location: Mission Viejo
Member Is Offline
Mood: Suicide Hot line ... please hold
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Killer post.. thanks that was on my mind... 
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