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El Gato

Dec 7, 2011, 6:13 AM

Post #1 of 4 (1290 views)

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Cap Gains on Primary Residence

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My understanding is that if you can prove your home has been your primary residence for 5 years cap gains are waived if you sell it. Do you have to have Imagrado status? Does an FM2 work?

I have a friend who has lived in Mexico since 2007 and she has to sell. The value has dropped considerably during those years. However, the Realtor is telling her that she will have to pay cap gains on the difference from what she paid and what it is sold for regardless if it was a gain or loss! She has had an FM2 (renewing it today).

Previously I had heard you only had to have it as your primary residence for two years if you had FM2 status.

Any comments? Thanks.
"The World After WW1 - 1918 - 1921" at amazon.com, Barnes & Nobel - letters written at the end of WWI

YucaLandia

Dec 7, 2011, 4:34 PM

Post #2 of 4 (1224 views)

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Re: [El Gato] Cap Gains on Primary Residence

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There are more requirements to qualify for the Primary Residence home-owner's exemption to Mexican gains taxes than can be described in a simple post. You can read more at: http://yucalandia.wordpress.com/...-mexican-properties/

e.g. You must prove that this is your principal residence, and you must find a Notario who is willing to risk certifying that you meet all the requirements even though she only has Inmigrante/FM2 status. Many Notarios require that the person filing have Inmigrado status, and some require that the expat have applied to become a citizen.

You must have a Notario who is willing to sign-off on the application - and many will not - even if you have 5 years of power bills in your name and proof that you have lived in that home as your primary residence, and proof that Mexico is your principal center of fiscal activities.
steve
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Read-on MacDuff
E-visit at http://yucalandia.com

(This post was edited by YucaLandia on Dec 7, 2011, 4:57 PM)

sioux4noff

Dec 7, 2011, 6:04 PM

Post #3 of 4 (1207 views)

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Re: [El Gato] Cap Gains on Primary Residence

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In Reply To

the Realtor is telling her that she will have to pay cap gains on the difference from what she paid and what it is sold for regardless if it was a gain or loss! She has had an FM2 (renewing it today).

The bigger question here is really, you have to pay capital gains tax on a loss? First thing I would do if I were her, is check with a notario.
That sounds totally wrong, paying tax on a loss. Or perhaps she misunderstood something the realtor said.

chinagringo

Dec 7, 2011, 6:19 PM

Post #4 of 4 (1198 views)

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Re: [El Gato] Cap Gains on Primary Residence

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You might try reading this article from this very website:

http://www.mexconnect.com/...uesto-sobre-la-renta

Not saying that it is 100% accurate from what I have heard but it does provide an explanation!
Regards,
Neil
Albuquerque, NM