May 16, 2010, 8:12 AM
Post #12 of 13
Do the discussions on the other board include the relatively new requirements for qualifying for the tax exemption (since Feb. 2010)? (Capital Gains is a NOB term, so, it really is not a capital gains exemption since the Mex. Gob. considers the profit on any sale simply as income, so, I suspect what we are talking about is a homeowner's exemption for selling their primary residence?)
Re: [charley49] New law 30% capital gains tax
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e.g. If we are talking about the exemption, to qualify for an exemption, the Claimant of the exemption (seller) must currently meet several requirements or pay what is effectively a 30% tax:
The burden of proof for reducing or eliminating taxes on the income from property sales was raised so substantially in February, that a small bump from 28% base tax rate to 30% for some payers/sellers would seem minor, si? (And some situations already had a base rate of 30%, so, 30% rates already existed for some sellers.)
- 5 years of comprabantes (CFE or JAPAY bills) in their name to qualify.
- Mexico also has to be your “fiscal residence” & the “main center of your professional activities”, etc. for 5 years.
- Claimant must also find a Notario who is willing to stick their neck out and certify these claims and certify the Claimant's official "residency", and
- That Notario must certify all their related claims: including an informal but common Notario's requirement that the Claimant have 5 years of an FM2 and have either citizenship, inmigrado, or a pending application for such status.
Also, the current Seller had to pay a 2% Acquisition Tax at the time that they bought the property - or they do not qualify for other reductions (like the 3% per year depreciation). Many NOB buyers have not paid the Acquisition Tax, though a few do, which makes comparing different Seller's situations tricky. Clear as mud?
And none of these examples include the added UDI tax status on properties worth more than about $500,000 US ($1,500,000 peso). So, if you get direct reports from ex-pat sellers across Mexico, what is the official Capital Gains Tax rate on property sales? It depends on many factors, so, single point observations are interesting, but need full disclosure of many details to fully identify their filing situation. Facturas vs. Recebos. Luxury Homes vs. Normal Houses. Acquisition Tax paid vs not paid. Length of ownership. Residency Status of the Seller. Liberal Notary vs Conservative Notary. Property held privately or in the name of the Seller's corporation.
- e.g. Fred (a long-time ex-pat w/ FM2) sells his property after 5 years in Mazatlan and pay no taxes;
- Jerry in Guanajuato (also a long-time ex-pat w/ FM2) sells his property after 5 years and pays 30% (because he didn't get the CFE bill in his name right away);
- Harry sells his property in Villa Hermosa after 5 years also pays 30% because he didn't pay the 2% Acquisition Tax;
- Jeff sells his property in Monterey after 5 years and pays 25% because he got facturas for all his improvements and reduced his basis by 5%;
- Sue (on an FMT) sells her property in Merida after one year and pays 27% due to the 3% annual depreciation.
Said another way, does this thread / question include any "news" ?
I'm not challenging things, just trying to understand what we're talking about. We've got some of these items described (with legal references from lawyers & Notaries) in an article http://yucalandia.wordpress.com/...-mexican-properties/ , and I'd like to keep the information updated/current if something has changed and updated as things change.
E-visit at http://yucalandia.com
(This post was edited by YucaLandia on May 16, 2010, 8:32 AM)