Posted by Thom on December 04, 1996

We have seen long discussions on the subject of working in Mexico. I am curious about how it is to own rental property for income in Mexico. I'm thinking mainly in
terms of a condo or two which would probably be in an area like Ajijic or in one of the coastal resort areas and would probably be rented out to vacationing
Americans and Canadians.

What are the restrictions, if any, the tax implications, etc. Can it be a way to generate income in Mexico for a not-quite-retired Gringo living in Mexico?

Comments, ideas?

Posted by David on December 04, 1996
In response to Thom:

Thom:
While awaiting for more quality answers here is a "quickie".

In the well visited areas, buying to rent/lease is a reasonable plan.
Rules:
Get a good agent to assist in purchasing appropriate properties.
Take the time to know the area first, and buy as if you were going to live there.
Get a good Property Manager - critical.

Implications:
Each country has its own tax reporting requirements.
If you declare the asset and income, the regular implications would apply.

Many people own property in Mexico and use it as a way of building a stake towards their own relocation. As an investment, it is of medium risk as in the popular
areas, prices and rents are usually in USD.
However, devaluations do have an effect.

Posted by Thom McDonald on December 06, 1996

In Reply to: Rental Income posted by David on December 04, 1996

Thanks for the response. I guess what I was hoping to get was some recounting of first-hand experience. There's a couple over in Mazatlan who seem to be doing
just fine with a few vacation rentals, (they rent them through their own extensive web site). There must be many others doing the same thing, and perhaps others who
have tried something similar where it has not worked out as well. Real estate agents can usually be counted upon to paint a rosey picture. It would be helpful to hear
from principals with first hand experience.

Thom

Posted by jennifer j. rose on December 05, 1996

In Reply to: Rental Income posted by David on December 04, 1996 at 23:47:22:

The income that a foreignerís required to substantiate for the FM-3 or FM-2 is supposed to be generated from abroad. Even though the rents from a Mexican
property may come from vacationing foreigners, those funds are generated within Mexico. In a circuitous fashion, you could deposit those funds in your stateside
bank account, indicate to the Mexican immigration authorities that the source of income is rent (they're not likely to inquire whether the rental income is generated
from property held in the U.S., Mexico or Timbuktu).

There is a taxable event in the receipt of rental income. You would need to consult with tax counsel to determine the extent of your liability.

David's caveats are on point.

Posted by Thom on December 06, 1996

In Reply to: Mexican rental income posted by jennifer j. rose on December 05, 1996

I would guess that reservations, deposits, payments, etc. would best be carried out by a US-based "agent" of some sort anyway, so the income would be generated
outside Mexico by an outside entity which happened to own Mexican assets, verdad?

Do you know anyone who is doing this?

Posted by steve on December 06, 1996 at 17:11:46:

In Reply to: Re: Mexican rental income posted by Thom on December 06, 1996 at 09:03:24:

Yes, I do know someone. Go to this website and contact the people there: http://www.maztravel.com

Posted by Thom on December 06, 1996

In Reply to: rental income posted by steve on December 06, 1996

Thanks Estaban,

I have already communicated with Henry. I would like to hear about others doing the same or similar things, or from people who have looked into doing it in the near
future. Henry is betting that the idea of retiring in Mexico will become increasingly popular with aging baby boomers which will benefit those who own property in
areas popular with these future retirees. I think he may be on to something.

Thom

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