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Capital Gains exemptions for foreigners

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Capital Gains exemptions for foreigners

Post by Intercasa on Thu Mar 13, 2014 11:22 am

Anyone selling who is worried about capital gains and where the notary is requiring them to be a Residente Permanente may want to share the following information with the notary, this was published today and should work for temporales to avoid capital gains as the law mentions a presumption that foreigners that sell their homes in Mexico are residents for tax purposes when they comply with the following:

I. Declare under penalty of perjury
a) That they are residents in Mexico for tax purposes (Here article 9 of the tax code says you are a resident if you have no home in another country but if you do then you would need Mexico to be the center of your interests and would need 50% of our income to come from here). So reading this I can see why if someone has 2 homes the notary would want them to be permanent or have working papers if temporary but not if they only have one home.

b) Their tax home, or if you don't have one an address to receive notifications. The address can never be the property being sold.
II. Additionally prove their condition as a resident of Mexico. This requirement is met with a certificate of tax residence (which we can get for you from the SAT office) or RFC sheet you get online with your CURP.

Here is the text from the publication today in the DOF
http://dof.gob.mx/nota_detalle.php?codigo=5336743&fecha=13/03/2014

Condición para acreditar que las personas físicas de nacionalidad extranjera que enajenan su casa habitación son residentes en México para efectos fiscales
I.3.10.13. Para los efectos de los artículos 93, fracción XIX, inciso a) de la Ley del ISR y 9, fracción I, inciso a) del CFF, se presumirá, salvo prueba en contrario, que las personas físicas de nacionalidad extranjera que enajenan su casa habitación son residentes en México para efectos fiscales, cuando se cumplan los siguientes requisitos:
I. Declaren, bajo protesta de decir verdad, lo siguiente:
a) Que tienen la condición de residentes en México para efectos fiscales, en los términos del artículo 9, fracción I del CFF y, en su caso, de los tratados para evitar la doble tributación que México tiene en vigor.
b) Su domicilio fiscal o, en su defecto, un domicilio para oír y recibir notificaciones. En ningún caso el domicilio señalado podrá ser o encontrarse en la casa habitación que enajenan.
.............................................................................................................................................................................................
II. Adicionalmente a lo anterior, acrediten su condición de residente en México. Para tales efectos, se considerará que se acredita dicha condición con la constancia de residencia para efectos fiscales a que se refiere la regla II.2.1.4., o en su defecto, con la cédula de identificación fiscal referida en la regla I.2.4.2.
I.2.4.2. Para los efectos del artículo 27, décimo segundo párrafo del CFF la cédula de identificación fiscal, así como la constancia de registro en el RFC, son las contenidas en el Anexo 1, rubro B, numerales 1, 1.1. y 2.
.............................................................................................................................................................................................
Cuando la persona física que enajena su casa habitación no sea residente para efectos fiscales en México o no sea residente para efectos fiscales en el extranjero con establecimiento permanente en el país, no será aplicable la exención establecida en el artículo 93, fracción XIX, inciso a) de la Ley del ISR. En este supuesto, los fedatarios públicos, que por disposición legal tengan funciones notariales, estarán a lo dispuesto por el artículo 26, fracción I del CFF, respecto de la enajenación de que se trate, debiendo calcular y enterar el impuesto en los términos de lo previsto en el artículo 160 de la Ley del ISR.
CFF 9, 26, LISR 93, 155, RCFF 5, RLISR 130, RMF 2014 I.2.4.2., I.3.10.6., II.2.1.4.
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Re: Capital Gains exemptions for foreigners

Post by ChapWanaBe on Tue Mar 17, 2015 8:03 pm

A related question...
The permanent resident status is required only at selling ? If so, I would be OK buying a residence property as a foreigner (ie FMM card) and then eventually getting my permanent resident visa before the sell ?

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Re: Capital Gains exemptions for foreigners

Post by Intercasa on Tue Mar 17, 2015 8:19 pm

Buying is fine as tourist and later converting for now, could change if the new law goes into effect where you need a CURP when you buy or will have a zero basis.
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Re: Capital Gains exemptions for foreigners

Post by ChapWanaBe on Wed Mar 18, 2015 7:19 pm

Intercasa wrote:Buying is fine as tourist and later converting for now, could change if the new law goes into effect where you need a CURP when you buy or will have a zero basis.  

Thx for the quick reply! Any timeline and/or probability estimates of this new CURP requirement (or any info link) ?

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Re: Capital Gains exemptions for foreigners

Post by eagles100 on Sun Mar 29, 2015 10:59 pm

In reference to Capital Gains, should one not be eligible for the exemption for whatever reason, do receipts for upgrades/renovations to the house reduce the amount owing?
What type of receipts are necessary?
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Re: Capital Gains exemptions for foreigners

Post by RVGRINGO on Mon Mar 30, 2015 12:58 pm

Not receipts; only original facturas.

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Re: Capital Gains exemptions for foreigners

Post by Intercasa on Mon Mar 30, 2015 2:10 pm

Facturas or a tax improvement appraisal can raise your tax basis due to remodeling.
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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Fri Apr 03, 2015 11:33 pm

I am very seriously interested in to moving to the Lake Chapala area in the next two years. I have not been able to find the following information. Forgive me as a newbie, but I need your help.

#1 Are my USA Social Security Benefits taxable in Mexico?

#2 I've been very fortunate and have over a million dollar net worth. What about taxes on my Capital Gains on investments?

#3 I understand they have made residency rules stricter. I want to build a nice modern 2 bedroom home or condo in a safe community and have a maid, etc. I want at least a 1/2 size Olympic pool to swim in 4 - 5 days per week.

#4 I'd like a bike trail that I can get at least 100 miles in per week.

#5 I want USA TV programming AND high speed internet service.

#6 I love to roller skate... are their any roller skating rinks in the area or are there trails good enough to roller skate on?

#7 I'm quite capable of keeping my own home spotless. I don't want a maid, etc. A condo would probably be best for me.

#8 I don't want to do ANY maintenance... is there competent help available to fix minor problems. I want a lot of hot water for my showers, large washer dryer, refrigerator, freezer. etc. Can I do that there?

#9 I like younger women. I don't want to get married. How is the single life there?

Thank you very much!

-Joe

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Re: Capital Gains exemptions for foreigners

Post by CanuckBob on Sat Apr 04, 2015 8:25 am

Yes, you have to still pay taxes on everything. In #3 you say you want a maid and in #7 you say you don't. A younger woman will help you unload that million dollars but it won't be at the roller rink cause there isn't one around here.
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Re: Capital Gains exemptions for foreigners

Post by viajero on Sat Apr 04, 2015 10:00 am

Interesting first post Joe.
I have a 30 year old sister in-law you might like to meet,send me a PM when you get here.

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Re: Capital Gains exemptions for foreigners

Post by Stu on Sat Apr 04, 2015 10:35 am

viajero wrote:Interesting first post Joe.
I have a 30 year old sister in-law you might like to meet,send me a PM when you get here.

cbalcahuete?

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Re: Capital Gains exemptions for foreigners

Post by viajero on Sat Apr 04, 2015 10:53 am

Stu wrote:
viajero wrote:Interesting first post Joe.
I have a 30 year old sister in-law you might like to meet,send me a PM when you get here.

cbalcahuete?
Quiero sacar adelante a mi familia,nada mas,y si le sale cogida mi cuñada, le puedo dar otra,si es que va querer otra.

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Re: Capital Gains exemptions for foreigners

Post by Lady Otter Latté on Sat Apr 04, 2015 10:55 am

Oh, Joe. You tossed out one-too-many troll lines there. Nice effort though.
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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Sat Apr 04, 2015 12:49 pm

Lady Otter Latté wrote:Oh, Joe. You tossed out one-too-many troll lines there. Nice effort though.

Sorry if it came out that way. No I'm very serious about moving to the Lake Chapala area within the next two years or so.

I've spent a few months travelling in Mexico over the years and have been thru the Lake Chapala area about 15 years ago, but I didn't spend any time there (mostly down exploring the Yucatan Peninsula). I found the people to be very nice, but I stay away from the tourist traps and the US border area. The worst experience I had was a police officer shake me down for $19.

I know the area is mostly retiree's and I really don't know any of the current tax laws there. I'm surprised that US Social Security is taxable there and I wonder at what rate (or how their government would even know of your US income).

My reasons for choosing the Lake Chapala area are mostly due to the climate (of course) and to be perfectly honest I really don't like US politics. I'm a very physically active person and I prefer to swim, bicycle, and skate. I don't pump iron and I don't play golf.

I want a new house or condo, access to a real swimming pool to swim laps, high speed internet, and access to US television programming.

Yes, my comments about a maid were contradictory. I really don't care one way or the other.

So yes, I'm a real person, with real interest in the area. I apologize if I came off sounding any other way.

Thanks,
-Joe

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Re: Capital Gains exemptions for foreigners

Post by RVGRINGO on Sat Apr 04, 2015 12:55 pm

“I know the area is mostly retiree's and I really don't know any of the current tax laws there. I'm surprised that US Social Security is taxable there and I wonder at what rate (or how their government would even know of your US income).“

The statement above is not correct. The Lake Chapala area is mostly Mexican nationals and there are no unusual tax laws. If you receive US Social Security, it is not taxable in Mexico, nor is your retirement income from the USA. Depending upon your circumstances, they may be taxable in the USA and you must file US tax returns, no matter where you live.

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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Sat Apr 04, 2015 12:58 pm

RVGRINGO wrote:“I know the area is mostly retiree's and I really don't know any of the current tax laws there. I'm surprised that US Social Security is taxable there and I wonder at what rate (or how their government would even know of your US income).“

The statement above is not correct. The Lake Chapala area is mostly Mexican nationals and there are no unusual tax laws.  If you receive US Social Security, it is not taxable in Mexico, nor is your retirement income from the USA. Depending upon your circumstances, they may be taxable in the USA and you must file US tax returns, no matter where you live.

Thank you for the info.

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Re: Capital Gains exemptions for foreigners

Post by CanuckBob on Sat Apr 04, 2015 12:58 pm

The US, Canada and Mexico have a tax treaty so if you paid the taxes to the US then you don't have to pay again to Mexico.
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Re: Capital Gains exemptions for foreigners

Post by gringal on Sat Apr 04, 2015 1:04 pm

Joe, Lake Chapala area has changed dramatically since 15 years ago. I'd suggest you come on down for a few weeks and decide if the current reality would suit your desires.

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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Sat Apr 04, 2015 1:13 pm

gringal wrote:Joe, Lake Chapala area has changed dramatically since 15 years ago.  I'd suggest you come on down for a few weeks and decide if the current reality would suit your desires.

Yes, I intend to visit a couple of times before I make any decisions. Then from what I understand I'll have to find a rental first and go thru the permit process. I read conflicting information on that process, but I'll find out more during my first visit.

I'm sure many of my questions seem silly to you, but I read a lot of contradictory information. A lot of the information hasn't been updated in years so I have no way to know if it's still valid or not.

Thanks to all for the tax information... I'm not trying to avoid US taxes, but I didn't want to get into a double taxation situation. I've been all over the world but I never bothered to look into tax and residency issues.

Thanks,
-Joe

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Re: Capital Gains exemptions for foreigners

Post by Lady Otter Latté on Sat Apr 04, 2015 1:27 pm

#1 Are my USA Social Security Benefits taxable in Mexico?
USA income is not taxable by the Mexican government

#2 I've been very fortunate and have over a million dollar net worth. What about taxes on my Capital Gains on investments?
This area has been compared to a lush lagoon teeming with plump seals where the sharks gather to feed. We have had more than our share of scammers and schemers here to separate the vulnerable elderly from their money. This is in addition to the run-of-the-mill thieves looking to rob whoever they can of whatever they have. Be careful.

#3 I understand they have made residency rules stricter. I want to build a nice modern 2 bedroom home or condo in a safe community and have a maid, etc. I want at least a 1/2 size Olympic pool to swim in 4 - 5 days per week.
The residency requirements have nothing to do with how you wish to live down here. If you meet the requirements you can live here very comfortably. I do not meet the current requirements and live very well.
If I were you I would be sure I understood how local life works before I took on a house construction project.

#4 I'd like a bike trail that I can get at least 100 miles in per week.
There are a lot of people doing a lot of bike riding so that should not be a problem once you plug into the network.

#5 I want USA TV programming AND high speed internet service.
No problem.

#6 I love to roller skate... are their any roller skating rinks in the area or are there trails good enough to roller skate on?
Uh, in a word, NO!

#7 I'm quite capable of keeping my own home spotless. I don't want a maid, etc. A condo would probably be best for me.
Have a maid or don’t. It is up to you unless you rent a place that furnishes its own maid.

#8 I don't want to do ANY maintenance... is there competent help available to fix minor problems. I want a lot of hot water for my showers, large washer dryer, refrigerator, freezer. etc. Can I do that there?
You can if you are willing to pay the higher electricity rates for consumers of more electricity and the propane costs for all that hot water.
There are many accomplished trades people and general handymen who work very reasonably.

#9 I like younger women. I don't want to get married. How is the single life there?
I am not sure what you mean when you say “the single life”. I am single as are many of my friends. We all have different interests in addition to things we share. Married people I know do the same things we do. So, I can not help you with this answer.
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Re: Capital Gains exemptions for foreigners

Post by gringal on Sat Apr 04, 2015 2:27 pm

A little confusing:  wanting to build a house OR a condo?
Speaking from experience: we have a large supply of very well built houses and condos of recent vintage on the market here; some with huge price reductions.
Building anything here can turn into a nightmare.  I'd recommend you rent first and check out the supply of existing houses for sale before considering building.

Re maids:  There is a business here that is like the "Merry Maids" NOB, but much less expensive.  Using them lets you avoid the obligations you acquire if you hire a maid on your own.

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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Sat Apr 04, 2015 4:05 pm

gringal wrote:A little confusing:  wanting to build a house OR a condo?
Speaking from experience: we have a large supply of very well built houses and condos of recent vintage on the market here; some with huge price reductions.
Building anything here can turn into a nightmare.  I'd recommend you rent first and check out the supply of existing houses for sale before considering building.

Re maids:  There is a business here that is like the "Merry Maids" NOB, but much less expensive.  Using them lets you avoid the obligations you acquire if you hire a maid on your own.

I mentioned renting a condo because I had read that I'd have to leave after 6 months (for what period of time I don't know), but it could take quite a while to get a permanent resident visa. I wouldn't want to purchase anything until I was sure I could stay there. This is one of the subjects confusing to me because much of the information on the internet is many years old, and there are several mentioning upcoming changes.

On a permanent resident basis I really don't care if it's a house or first floor condo. Despite being athletic I prefer not to have stairs in any case. I don't care about a yard or garden, etc.

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Re: Capital Gains exemptions for foreigners

Post by RVGRINGO on Sat Apr 04, 2015 5:52 pm

Immigration requirements changed completely in 2012 and the qualifying financial requirements were reduced in 2014, so you should only concern yourself with very recent postings.
Briefly, you may apply only in your home country, at a Mexican consulate, for either a residente temporal or residente permanente visa. You will have to show bank statements for up to the previous 6 or 12 months of income, and/or a certain amount of untouched savings/investment; perhaps around $25,000 USD. If your application is accepted and pre-approved, you will have 180 days to enter Mexico and get your ‘canje‘ in your passport stamped into Mexico at the border or airport customs. You then have 30 days to establish residence and take proof of residence address to the nearest full service INM office to that residence. They will process your ‘canje‘ application in a matter of weeks, giving you a temporary letter of ‘tramite‘ with a number and password (NUT) to carry in lieu of a visa and for travel within Mexico. Once the visa card is issued, you are free to come and go at will.

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Re: Capital Gains exemptions for foreigners

Post by JoeInMO on Sun Apr 05, 2015 12:26 am

RVGRINGO wrote:Immigration requirements changed completely in 2012 and the qualifying financial requirements were reduced in 2014, so you should only concern yourself with very recent postings.
Briefly, you may apply only in your home country, at a Mexican consulate, for either a residente temporal or residente permanente visa. You will have to show bank statements for up to the previous 6 or 12 months of income, and/or a certain amount of untouched savings/investment; perhaps around $25,000 USD.  If your application is accepted and pre-approved, you will have 180 days to enter Mexico and get your ‘canje‘ in your passport stamped into Mexico at the border or airport customs. You then have 30 days to establish residence and take proof of residence address to the nearest full service INM office to that residence. They will process your ‘canje‘ application in a matter of weeks, giving you a temporary letter of ‘tramite‘ with a number and password (NUT) to carry in lieu of a visa and for travel within Mexico. Once the visa card is issued, you are free to come and go at will.

Thank you very much for the accurate information. I know I'm moving somewhere outside the USA and have put all my properties and businesses up for sale and hope to be out of here in 2 years or so.

I hope to meet some of you in person soon. I'm working on my Spanish. I can understand more than I can speak and my coach is from Colombia and many of the words an annunciation are different. I don't have a uvula so the "rr" is difficult for me. I don't wan't to have a bad gringo accent. The short vowels are difficult to deal with as well. Usually anywhere I go I can understand the language in a week or so, but I can't speak it. The exception has been anything with a Cyrillic alphabet, but I can do a little Russian and even a little Mandarin but not much.

Thanks again for all your help. It's good to get accurate information.

Thanks,
-Joe

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Re: Capital Gains exemptions for foreigners

Post by Luisa on Tue Apr 07, 2015 11:14 am

Hi Joe,
Why have you selected Mexico and the Lake Chapala area? That would help us to better understand your questions.

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