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Charging rental in foreign currency

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Charging rental in foreign currency

Post by CanuckBob on Wed Jul 04, 2012 1:39 pm

Spencer, I have been informed that there is a law (or regulation) which prohibits, among other things, charging rental in foreign currency (IE. US or Canadian $$). I have always felt rentals should be agreed upon and charged in pesos. What can you tell us about this?
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Re: Charging rental in foreign currency

Post by HelperGuy on Wed Jul 04, 2012 3:44 pm

Getting paid in pesos means you should be able to rent in pesos, but I have a hard time convincing landlords of that... .

There's also a law that says those offering rentals must pay taxes on that income, and I have yet to see anyone doing that.

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Re: Charging rental in foreign currency

Post by RoofBob on Wed Jul 04, 2012 4:01 pm

Senior HelperGuy, I would be happy to have you accompany me on my first of the month visit to the account to pay taxes. He also provides accounting services for many of the B&B's lakeside. I know this because I also see them there then.

Added: The last thing I would want is U.S dollars, they are a PIA.
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Re: Charging rental in foreign currency

Post by Intercasa on Wed Jul 04, 2012 4:09 pm

I have seen contracts accepted and litigated in the courts where the rent was stipulated in foreign currency with zero problems.

You have the right to pay in Mexican pesos at the official exchange rate on the date of payment.

Monetary law

Artículo 8º.- La moneda extranjera no tendrá curso legal en la República, salvo en los casos en que la
Ley expresamente determine otra cosa. Las obligaciones de pago en moneda extranjera contraídas
dentro o fuera de la República para ser cumplidas en ésta, se solventarán entregando el equivalente en
moneda nacional, al tipo de cambio vigente en el lugar y fecha en que deba hacerse el pago.
Este tipo de cambio se determinará conforme a las disposiciones que para esos efectos expida el
Banco de México en los términos de su Ley Orgánica.
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Re: Charging rental in foreign currency

Post by HelperGuy on Wed Jul 04, 2012 4:15 pm

RoofBob wrote:Senior HelperGuy, I would be happy to have you accompany me on my first of the month visit to the account to pay taxes. He also provides accounting services for many of the B&B's lakeside. I know this because I also see them there then. Added: The last thing I would want is U.S dollars, they are a PIA.
Hang on, I didn't say everybody. But in my four rentals here, it ain't happened, and while looking for another place right now, Gringo and Canadian landlords want U.S. dollars, period.

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Re: Charging rental in foreign currency

Post by RoofBob on Wed Jul 04, 2012 4:21 pm

Ima hanging on and didn't say everybody either. I wonder why they would want U.S dollars? Surely they have enough bills they have to pay in pesos.
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Re: Charging rental in foreign currency

Post by sparks on Wed Jul 04, 2012 4:26 pm

They surely don't want dollars down here. Maybe a bank transfer to accounts up north?
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Re: Charging rental in foreign currency

Post by HelperGuy on Wed Jul 04, 2012 4:31 pm

RoofBob wrote:Ima hanging on and didn't say everybody either. I wonder why they would want U.S dollars? Surely they have enough bills they have to pay in pesos.
There seems to be an irresistable urge to hang on to the homeland: the ways, the whys, the wherefores. And perhaps a greed factor, knowing full well that the dollar is always going to give them a better return than pricing something in pesos. Just look at the MLS listings, holy cow. Personally? I think it's unfair--and pointless--to be pricing in U.S. dollars.

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Re: Charging rental in foreign currency

Post by Big Daddy Mexico on Wed Jul 04, 2012 4:40 pm

Of the 7 rentals that I have helped my parents with over the last few years, all the landlords quoted their rent in US dollars. However, they would accept whatever the equivalent in pesos was at the current exchange rate at the time they paid the rent. Therefore, it was always better for my parents to budget their money without worrying about the flucation in the peso/ dollar.


Last edited by Big Daddy Mexico on Wed Jul 04, 2012 4:42 pm; edited 1 time in total
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Re: Charging rental in foreign currency

Post by HelperGuy on Wed Jul 04, 2012 4:42 pm

Mine, too. It was never a case of not wanting pesos; always a case of wanting the U.S. value.

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Re: Charging rental in foreign currency

Post by Chico on Wed Jul 04, 2012 5:05 pm

Lakeside is unique to other parts of Mexico, in that we have a primarily US and Canadian population who are the primary renters here. Very few Mexicans are renters, as they have owned their own home for generations. It is rare that a Mexican wants to rent here. These folks are buyers, not renters.

It makes some sense to me that with the largest foreign population in Mexico that lakeside advertises their rentals in currency that is understood by the potential renter population.

. Mexican landlords advertise their properties in pesos here, as that is a currency more familiar to them. I think we have the best of both world's here and do not know of a single foreign landlord that would not accept the peso equivalent for monthly rent.

I agree with RoofBob, I hate it when tenants pay me in USD. What the hell do I do with it? Checks are fine, but please no American money.

Went to a tienda the other day and thought I was handing them a five peso coin. Turned out it was a US 25 cent piece. They did not know what it was and those US coins are looking a little funny to me, too nowadays. Still can't figure out where I got it. chico

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Re: Charging rental in foreign currency

Post by CanuckBob on Wed Jul 04, 2012 5:06 pm

I must have been misunderstood. I am talking about a rental price that is quoted in Pesos and doesn't fluctuate, not actually forking over foreign currency on rent day.
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Re: Charging rental in foreign currency

Post by Chico on Wed Jul 04, 2012 5:12 pm

Mexican landlords do this all of the time and it does not fluctuate. To them a peso is a peso is a peso. Foreign landlords advertise in dollars and if you pay in pesos, it is determined by the exchange rate on that day or real close to that day. Read my post directly above yours. chico

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Re: Charging rental in foreign currency

Post by CanuckBob on Wed Jul 04, 2012 5:22 pm

Well someone had told me that there was some sort of regulation against having this fluctuating rent every month. It was under a tenants act or such.
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Re: Charging rental in foreign currency

Post by Chico on Wed Jul 04, 2012 5:28 pm

Well, "someone" was wrong. Aren't you glad that you now have the correct information? Dead Horse chico

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Re: Charging rental in foreign currency

Post by slainte39 on Wed Jul 04, 2012 5:29 pm

CanuckBob wrote:I must have been misunderstood. I am talking about a rental price that is quoted in Pesos and doesn't fluctuate, not actually forking over foreign currency on rent day.

That can happen too...a firm price in pesos, or a firm price in dollars that must allow the renter to pay at the buy rate for pesos on the day of the transaction.
In addition to ISR (income tax) on the rental income that the owner is liable for, the owner should also be collecting IVA (the 16% value added tax) on the amount of the rent from the renter and depositing that to Hacienda on a monthly basis. Any transaction involving IVA should be documented on a government approved factura if the renter needs the IVA credit for his tax returns...say...expense accounts.

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Re: Charging rental in foreign currency

Post by martygraw on Wed Jul 04, 2012 6:10 pm

We have rented here for the past 9 years, our landlord is Mexican and we pay our rent in Mexican pesos at a fixed sum.
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Re: Charging rental in foreign currency

Post by johninajijic on Wed Jul 04, 2012 7:34 pm

Hi ll - I think you're all missing a point here to do with exchange rate. The exchange rate fluctuates daily.

If I rent my Casita at $ 500. US a month (hypothetically), my agreement says "or equivalent pesos at that days exchange rate). Which is legal.

If I rent in pesos look at the following example:
$ 500 US x 13.00 xchg rate = $ 6,500 pesos.

When the xchg rate is 14, my rental value is $ 464 US, unfair to me.

When the xchg rate is 12, my rentak value is $ 541 US, unfair to my Tenant.

It still makes more sense to rent in US $ and it even makes more sense to sell property in US $ because the exch g rate varies. On a house there would be either overcharging or undercharging in pesos. Suppose you put an ad in the Mexican newspaper in GDL, you can't change the price every time the peso fluctuates and both the buyert or seller's pricing is incorrect. My house is advertised in the Mexican paper in pesos because I was told I had to do it that way.
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Re: Charging rental in foreign currency

Post by HelperGuy on Wed Jul 04, 2012 7:39 pm

It only makes sense to rent in US$ if you are from NOB. Here, a peso is a peso, no matter what other world currencies are like. Otherwise, I'd be worried about the yuan, the Euro, and the florin, too. "Now what's my rent in Albanian leks? Oh, no!!"

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Re: Charging rental in foreign currency

Post by Intercasa on Wed Jul 04, 2012 8:10 pm

It is an agreement between the parties.

I went to seize property of a foreigner with the court (2 weeks ago) that did not pay the rent for 10 months. The tenant paid to avoid seizure of their goods and further court costs as they did owe the amounts claimed but complained that the exchange rate went up (contract was for an amount in US dollars) from the time the rents were due until the time the landlord sued. Had they paid their rent on time they probably would have paid an exchange rate of a bit under 13 to the dollar. At the time they had to pay or have their belongings seized the rate was 13.8 to the dollar and the landlord´s attorney agreed to accept a rate of 13.5 pesos per dollar to satisfy the delinquent rents.

If you do not want to risk fluctuations then do not enter into a contract in dollars or whatever currency you fear. For many who earn their income in dollars paying in dollars makes sense, it may not for Mexicans who earn in pesos and who do not want to risk the fluctuations.
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Re: Charging rental in foreign currency

Post by sparks on Wed Jul 04, 2012 9:29 pm

In six years ... never have I rented a place listed in dollars and I never would... That is a tourist trap or for someone new to Mexico.

Rent from Mexican a 3-4 bdroom very nice house for 4-5000 pesos and you will all be happy
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Re: Charging rental in foreign currency

Post by sparks on Wed Jul 04, 2012 9:48 pm

Joco is not Lakeside I assume .... you are on the other side of the tracks. Beautiful house in Joco for 4k for 14 months and both landlord and I were happy. Then there is south side or SJC which are not exactly popular today.

If you need walking distance to this messsage board then it might be higher
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Re: Charging rental in foreign currency

Post by DaveP on Fri Jul 06, 2012 9:50 am

RoofBob wrote:Ima hanging on and didn't say everybody either. I wonder why they would want U.S dollars? Surely they have enough bills they have to pay in pesos.

Maybe they want to avoid taxes here and where they live. The tax on a rental for a non resident of Mexico is high I believe and also if the rental property is furnished it may also be liable for IVA.




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Re: Charging rental in foreign currency

Post by Zedinmexico on Wed Jul 25, 2012 9:25 am

Rental companies like USD checks because they are not taxed like
cash deposits. Cash is the bad boy down here for rental companies
cause it triggers the tax after a certain amounts of cash deposits
for the month. 2% is the tax if I remember correctly.

Z

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Re: Charging rental in foreign currency

Post by johninajijic on Wed Jul 25, 2012 9:34 am

Zedinmexico wrote:Rental companies like USD checks because they are not taxed like
cash deposits. Cash is the bad boy down here for rental companies
cause it triggers the tax after a certain amounts of cash deposits
for the month. 2% is the tax if I remember correctly.

Z

Cash deposits of over $ 15,000 pesos a month are taxed at 3%.
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