Tuesday, November 30, 2010

Climate Change Conference: Its Effect on Puerto Morelos

Well, the Climate Change Conference is leaving its mark in Puerto Morelos.  

On a great note, the overpass that was installed for this Convention is finished.  I can't wait to be able to drive from Cancun to Tulum without a stoplight!  Hopefully they will finish the others in Playa del Carmen soon!

On a good note, it has allowed the Puerto Morelos area to take center stage with environmentalists.  Hopefully, those close to the National Park and the mangroves in Puerto Morelos are networking like crazy.  This presents a great opportunity to put the natural treasures of Puerto Morelos under the wing of the international environmental community's protection and watchful eye.

On a hopeful note, I am planning on taking the kiddos to the FREE Climate Change Village.  Are you going?

On a humorous note, Mexico decided to install a giant windmill near the Conference Center.  It went up super fast and just before the Conference was set to start.  We have all chuckled that it is plugged into a generator onsite ;)  However, Presidente Calderon participated in its inauguration and says its a promising sign of Mexico's potential for harvesting wind power.

On a not-so-good note, traffic has been terribly snarled by the crazy one-lane-each-way-detour that they have set up on the highway.  It took staff from our office 5 hours to get to work yesterday morning!  It's actually faster to go through Central Vallarta and Leona Vicario to get to Cancun -- can you imagine that.  To make things worse, rumor has it that there is going to be a protest on December 7th that is going to shut down 307 completely.

On a horrendous note, the fishermen of Puerto Morelos were notified on Friday that as of yesterday (Monday) they could NOT fish or take snorkelers inside our reef FOR 12 DAYS!!!  This was done as a security measure, but it leaves an vital part of our community unemployed, without notice, just before the holidays.  While they are trying to negotiate a compromise, the last-minuteness of the ban has put everyone on their heels.

Fellow Puerto Morelians, you know that I don't normally use the blog to get on a soapbox to urge others to action, but I am officially calling all residents to join in, spread the word, and take part:  WHEN THE PORT RE-OPENS IN TWO WEEKS, EVERYONE PLEASE MAKE A POINT OF BUYING SEAFOOD FROM THE FISHERMAN'S MARKET AND/OR TAKE A SNORKELING TRIP!! Maybe its been awhile since you've done either.  I know I am overdue.  The extra business will help them immensely this holiday season!!



Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Saturday, November 27, 2010

Gray Cup Party in Puerto Morelos!! All Canadian Football Fans!!!

An open invitation from fellow Puerto Morelians, Brenda and Don Mackay!


Brenda and Don Mackay are having a Grey Cup Party on Sunday - game time is 5:30 - come about 4.  Bring an appie and your fav. drink.  We are at #2 Sole Villa's north of Puerto Morelos.  Take the highway Norte towards Cancun - take the first right AFTER the turn off for Puerto Morelos - at the Crococun Zoo.  When you come to the T intersection (at the entrance to The Excellence Hotel) take a right and continue down the road to Solë Villas.  If you come to Dreams you have gone too far.  Our telephone numbers are 998 216-5100 cell and 998 206-9224 home.  Hope to see you on Sunday.  Go Sask Go! 



Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Friday, November 19, 2010

Cancun is the #1 Destination in Mexico for North American Travelers!

Cancun was recently voted the #1 destination in Mexico among travel agents and travelers in several recent surveys.

Wonder if those folks have ever been to Puerto Morelos?  ;)


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Monday, November 15, 2010

Extinct Animal Skulls on an recent dive exploration in cenote!

Ok folks, when I grow up I want to be a "Sub Aquatic Archeologist"!  How cool is that??

On a recent diving exploration here in the Yucatan Peninsula, Sub Aquatic Archeologist found skulls from an extinct species of bear not formally known to have lived in this area, as well as human remains.

Read all about their finds in a recent article on artdaily.com

Cool Stuff!!  Very Cool Stuff!


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Friday, November 12, 2010

Attention Divers! Underwater Sculpture Garden is Complete!

Awhile ago, I had posted news about an underwater sculpture museum being installed.  And now...It's ready!  And it looks incredible!!!!!

Sculptor Jason deCaires Taylor completed the 400 life-size sculptures here in Puerto Morelos, which have recently been installed near Isla Mujeres!  An excellent account of his experience was recently documented by the LA times -- worth the quick read!!





Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Cancun in World Spotlight with Upcoming U.N. Climate Change Convention!

Cancun will be in the world spotlight in the coming days.  The 2010 United Nations Climate Change Conference will be held in Cancun from November 29th - December 10th, 2010.

Cancun will have a Village of Climate Change which will offer cultural and climate exhibits and expositions.  Best part?  IT'S FREE ADMISSION!  So, plan on stopping by and checking it out.  It will be located at km 7.5 on the 307 highway (near airport).  [At the time of this blog post's publishing, I could not find a program of events for the village.  If you happen to come across one, please forward it to me -- I would love to add it to this post!]



Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Traditional Mexican Cuisine is recognized by UNESCO!!

Congrats Mexico!!

UNESCO will meet next week to accept Traditional Mexican Cuisine on the Representative List of the Intangible Cultural Heritage of Humanity.  It is the first cuisine to receive this distinctive honor!

Check out the Video Here.
See the List of Nominees Here.

Here's what the committee had to say:
"Traditional Mexican cuisine is a comprehensive cultural model comprising farming, ritual practices, age-old skills, culinary techniques and ancestral community customs and manners.
It is made possible by collective participation in the entire traditional food chain: from planting
and harvesting to cooking and eating. The basis of the system is founded on corn, beans and
chili; unique farming methods such as milpas (rotating swidden fields of corn and other crops)
and chinampas (man-made farming islets in lake areas); cooking processes such as
nixtamalization (lime-hulling maize, which increases its nutritional value); and singular utensils
including grinding stones and stone mortars. Native ingredients such as varieties of tomatoes,
squashes, avocados, cocoa and vanilla augment the basic staples. Mexican cuisine is
elaborate and symbol-laden, with everyday tortillas and tamales, both made of corn, forming
an integral part of Day of the Dead offerings. Collectives of female cooks and other
practitioners devoted to raising crops and traditional cuisine are found in the State of
Michoacán and across Mexico. Their knowledge and techniques express community identity,
reinforce social bonds, and build stronger local, regional and national identities. Those efforts
in Michoacán also underline the importance of traditional cuisine as a means of sustainable
development."

For those of you who haven't enjoyed the traditional cuisine, highlighted in Michoacán, it is spectacular and not something to be missed!  I think I could move to Michoacán to enjoy corundas and atole!  Michoacán is truly a trip of a lifetime:  the food, scenery, folk art, and people are truly incredible.




Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Thursday, November 11, 2010

Guinness World Record in Free Diving Set in Dos Ojos!

Free diver Carlos Coste of Venezuela set a free diving record in the Dos Ojos!  150 meters / 2 minutes 32 seconds.

Read the whole article here.


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Tuesday, November 9, 2010

THE FIDEICOMISO (MEXICAN BANK TRUST) CONTROVERSY

THE FIDEICOMISO (MEXICAN BANK TRUST) CONTROVERSY

and FORMS 3520 and 3520A
is it?   or is it not??
(a trust under IRS rules)


by Linda Neil ABR® (US) and Don D. Nelson, CPA and attorney specializing in tax law (US)


Per Internal Revenue Code Section 6048 any trust established in a foreign country  or its US beneficiary must file certain forms with the  US department of the treasury (Internal Revenue Service) each year.  Forms 3520 and 3520A must be filed by anyone who holds an interest in a foreign trust as a beneficiary.  These forms are many pages long. The form 3520A is due on March 15th following the end of a calendar year. Form 3520 is due on the extended due date of the taxpayer’s personal tax return. These forms must be filed each year that the foreign trust is in existence. These forms report on the assets, liabilities and income and expenses of the foreign trust.

If the US taxpayer has deposits in foreign banks, stock brokerage accounts or other foreign financial accounts and when the highest balance in those combined accounts equals or exceeds $10,000USD, during a calendar year, form TDF 90-22.1 must be filed by June 30th following the end of each calendar year. This form is not filed with taxpayer’s personal tax return and cannot be extended beyond that due date.

Any US citizen who holds an interest of 10% or more in a foreign corporation must file form 5471  and must be filed on the due date of taxpayer’s personal form 1040 each year. There are similar rules and special forms for US taxpayers that hold interests in foreign partnerships and foreign limited liability companies.

The penalties for non-filing or late filing of any of the forms mentioned above can be    $10,000.00 USD or more.

Recently there has been news in the media and on the internet that the Mexican bank trust (fideicomiso) probably should not be included in this filing requirement.  Some attorneys believe that the Mexican bank trust, (fideicomiso) may not be a foreign trust and does not  meet the criteria which requires filing of forms 3520 and 3520A.  Some of these attorneys have also hypothesized  that no reportable event occurs when a US taxpayer acquires a property in fideicomiso. This is great in theory, but here are the facts:

  1. The IRS has never issued any written ruling or opinion whether or not  a fideicomiso is a foreign trust and IRS sources state it  has no intention of doing so in the near future. 
  2. Under US tax law, an oral decision made in an individual's tax matter CANNOT be cited as authority by another taxpayer in a similar factual situation. 
  3. No one has received a private letter ruling that the Mexican fideicomiso is not a foreign trust nor have any court cases so decided. 
  4. Unfortunately, most of the standard wording in a Mexican fideicomiso document reads just like the wording of a foreign trust. 
  5. A representative of the IRS General Counsels Office has said that since the IRS has not yet (nor may ever) issued a ruling that a Fideicomiso is not a foreign trust, it is not advisable to rely on an opinion on that requirement that does not come in writing from the IRS. 
  6. The fact the IRS will not issue a written opinion on fideicomiso filing requirements should be cause to worry. It would be easy for them to issue written guidance if they really were certain that the beneficiaries of fideicomisos did not have to file the foreign trust forms. 
  7. Currently in almost all situations, anyone who has filed these forms late and included a late filing excuse, has not been assessed penalties. Those who have filed the forms late and did not include a late filing explanation have been assessed penalties, but have subsequently  been able to get the penalty abated after appealing.  This could change in the future.


In conclusion, common sense requires that the taxpayer file the Forms 3520 and 3520A unless the IRS states in writing it is not necessary to file these forms.  Any US taxpayer should file if he/she wishes to avoid time consuming and expensive audits and  court litigation.  

The foreign trust  forms do not change the existing rule that if rental income from the real estate held in fideicomiso  must be reported on personal US tax returns.  There are also reporting requirements in Mexico.

If the property is sold, the gain or loss must be reported under the same rules that apply to personal or rental property located in the US.  If sold at a gain a credit for Mexican taxes paid on that gain can be taken against the US income tax on any of the gain which is taxable on the taxpayer’s US tax return.

It should be kept in mind that there are attorneys out there writing articles and issuing written opinions stating various positions on all aspects of the US income tax law.  Some  of those opinions are correct and some are not. Generally the taxpayer must go to Court to determine if the opinion is correct unless the IRS later concedes this in writing.  For approximately five years the IRS has known that certain attorneys have expressed that a fideicomiso should not have to file Forms 3520 and 3520A. The IRS has not agreed as of this date. 

Co-Author Linda Neil is the founder of The Settlement Company.  It is the first escrow company in Mexico, and is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty five years of hands on experience in all aspects of Mexican real estate.  She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96.  E-Mail; linda.neil@settlement-co.com  Web Site: http://www.settlement-co.com.
 

Co-Author Don D. Nelson.  - Attorney and C.P.A. has over 31 years of experience in U.S. international taxation, tax law, expatriate taxation, and assisting US Citizens, Americans, permanent residents and nonresidents with their U.S. tax problems, returns, planning, and other tax and legal matters. Visit Don's websites at www.taxmeless.com, www.expatattorneycpa.com  E-mail: dondnelson@gmail.com


copyright January 2010, Consultores Phoenix, S.C., reproduction prohibited without permission.



Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Sunday, November 7, 2010

Discounted Summer Rates on Electricity Have Ended!

Time to cut back on the Air Conditioning -- our discounted electricity rates from CFE are over for the year.

This event will really stress out my husband, but delights the heck out of me.  The ambient temperature of our home has nearly caused the demise of our blessed union a time or two. ;)

Wondering about how your CFE rates work or how to read your bill?  Check out my prior post: "Understanding Your Electric Bill from CFE"


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Friday, November 5, 2010

Good Deals on Flights to Cancun from Canada: Edmonton, Calgary, Toronto, and more...

Check out Signature.ca and search their flights!  They fly out of many Canadian cities!

Another good one to check is Sun Wing Airlines.  They also fly from Canada to Cancun!


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

US Consulate in Cancun is moving to a new location

U.S. Consulate Merida

Calle 60 # 338 K x 29 y 31
Colonia Alcalá Martín
Mérida, México C.P. 97050



WARDEN MESSAGE

November 3, 2010


The Cancun Consular Agency will move to a new office building.  The new address is:

U.S. Consular Agency Cancun
Blvd. Kukulcan Km 13 ZH
Torre La Europea, Despacho 301
Cancun, Quintana Roo, Mexico C.P. 77500

Note: The building is located in front of the Cancun hotel zone police station.

From now through close of business on Friday, November 5, 2010 we will continue to receive customers at our current location: Plaza Caracol, third floor, No. 320-323, Boulevard Kukulcan, Km. 8.5, Zona Hotelera, Cancun.

Beginning Monday, November 8 all customers should visit the new location in Torre La Europea.

An appointment is required for all services in Cancun such as U.S. passport applications, Consular Report of Birth Abroad, notarials, and other requests for in-person meetings.  Please make an appointment by calling the office phone during normal office hours or send an email to cancunagency@gmail.com containing information about the service you require, your contact information and a preferred time for your appointment within normal office hours.  Emergency cases are accepted as walk-ins.

Phone numbers for the Cancun Consular Agency will remain the same.  These are:

Office: 998-883-0272
Vonage: 202-640-2511
Fax: 998-883-1373

For the latest security information, Americans traveling abroad should regularly monitor the Department's Internet web site at http://travel.state.gov where the current Worldwide Caution Public Announcement, Travel Warnings, and Public Announcements can be found. Up to date information on security can also be obtained by calling 1-888-407-4747 toll free in the United States, or, for callers outside the United States and Canada, a regular toll line at 1-202-501-4444. These numbers are available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays). American citizens traveling or residing overseas are encouraged to register with the appropriate U.S. Embassy or Consulate.  To register please click here: https://travelregistration.state.gov/ibrs/ui/.
The U.S. Consulate in Merida, Yucatan, Mexico, has responsibility for the Mexican States of Quintana Roo, Yucatan, and Campeche.  The Consulate can be reached during its regular business hours (M-F, 7:30 a.m. to 4:30 p.m.) by telephone at 999-942-5700; by fax at 999-942-5777; and by email at meridacons@state.gov.  After hours, for emergencies involving U.S. citizens in the Mexican states of Yucatan, Quintana Roo, and Campeche, call the Consulate’s main number and follow instructions to be connected to the Merida duty officer.
 
Full contact information follows:
 
CONSULATE MERIDA (Calle 60 No. 338-K x 29 y 31, Colonia Alcala Martin, Merida, Yucatan, Mexico)
Main switchboard dialing from the US: 011-52-999-942-5700
Main switchboard dialing from outside Merida but within Mexico: 01-999-942-5700


CONSULAR AGENCY CANCUN (U.S. Consular Agency Cancun, Blvd. Kukulcan Km 13 ZH, Torre La Europea, Despacho 301, Cancun, Quintana Roo, Mexico)
Office dialing from the US: 011-52-998-883-0272
Office dialing from outside Cancun but within Mexico: 01-998-883-0272
 
CONSULAR AGENCY COZUMEL (Plaza Villa Mar en el Centro, Plaza Principal, (Parque Juárez between Melgar and 5th Avenue) 2nd floor, locales #8 and 9, Cozumel, Quintana Roo, Mexico)
Office dialing from the US: 011-52-987-872-4574
Office dialing from outside Cozumel but within Mexico: 01-987-872-4574
 
CONSULAR AGENCY PLAYA DEL CARMEN ("The Palapa,"  Calle 1 Sur, between Avenida 15 and Avenida 20, Playa Del Carmen, Quintana Roo, Mexico)
Office dialing from the US: 011-52-984-873-0303
Office dialing from outside Playa Del Carmen but within Mexico: 01-984-873-0303


Twitter and Facebook Readers can view the original post and leave comments at: PuertoMorelosBlog.com.

Amber Pierce-Schulz is the Broker/Owner of Mayan Riviera Properties, specializing in Puerto Morelos Real Estate and Puerto Morelos Vacation Rentals. We are members of AMPI and Federally Certified Realtors.

Wednesday, November 3, 2010

Understanding Capital Gains (ISR) Tax in Mexico

Welcome to a topic that no one likes to think about, but everyone wants to know about -- Capital Gains Tax in Mexico!

There is much confusion surrounding the topic, and it exists is for good reason.  The tax codes have been changing and subject to gray areas/interpretation.

Major changes were effected in 2007 and more reforms have just recently been passed.  There have been some important and big changes in the tax law that have taken effect January 1, 2010.  The aim of this article is to explain these changes and reforms.   [In light of all of the recent changes, be sure that as you surf the net for info on this topic, the sites you are reading have current information.  There is a lot of outdated info out there.]

IMPORTANT:  This scope of this article covers residential properties owned in a deed or in fideicomiso.  Commercial and rural properties, and/or those owned by a Mexican Corporation are subject to a different set of tax codes!!


What is the Capital Gains Tax?
 The Capital Gains Tax in Mexico is a Federal Tax known as Impuesto Sobre La Renta (ISR).  
  • More accurately, ISR is an income tax (not a capital gains tax), as it is assessed like any other income to an individual.  
  • It cannot be rolled over into another investment as it can in the U.S. 
  • It is payable by the seller to the notary at the time of closing.  
So, rather than confuse or mislead, from here on out I will refer to this tax as "ISR" -- it's proper name.  This tax is assessed on the amount of income (or gain, which is where the confusion of terms arises) that is realized through the sale of a property. 


How is ISR Assessed?
The notary will make the following two calculations.  Whichever calculation is lower (and therefore more beneficial for the seller) will be used:
  1. 25% of the Gross Sale Price
  2. 30% of Income Received From the Sale
    • This amount increased from 28% to 30% as a result of the new 2010 tax reforms.  The percentage is scheduled to return to 28% in 2014, but by then it will be on the next President's watch and for him/her to decide whether to reduce the tax as scheduled.  
    • This option is most commonly the lower of the two values, and is therefore the most common formula for assessment.
    [NOTE:  There is also a state tax on income earned from the sale of property, but it is completely deductible from the federal ISR.  So, for the purposes of the discussion, it is not relevant.]


    How is ISR Calculated?
    • The income from the sale is calculated with the following method: 
    Recorded Sale Price - Adjusted Recorded Purchase Price = Income as the Result of the Sale
    • The ISR is calculated with the following method:
    Income as the Result of the Sale x 30% = ISR to be Paid by Seller, Less Any Applicable Deductions
    (As of now, the 30% ISR tax is scheduled to return to 28% in 2014.)

    Terms to Understand in the above formula for calculating income:
    1. Recorded Sale Price:  This is the value that will be recorded in the deed (escritura) at the time your property is sold. 
    2. Adjusted Recorded Purchase Price:  This is the value that was recorded in the escritura when you purchased the property that is adjusted for inflation by the notary.
      • Why is this done?  If you would merely compare the sale price to the purchase price, you would not be "comparing apples to apples".  For example, if I paid for and recorded a property at $50,000 USD in 1980 and am selling in 2011 for $150,000 -- it would not be fair to calculate my gain as $100,000 -- because the value of $50,000 back in 1980 was higher than it is today, due to inflation over time.  So, the notary will adjust your originally recorded purchase price up, using a standard schedule of annual inflation, to factor in inflation and thereby make the two numbers comparable. 


    What Deductions are Applicable?
    The good news is that there are several deductions that can significantly decrease the amount of ISR you will pay!
    1. The following expenses that you incurred while purchasing the property are deductible:  Notary Fees and Some Federal/State/Municipal Taxes and Fees incurred at the time of purchase.
    2. The following expenses that you will incur when you sell the property are deductible:  Real Estate Commissions, Notary Fees, Some Federal/State/Municipal Taxes and Fees incurred at the time of purchase.
    3. Capital Investments that you have made to the property in construction, remodel, etc. are also deductible.  These investments are projects that added real value to the property --  i.e. a plumber's bill for a leaky faucet wouldn't count.
    IMPORTANT!  In order to for the above services to qualify as deductible services, you would have had to pay IVA sales tax.  If you didn't (i.e. you paid for the services "under the table") then they will not qualify as a deduction.  This makes sense right?  If you didn't pay taxes the first time, they will not then allow you to use them as a deduction later.  So, get your facturas or receipts for these services!  These facturas or receipts should include:  Your name, Property Address, Date, The Name & Tax Number of the Person or Company issuing the Factura or Receipt, and the Tax (IVA).

    If you don't have facturas for your capital improvements, an official appraisal can be performed as a substitute.


    Can I Exempt my Residence from the ISR tax?
    In some circumstances, the law allows homeowners to partially or completely exempt their residence from the ISR tax. 

    FIRST CRITERIA:  To have a chance at qualifying for exemption, the property that is being sold must qualify as a residence.  Residence is defined as property where the square meters of the land does not exceed three times the area of construction. [RISR 129]

    SECOND CRITERIA:  Does your circumstance as an owner qualify for exemption?  This is a bit more complicated.  To find out if your residence qualifies for ISR exemption, let's begin with the following chart:
    [Click on Flow Chart to View in Larger Size.]
    Are you a Fiscal Resident of Mexico?  According to the Fiscal Code, foreigners who reside in countries other than Mexico shall be considered residents of Mexico when:
    1. The residence is not temporary/seasonal, with touristic purpose [RCFF 5]
    2. When their vital center of interest  is in Mexico [CFF 9]
    It defines having a vital center of interest in Mexico as the ability to demonstrate one of two scenarios:
    1. 50% or more of total income in a calendar year is derived from Mexican sources.
    2. When Mexico is the principal center of your professional activities
    In either scenario, foreigners would, by default, be required to have a  FM3 or FM2 endorsed by a Mexican corporation that they own or to whom they are employed.  Additionally, they may need to produce tax documents from SAT (Mexico's tax authority) to verify their Mexican source of income or center of professional activities.

    Have You Exempted Any Other Residence Within The Last Five Years?  If you have, you cannot be exempt.  Note that this does not mean that you haven't sold another property within the last 5 years, only that you haven't exempted one within that time.  If you haven't exempted within 5 years, then you will be eligible for some form of exemption, and the amount of time you have owned the home, will dictate whether or not there is a cap on the amount of ISR you will pay -- which takes us to the next question.

    Can I Demonstrate That I Have Lived in the Residence for the Last 5 Years?  At this time, the law dictates that the homeowner must present any ONE of the following documents, in the homeowner's name with the residence's address, to demonstrate residency:
    1. Valid, Official Identification -- Credencial de Elector for nationals.  FM2 or FM3 for Foreigners.
    2. Receipt for electricity or landline telephone
    3. Statements from banks, financial institutions, or credit card company
    Is the Price of the Sale More Than 1,500,000 UDIs?  "UDI" stands for Unidad de Inversion or Investment Units and is a number based on an index of funds, rather than relying on the ever changing peso.  At the time that this article, 1,500,000 UDIs was equivalent to approximately 6,300,000 pesos.


    Why is Fiscal Residence Required For Foreigners?:
    The notary in the transaction is responsible for collecting the taxes/fees due to government in transactions.  [Click here for more info about notaries in Mexico.]  If, during an routine audit, the government finds that a notary allowed an illegal/unjustified deduction or granted an exemption without sufficient documentation to meet the requirements as stipulated by the law, the notary is financially responsible for the difference.

    The notary's are currently mandated, by direction of the notary counsel, to apply the fiscal codes, in addition to the residency codes, when making ISR exemptions.  The actual codes regarding ISR themselves do not clearly indicate whether both residency and fiscal codes are to apply in ISR exemption.  If this mandate is changed in the future, non-citizens would only have to meet residency requirements to qualify for exemption purposes.


    References:  
    1.  Porta Themis Fiscal con Correlaciones [Tax Code for 2010].  Ley del Impuesto Sobre la Renta.  Título IV, Capítulo IV: "De Los Ingresos por Enajenación de Bienes.  www.themis.com.mx
    2. AMPI Course: 2010 Tax Reforms.  Given by Attorney Alfonzo Aranalde and Accountants Carrasco Garcia and Asociados. 
    3. A special thanks to Attorney Alfonzo Aranalde of Playa del Carmen who patiently answered my endless questions while I was putting this article together!  984.147.0044 or aaranalde@legalriviera.com
    This article is copyrighted by Mayan Riviera Properties in 2010.

    Twitter and Facebook Readers can view the original post and leave comments at: http://www.PuertoMorelosBlog.com