September Brings New Fiscal Rules for Buying or Selling Real Estate in Mexico
Timothy Real Estate Group
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August 8, 2014
We have just been advised of a new fiscal resolution regarding Buying and Selling property in Mexico. The new change was announced on July 4th by the Secretary of Hacienda and Public Credit and will go into effect on September 1st, 2014. This new resolution will affect Buyers and Sellers of real property in Mexico.
Regardless of nationality, it is now required that all Buyers of real property receive from their notary a tax deductible receipt called a CFDI (Comprobante Fiscal Digital) to be able to use your purchase price for tax purposes. In order for the notary to be able to issue Buyers a CFDI receipt, all Buyers and Sellers are required to have an RFC (Federal Registry of Contributors or Tax Number) and a CURP (Unique Population Registration Code similar to a Social Security number). Otherwise, the tax value basis will be 0 (zero) and capital gains tax will be calculated on the entire new sales price without giving credit for what the Buyer paid to offset gain.
So what does this mean for Buyers and Sellers?
If you are buying or selling real property you will need an RFC and a CURP. In order to get a CURP, the foreign Buyer or Seller must get a Temporary Resident or Permanent Resident Visa in Mexico. For those that do not have a Temporary or Permanent Resident Visa the process starts in the country of your origin with your nearest Mexican Embassy or Consulate office and ends in Puerto Vallarta with the immigration services. This should not take more than a few days. The immigration visa card that you will be issued will have your new CURP. Once you have your CURP you will be able to apply online for your RFC. Although this procedure starts online you will have to come to Puerto Vallarta to register your residency permit and visit Hacienda (SAT) with your new RFC. For complete details contact an accountant or our in-house attorney Lic. Sebastian Lopez here at Timothy Real Estate Group.
Once you have your CURP and RFC you will be able to receive your CFDI receipt from the notary giving you the ability to use your purchase price for tax purposes when you sell your home and you will already be prepared with the proper documentation to sell.
For Sellers this is important because Buyers will now have as a contingency of sale in their Purchase Sale Agreements a clause that will require the Seller to have an RFC and CURP before closing.
Good news for anyone who at some point in the past has had an FM3, FM2, a Temporary Resident or Permanent Resident Visa, even if it has lapsed. Since s/he had been registered with foreign affairs, s/he will already have a CURP. It will then be easy to find the CURP and apply for an RFC online in case s/he did not have one.
For those that do not have a CURP we strongly suggest that the immigration process be started immediately in order to not delay a closing, or miss out on being able to purchase your new home or sell your property without being able to take advantage of a capital gain exemption.
If you are ready to make your purchase, we suggest that you allow for a 60-90 day closing period. We will work with your Real Estate Agent to draft your offer to allow for the time needed for you to complete the necessary process of obtaining your residency, CURP and RFC.
This may all seem daunting but it really is not as bureaucratic and difficult as what you may be used to at home. Mexico has things pretty organized for tax related issues and immigration so the processes should go very smoothly.
As with any new law that has just been announced in Mexico there is a chance that the authorities may modify these rules but we cannot count on that so please contact your Timothy Real Estate Group agent for complete details on how to properly prepare to purchase or sell your home in Puerto Vallarta. We will keep you informed of any changes so please check your newsletters.
Contact any Timothy Real Estate Group agent for easy details on how to make the best of your real estate investment in Puerto Vallarta.
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