Internal Revenue Service Offers Good News for US Citizens Owning Property in Mexico
Vallarta Lifestyles asked attorney David Connell (Connell & Associates, Mexican Attorneys & Consultants, MexicoLaw.com.mx) to provide some insight on the reforms currently taking place in Mexico's Article 27, which determines ways in which foreign investors can and cannot purchase land in Mexico. For more information regarding real estate in Puerto Vallarta, please visit MLSVallarta.com. (virtualvallarta)
A recently announced ruling by the Internal Revenue Service could save U.S. citizens buying homes in Mexico thousands of dollars and endless headaches.
After lengthy discussions, the IRS formally acknowledged this month that fideicomiso - the Mexican land trusts foreigners must use to buy property along the coast - are not "trusts" under the definition of the U.S. tax code.
Foreigners can't directly own land along the coast. Instead, the fideicomiso are set up by the bank to hold the title for the property, which can be sold or transferred at any time without the bank's involvement.
If the fideicomiso were considered "trusts" by the IRS, owners would be required to fulfill all the filing obligations and fees associated with a trust.
... The ruling is only the latest good news for Mexico buyers. In April the Chamber of Deputies approved a measure that would remove the need for foreign buyers to use a trust to buy residential property on the coast. The measure, which provoked stiff opposition, still needs formal Congressional approval, but the industry was certainly buoyed by the measure's initial success.
Read the rest at World Property Channel
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