For many years many gringos have used American LLC's to set up the bank trust to enable a sale of the property at a later date by simply paying minor legal costs to transfer the shares to the new owners. This avoids the typical bank trust and transfer tax of $10,000, or even more. It appears the sun has set on this loophole:
No more LLC's to avoid bank trusts and 2 % transfer tax?
- Thread starter joanC
- Start date
Brad
Guest
Can’t open letter
fatboyharley
Guest
all good things must come to an end
mondone
Whitecaps
Yes, just found this out last week from the attorney and notario that were about to submit the final steps and doc's for my LLC and bank trust that I have been trying to accomplish for over 5 years thanks to the sellers trust with HSBC. Nothing like getting stopped on the 1 yard line after all this time. If the attorney had not "lost" an important document that we signed in October, I would have got in under the wire. I'm so pissed off.
Another new law coming soon to the Mexico we know and love: It's common for a gringo property owner, who does not have any legal status in Mexico, to sell his Mx property for a profit and get paid without ever going to Mx and meeting the visa or residency requirements. He uses a Power of Attorney naming a Mexican as his Attorney to sign everything on his behalf. The problem: the capital gains tax never gets paid.
The new law will make the Attorney liable for the tax, and prior to signing must prove assets of sufficient value to cover the tax.
The new law will make the Attorney liable for the tax, and prior to signing must prove assets of sufficient value to cover the tax.
brokenwave
Guest
Well, hopefully getting a permanent resident card will ease the Mexico capitol gains taxes currently at 35% on a sale for a non-resident.
They are clamping down on all the tax avoidance that has happened for many years. I heard Mexico wants AirBNB and other rental places to
report all transactions so they can re-coup all the lost revenue from people not reporting income.
My local buddy who does construction deposited a check from a job for $10K, he had to justify where the $$ came from
and is still being questioned about it every time he deposit's $$ into his account.
They are clamping down on all the tax avoidance that has happened for many years. I heard Mexico wants AirBNB and other rental places to
report all transactions so they can re-coup all the lost revenue from people not reporting income.
My local buddy who does construction deposited a check from a job for $10K, he had to justify where the $$ came from
and is still being questioned about it every time he deposit's $$ into his account.
**Capital Gains Tax Exemption for Homeowners for November 16, 2021.**
The Income Tax Law of Mexico allows the homeowner the right to be exempted up to 700,000 UDI on the profit of the sale of his primary residence, thus if you have legal status (As temporary or Permanent Resident) you may enjoy that exemption. Other conditions apply.
The UDI will be worth on November 16, 2021), $ 7.004444 pesos, which multiplied by 700,000 UDI, and divided by the exchange rate of the day ($20.50) results in a savings of $4,903,110.8 pesos, or $239,176.13 dollars.
My last report on the UDI was on October 20th, 2021 and the savings in US dollars back then, resulted in $238,275.47 US dollars.
Questions?
Email me at [email protected]
Or call 619 409 2610.
Regards,
Rafael Solorzano.
The Income Tax Law of Mexico allows the homeowner the right to be exempted up to 700,000 UDI on the profit of the sale of his primary residence, thus if you have legal status (As temporary or Permanent Resident) you may enjoy that exemption. Other conditions apply.
The UDI will be worth on November 16, 2021), $ 7.004444 pesos, which multiplied by 700,000 UDI, and divided by the exchange rate of the day ($20.50) results in a savings of $4,903,110.8 pesos, or $239,176.13 dollars.
My last report on the UDI was on October 20th, 2021 and the savings in US dollars back then, resulted in $238,275.47 US dollars.
Questions?
Email me at [email protected]
Or call 619 409 2610.
Regards,
Rafael Solorzano.
Old55
Guest
So much for flipping properties….many houses and condos build in the housing bubble went for top dollar.I am wondering if the Sandy beach condos from 2008-10 for example are worth more or less than the original selling price….I know Santo Tomas hasn't gone up much so doubt much gain is happening there ……good old drug war…
Mondone: we are all happy you got under the wire.
The longtime reason to use an LLC as the owner in the trust was to make selling easier: transfer the LLC shares, and voila...deal is done. No costs for transfering the trust and no 2 % tax.
Do you feel Catastro will come up with some new rules to ensure when you sell the property in the future the LLC will not be of help?
The longtime reason to use an LLC as the owner in the trust was to make selling easier: transfer the LLC shares, and voila...deal is done. No costs for transfering the trust and no 2 % tax.
Do you feel Catastro will come up with some new rules to ensure when you sell the property in the future the LLC will not be of help?
playaperro
El Pirata
Just how they are taxing the VRBO and Airbnb 20 percent off the top they are thinking of getting people at the border and get FMM’s money from them, Be sad if they go after LLC and make them get bank trusts JMHO.
mondone
Whitecaps
The bank trust doc's were already prepared under the name of the LLC.
mondone
Whitecaps
Exactly the benefit of an LLC as of now. As to what they will change is up in the air, but I would say the primary goal to change is the 2% tax they are not collecting now.
You don't grasp the rules. Start with this: An LLC is a legal person, same as man buying a MXCN property within the " protected" area 100 KM in from an international border, and 50 KM in from the water. The LLC is the person buying the property. The LLC has always required a bank trust, as any other person. The new rules simply stop transferring the shares in the LLC to effect a sale, and thereby avoid the 2 % transfer tax as well as bank trust transfer costs. The first LLC owner gets no benefit, but when he sells he can get a higher price because the buyer avoids the tax and transfer costs.
Keep in mind: the 2 % tax goes to the city. Every sale of 250,000 will generate 5000. Local Mexicans can't go the LLC route, so they pay the transfer tax, and gringo's don't!
The banks usually charge up to $2000 to transfer a trust from Joe Smith to Bill Wilson, and a local notary will get some revenue on the deal. The traditional LLC share transfer we have had over the years cuts out the bank and notary, and only the US attorney who does the share transfer sees any coin.
Everywhere in the world, for a foreign LLC to do business or own property in a foreign country, it must register in that country. It then must have a local agent and registered office, and must file annual reports, reporting shareholders, directors and officers. If Mx wants to stop the tax avoidance, it can do so with rules on par with the rest of the world.