Do you own property down there?

Landshark

Landshark

Guest
For about the last year it seems like the American border agents always ask me this question. When I'm heading down, they usually start with "Where are you going?" When I reply, Rocky Point, they immediately say "Do you own property down there?" What happened to "Do you have guns, drugs, or $10,000 or more in cash?" Coming back, same story, "Where have you been?" "Do you own property down there?" Apparently they weren't having much financial success with their usual tactics, so they have a new angle. Taxation!!!


Starting in 2012, a new law will require you to report all foreign assets. At that time you will be required to report your ownership. The IRS has decided Americans who transfer property to or has an interest in a Mexican fideicomiso must comply with the information reporting requirements of section 6048.


So now the questions make sense. They are planning a way to take our money once again. Are they tracking our answers? No you say? I wouldn't be so sure. "Do you own property down there?" No sir, renting a condo on Sandy Beach and goin drinkin" :-D
 
K

Kea

Guest
Changed my mind -- don't want to post my comment here after all.
 
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Landshark

Landshark

Guest
Thanks to all for your responses. Interesting reading...NOT. Now I have a headache. I had heard a little about this but didn't know how far they had gone with it. I will speak with my accountant to determine my responsibility based on my very limited involvement.
 
K

Kea

Guest
>>>coward !!<<<<

Yep!!
I may re-post it or a modified version. I just want to be careful with what I say on this matter.

And I've never been asked at the border, either.
 
K

Kea

Guest
Yes. I bought in 2010 and filed Forms 3520A & 3520 last year (for 2010). This year I will do the same as well as filing the new Form 8938, which will get filed with the 1040.

FYI, Forms 3520A & 3520 are separate filings from the 1040. 3520A is due March 15 and 3520 is due on the regular tax date, including extensions (if your 1040 is on extension).
 
J

JimMcG

Guest
Wahoo said:
... this is HUGE as it pertains to RP. This will become effective January 2013!!!! Here is more on the US reporting laws. If you have a US asset that is invested abroad you will be taxed on it... Foreign Taxes paid could offset some of it but that would be from actual taxes paid... In mexico taxes are paid in arrears.... so not much to offset.

"The U.S. Treasury Department and IRS recently released nearly 400 pages of proposed regulations that detail their plans to implement the Foreign Account Tax Compliance Act (FATCA), which becomes effective on January 1, 2013. The proposed rules are intended to prevent U.S. taxpayers who hold financial assets in non-U.S. financial institutions and other offshore accounts from avoiding their tax payment obligations.

The proposed rules give FFIs additional time to make adjustments to their systems for reporting U.S. income. Through 2014, FFIs would only have to provide identifying information (name, address, taxpayer identifying number, and account number) and the account balance or value of the U.S. accounts. Beginning in 2016, they will be required to report income. By 2017, the full transactional reporting will be required. (FFI is the one holding the Trust which will be required to report to the US IRS) WOW.....!!!
Click to expand...
Could you provide a link to your source? Thanks
 
moore_rb

moore_rb

Stay Thirsty My Friends
Wahoo said:
and for the Expatriats living in RP and collecting social security etc;

An American taxpayer owns a a home or condominium in Rocky Point, Mex and lives there full time. Being in the restricted zone, he has a Fideicomiso. Looking at the numerous advertisements to rent these homes to Americans on vacation, as they appear in Craigslist and Baja real estate agents websites, that taxpayer's home or condominium has a fair market rental rate of $175 per day. Under FATCA, the taxpayer should report $63,875 of taxable income to the IRS, commencing in 2011. Individual tax rates in 2011 vary from 15% to 39.6%, so this could create an additional federal income tax liability of $9,580 to as much as $25,300, in the example.

WOW!
Click to expand...

Hmmm... I'm pretty sure that the reporting requirement is adjustable based on actual rental occupancy rates. Just because your property is for rent every day does not mean you owe tax for every day... you owe the tax only for the days it was occupied by a tenant.

Also remember- reporting to the IRS that you own foreign assets is not a very dangerous thing... it is failing to report foreign earned income that will get you into trouble- and this includes income/capital gains from the sale of a foreign asset.

So, the solution if you want to avoid the headache, is simply not to rent your place out. Pay your Mexican taxes, maintain it for your personal use, and keep it unregistered with Oceano, RPR, or any of the other rental management companies; because I guarantee that if they are not already reporting data to the IRS, then they will be soon.


This is a no brainer- If you have a Social Security number, then you are a tax slave to the IRS, and they will find you, and squeeze you for everything you "owe" them...


And just think- 5 years ago everyone thought having a condo in another country was such a great get rich plan because the tax laws were not sophisticated enough to deal with it... funny how fast the lazy old hounds will run once they are onto the scent of blood... :)
 
Landshark

Landshark

Guest
Terry C said:
Landshark, here is a news letter from Nezter...IMPORTANT TAX FILING INFORMATION FOR US CITIZENS
Update your Trust | Nezter
I
it's a Blog
Click to expand...
Uncompensated use of trust property:
If you, a US beneficiary, or a US person related to you or the US beneficiary, directly or indirectly, received the use of any property of a foreign trust, the fair market value (FMV) of such use will be treated as a distribution to you or the US beneficiary, unless you, the US beneficiary or the US person related to you or the US beneficiary compensate(s) the trust at FMV for the use of such property within a reasonable period of time.

So if you own a beach home in RP that is held in a trust, do not rent it or receive any income in any way, vacationing there on & off thoughout the year will create a tax liability for you?? A distribution from the trust to you based on FMV per day for the number of days you were there??
 
jerry

jerry

Guest
1099-CSome cancelled or forgiven debts are reportable on form 1099-C. This includes both credit card and mortgage debt that was canceled. If you receive a 1099-C after a short sale or foreclosure of your home, then the IRS will allow you to exclude the forgiven debt as long as it was created on your primary home because the Mortgage Forgiveness Debt Relief Act of 2007 allows that for short sales and foreclosures through 2012.If the canceled debt that prompted the 1099-C was from a credit card or other debt, then you may still be permitted to exclude it if you were forgiven due to bankruptcy or insolvency, or if it was a non-recourse loan.

Read more: A 1099 Crash Course For 2012​
 
T

Terry C

Guest
I have not read the ruling but two sources confirmed this. It has some stipulations i'm sure.

It is official, the IRS has issued Revenue Ruling 2013-14 stating that a Mexican Land Trust, Fideicomiso, is not a trust for purposes of 301.7704-4(a), and hence no IRS form 3520 is required. Your accountant can easily get a copy of that revenue ruling.
 
K

Kea

Guest
Thanks for the Revenue Ruling # Terry C.

Here is the link to the revenue ruling: http://www.irs.gov/pub/irs-drop/rr-13-14.pdf

It's only 7 pages and does not have a lot of legalese (but there is some). I am not a tax attorney and am not in a position to make an official opinion. But it looks promising. I have forwarded the link to a tax attorney (who prepared my initial 3520 and 3520A) to get his opinion. I'll let you know what he says.
 
K

Kea

Guest
My tax attorney says it's official that the above rev. rule means the forms 3520 and / or 3520A do not have to be filed fora fideicomiso!

(YMMV)
 
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