My husband was at a meeting yesterday. While they were waiting to start the subject of Rocky Point came up. A friend told him that they had spent 4 days at LP in a 2 bedroom in II for a really great rate. The owner sends them as relatives and they pay no fees, taxes etc. $150 a night. Another one told about a Sonoran condo 2 bedroom for $125 total. They were sharing number and going on about how great this is to screw the rest of the owners that pay the fees and taxes. When asked, he told them that we are having a good summer and that we charge and pay all the fees. Guess we won't be hearing from any of those people. I have heard that the Mexican government has warned some condos about not collecting room tax. There are so many condo now that I am sure it is hard to know who is a renter and who is a relative.
Renting under the table and not paying taxes and fees
- Thread starter marybna
- Start date
El Gato
Guest
From what I understand, the Hacienda is going after those agencies and/or homeowners who do not pay the fees. If I were a homeowner renting out my condo it wouldn't be worth the chance of a major fee in order to save a renter some money. The renter isn't going to suffer for non compliance - it is going to be the homeowner. And by playing 'games' these homeowners hurt their own HOA resort complexes. Mary, you and your husband have the right idea and are to be commended. Thanks from all of those that do play by the rules.
I rented my unit to a friend and the 2nd day the water pipe at Bella broke. No water. Seaside moved my renters to Sun. Did all the moving for them. I understand that a few renters showed up at the rental office but because they had rented directly from the owner, they could only rent them a unit at another property. I work with Seaside and they let me offer a special. They still get their commission and fees and I just add a 3rd night for free. We had another property that would let me give a free nights so I bought gift certificates for the restaurant on premise. $25 bucks doubled my rentals on that property till I sold it. I told the people that bought it that I did that but they did not think it was necessary.
The new Hacienda rental fees have started. 11% to 18% . I noticed when I was pricing a rental for Bella that Seaside has reduced some fee so that the hit was not so bad. Since the Feds used my unit to shot at the Villa, and did damage to my unit, I am on their radar. I checked Craigslist today and it seems that I am the only one listed with the new taxes figured in to the price. It will be intersting to see if other resorts increase their fees.
Roberto
Guest
DeniseAck
Guest
We met with Marcos, the manager of SeaSide reservations. He said that the 16% tax is ONLY applied to Mexican Nationals who want a "Factura" (tax-deductable receipt) to claim the whole amount against their taxes. Americans who want to rent aren't charged this tax. He was VERY adamant about this only being charged to Mexicans who ask for the Factura.
I found this info: http://www.bajainsider.com/baja-business/factura-mexico-business.htm#.UyBegvmwJLU
I am very confused now. It seems like the "pay with cash discount and it never gets recorded to the gov't" kind of thing.
I found this info: http://www.bajainsider.com/baja-business/factura-mexico-business.htm#.UyBegvmwJLU
I am very confused now. It seems like the "pay with cash discount and it never gets recorded to the gov't" kind of thing.
DeniseAck
Guest
I found my notes on the breakdown of the customer bill (per Marcos):
rental fee (rate x nights)----------------------> the amount the owner pays income tax on
maid fee
16% tax (if applicable)
2% IVA
impact fee (goes to the HOA)
voluntary charity donation
+___________________
= Gross Total
rental fee (rate x nights)----------------------> the amount the owner pays income tax on
maid fee
16% tax (if applicable)
2% IVA
impact fee (goes to the HOA)
voluntary charity donation
+___________________
= Gross Total
DeniseAck
Guest
Correction--
rental fee (rate x nights)------------> the amount the owner pays income tax on
maid fee
16% IVA / VAT tax (http://www.mymexicanlawyer.com/useful-expat-info/iva-mexicos-value-added-tax-16-or-11-sales-tax/)
2% lodging tax (http://www.travelyucatan.com/first-8.htm#TAXES)
impact fee (goes to the HOA)
voluntary charity donation
+___________________
= Gross Total
rental fee (rate x nights)------------> the amount the owner pays income tax on
maid fee
16% IVA / VAT tax (http://www.mymexicanlawyer.com/useful-expat-info/iva-mexicos-value-added-tax-16-or-11-sales-tax/)
2% lodging tax (http://www.travelyucatan.com/first-8.htm#TAXES)
impact fee (goes to the HOA)
voluntary charity donation
+___________________
= Gross Total
bigfootbill
2008 Realtor or the year
Hi All,
Denise you are correct in the above But owners of condos now must have MX Bank accounts, full IMN papers, registered with Hasienda and hire an account to pay bi-monthly taxes and issue Facturas. It is getting very challenging.
Bill
Denise you are correct in the above But owners of condos now must have MX Bank accounts, full IMN papers, registered with Hasienda and hire an account to pay bi-monthly taxes and issue Facturas. It is getting very challenging.
Bill
artisticdiva
Guest
I agree! And the people who operate like this are usually the first ones to complain about the lack of first response medical care. Taxes help secure the infrastructure so screwing around and finding a way to NOT pay hurts everyone. From roads to police and med techs we need to all pay our fair share. People like that make me sick.
I have an add on CL for my condo. In the ad I tell them I am giving them one night free. They get all 3 nights for about $350. I never had a problem. People that do not want to pay that much don't call or write me. Today this guy wrote and offered me $300. He told me he can get other unti for 3 night for that price. I told him that I do not rent under the table, I pay my taxes and HOA impact fees. I also told him that I hope he gets caught and get evicted. Some of the HOAs and rental offices are aware of what is going on and charge the owner the additional fees. But the good news is that a few of them are starting to evict renters. The few times I give my place away for fund raisers I pay the 18% room tax and HOA impact fee. The last thing I want is Hacienda for my business partner.
This owners that rent under the table put rest of us in jeopardy. I know they have contacted one HOA about fine and inforcement.
It is Mexico. You have got to play by the rules. Stop putting this illegal renters in your condos.
This owners that rent under the table put rest of us in jeopardy. I know they have contacted one HOA about fine and inforcement.
It is Mexico. You have got to play by the rules. Stop putting this illegal renters in your condos.
brokenwave
Guest
I agree with your dilemma. I don't do CL very often because of all the deal scammers.
But in a world where so much business is done under the table. 30-40% in Mexico and 20+% in the USA,
it's hard for people to what is morally correct.
People have been doing transactions bypassing the taxation of such forever.
Many people will agree with paying taxes and you will have just as many who try to bypass paying taxes for various reasons.
But in a world where so much business is done under the table. 30-40% in Mexico and 20+% in the USA,
it's hard for people to what is morally correct.
People have been doing transactions bypassing the taxation of such forever.
Many people will agree with paying taxes and you will have just as many who try to bypass paying taxes for various reasons.
DeniseAck
Guest
No matter what you charge for your condo, you have to collect and pay taxes on that amount. So if you rent it at $100/night instead of $300/night that your neighbors might be renting at is your prerogative. You still have to charge the 18% tax, which gets passed through to Hacienda. However, if you are cooking your books, saying you rented it at $100 and collected $18 for hacienda, but really charged $300 and received $54 (pocketing the extra $36 in taxes), you're asking for trouble. It's the same in the US. Will your small biz necessarily trigger an audit from the IRS? Maybe not. I guess it depends on how much of a gambler you are and how much you want to try and cheat the system.
Another way would be to build in the taxes into your rental cost ($118 per night, all taxes included), but that's sort of pointless. Since guests are used to paying taxes, they are trying to compare base rental rates ie: apples to apples. I think what's more of a problem is all the fees that are added. $10/night impact fee (which I agree with), $55 housekeeping fee (which DOESN'T go to the maid), $30 damage fee (which is a joke since they take an authorization on the cc). When people are renting on their own, without a mgt company, they can add these costs or not, making them seem a better deal than the competition. Just like the airlines who don't charge a baggage fee. That saves us $200 every time we fly as a family, so we choose that airline. There are benefits to a mgt. company, but every person has to decide what works best for them.
Another way would be to build in the taxes into your rental cost ($118 per night, all taxes included), but that's sort of pointless. Since guests are used to paying taxes, they are trying to compare base rental rates ie: apples to apples. I think what's more of a problem is all the fees that are added. $10/night impact fee (which I agree with), $55 housekeeping fee (which DOESN'T go to the maid), $30 damage fee (which is a joke since they take an authorization on the cc). When people are renting on their own, without a mgt company, they can add these costs or not, making them seem a better deal than the competition. Just like the airlines who don't charge a baggage fee. That saves us $200 every time we fly as a family, so we choose that airline. There are benefits to a mgt. company, but every person has to decide what works best for them.
I actually had someone come up to me when I was walking the dog. They knew I was an owner cuz I had the dog. They asked me about my condo. He wanted to rent a one bedroom for a week in the summer for $500. I think my electric bill is that much. I told him in is illegal. 2 days later he upped his offer to $600. I got his name and gave it to the HOA but they already knew about him. We have less than 50 units in the rental pool and now they have wrist bands so it is really easy to spot the ones that are trying to rent under the table. I use to give my unit away for fund raiser and events but I always got a letter from the organization and I paid the hoa impact fees. What people forget is that there are alot of people that buy their units, do not rent them, and let their family use it. They are paying a lot of HOA dues and not getting rent like I am.
DeniseAck
Guest
Mary--I don't think he's asking you something illegal, but he's asking for your place WAY too cheap. It wouldn't be worth the wear and tear on your unit. Bella Sirena average is about $120 for a 1BR, $150 for a 2BR. And occupancy is pretty high right now. There's no need to go that low--he's a dreamer--basic supply and demand. I'm expecting you have an accountant in Mexico who helps you with taxes collected for renting your condo, and you have all the proper business bank accounts, tax id numbers, etc. I don't know if BS has the same "impact fee" to the HOA as SSun, but ours is $10/night.
If you were to accept his $600/week, you could either:
In scenario 2, you'd receive $600, pay the $120 in fees and tell the accountant you received $73.22 in taxes that you have to pay Hacienda. You'd earn $406.78 (Average daily rate = $58.11). That is an absolutely absurdly LOW amount.
If you have a management company, they also want a piece of the pie, around 25% from your net. (Now the ADR is down between $43.58 and $64.28)
When we rented for 5 weeks this past winter, we were quoted a gross amount. I hope they paid all the fees and taxes as he should have. If they didn't, they risk an investigation by Hacienda and possibly deep mierda with their HOA. In our case, the condo would have otherwise been empty. Bird in hand is worth more than two in the bush. A slow season deal is entirely different than letting your condo go for 1/2 to 2/3 less than what it normally would in the summer.
Sorry for rambling and I hope I'm making sense.
If you were to accept his $600/week, you could either:
- Tell him it will also cost $108 (18%) in taxes, plus $70 in HOA fees, plus $50 (or whatever) in cleaning fees = $828 gross
- Back out all of the above costs to charge a gross of $600---> 600 - 70 - 50 = 480--> 480 / 1.18 = $406.78 net--->406.78 x .18 = 73.22---> 406.78 + 73.22 + 70+ 50 = $600
In scenario 2, you'd receive $600, pay the $120 in fees and tell the accountant you received $73.22 in taxes that you have to pay Hacienda. You'd earn $406.78 (Average daily rate = $58.11). That is an absolutely absurdly LOW amount.
If you have a management company, they also want a piece of the pie, around 25% from your net. (Now the ADR is down between $43.58 and $64.28)
When we rented for 5 weeks this past winter, we were quoted a gross amount. I hope they paid all the fees and taxes as he should have. If they didn't, they risk an investigation by Hacienda and possibly deep mierda with their HOA. In our case, the condo would have otherwise been empty. Bird in hand is worth more than two in the bush. A slow season deal is entirely different than letting your condo go for 1/2 to 2/3 less than what it normally would in the summer.
Sorry for rambling and I hope I'm making sense.
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DeniseAck
Guest
Yes, exactly! Why would this guy think he could get your place for next to nothing? I advertise my condo all over the place to help supplement what Seaside brings in, and I also do specials to boost reservations. 3 nights for $350 is a great deal! He had nerve to ask for lower!
You may want to ask your accountant about needing to pay the IVA sales tax and hospitality tax, since you didn't collect any money for it. I would think you shouldn't have to, but maybe the Hacienda rules are different. The fact that you pay the impact fee to the HOA for a free night shows how honorable you are, and should be commended.
There are nimwits out there who think that owners just pocket all the money they pay. They're not even thinking about electricity, maintenance, HOA fees, property tax, insurance, etc. They're the ones who make a real mess and jump on the beds (which I just got a $75 bill for). Grrrr.
You may want to ask your accountant about needing to pay the IVA sales tax and hospitality tax, since you didn't collect any money for it. I would think you shouldn't have to, but maybe the Hacienda rules are different. The fact that you pay the impact fee to the HOA for a free night shows how honorable you are, and should be commended.
There are nimwits out there who think that owners just pocket all the money they pay. They're not even thinking about electricity, maintenance, HOA fees, property tax, insurance, etc. They're the ones who make a real mess and jump on the beds (which I just got a $75 bill for). Grrrr.
Roberto
Guest
There are people who broker rentals. This guy might be one of them. They rent the place in their name then sub it out to someone else at a higher rate and pocket the difference. There is a man and woman team in town. We ran into them a bit back in a totaly screwed up mess. They use a network of people who work in the hotels for referrals when things get tight. They contract to rent a place on a predictably busy time, like Semana Santa. Then jack up the rate and find a renter, not hard at SS. Mexicans also seem to arrive in town without reservations then drive around looking.