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Canceling an FM3


llglenns

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I have had an FM 3 for four years, and imported household goods on it, but not an automobile. I also have bought property and opened a bank account in Mexico. Retirement for me is now further away than originally planned and keeping up the FM 3 is difficult. I don't want to sell the property. Is it possible to cancel an FM3 and what are the repercussions if I do so?

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If you don't need it for coming and going, you could take it to the nearest Mexican Consulate in the USA and ask them to cancel it. Otherwise, if you are in Mexico, you can ask INM to cancel it as you leave the country the next time. From that point on, it seems you would have to come into Mexico on an FMT with the 180 day limit. The only other problem would be if you wanted to sell your property within a couple of years of getting a new FM3/2 in the future. You might need the FM3 to keep your bank account, or to use it; I'm not sure.

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You can cancel the FM-3, on not renew it. I have not seen the definitive word on what happens if you let it expire as opposed to turning it in for cancellation. I know of circumstances where the FM-3's were simply not renewed with no effect upon subsequent application for another FM-3. I've also heard that you cannot obtain another FM-3 outside Mexico, but that has proven false. Perhaps it depends on where you apply and who receives the application. The one I am aware of was processed at the Consulate office in Calgary, Canada.

Be aware that should you sell your house, you will face taxes, unless you have an FM-3 at the time you close the sale. You can apply for a new FM-3 should you need to, but you can't do it the day before you sign the documents on the sale. There are some questions as to the need to have had an FM-3 for two years prior to the sale, but I am aware of situations when the new FM-3 was obtained a month prior to the closing and there were no taxes paid by the Vendor. Another of those cases where Mexican law is written differently than it is enforced.

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Be aware that should you sell your house, you will face taxes, unless you have an FM-3 at the time you close the sale. You can apply for a new FM-3 should you need to, but you can't do it the day before you sign the documents on the sale. There are some questions as to the need to have had an FM-3 for two years prior to the sale, but I am aware of situations when the new FM-3 was obtained a month prior to the closing and there were no taxes paid by the Vendor. Another of those cases where Mexican law is written differently than it is enforced.

Any idea of how much (%) the taxes might be?

thanks

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Any idea of how much (%) the taxes might be?

thanks

When I have asked Notaries, the answer I always get is, "It depends!". The last time I asked regarding a specific transaction I was involved in, the taxes would have been over $20,000 dollars, but there does not seem to be a formula that can be used relative to the sale price. It has something to do with the assessed value, as stated on the documents in the public register from the last time the property transferred, compared to the present assessed value, as determined by some government official. The assessed values have little relation to market values. The taxes are not "capital gains" in the sense we are familiar with from NOB. It is still a great mystery to me.

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When I have asked Notaries, the answer I always get is, "It depends!". The last time I asked regarding a specific transaction I was involved in, the taxes would have been over $20,000 dollars, but there does not seem to be a formula that can be used relative to the sale price. It has something to do with the assessed value, as stated on the documents in the public register from the last time the property transferred, compared to the present assessed value, as determined by some government official. The assessed values have little relation to market values. The taxes are not "capital gains" in the sense we are familiar with from NOB. It is still a great mystery to me.

I sold my house last year and I had to have my FM3 for 2 years- the Notario arranges for an official apprasisal at the time of sale- In addition to the the "sales tax" the rate also depends on the size of your land vs size of construction- because I had a large lot 2350 sq.meters I had to pay an additional tax on the sale of the land as it exceeded the allowed ratio of bldg.sf to land sf.

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I sold my house last year and I had to have my FM3 for 2 years- the Notario arranges for an official apprasisal at the time of sale- In addition to the the "sales tax" the rate also depends on the size of your land vs size of construction- because I had a large lot 2350 sq.meters I had to pay an additional tax on the sale of the land as it exceeded the allowed ratio of bldg.sf to land sf.

Would owning the house through a trust or a company get around these problems? I my case, they would solve other problems, so I might have to do this anyway.

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If you own your home in a land trust taxes are the same, the bank wouldn't take the hit and would pass the tax on to you. There are ways, as suggested by one poster to alter / list a different official sales price to pay no tax but this will not work if the purchaser is getting financing as the lender will want the actual transfer value on the deed and not a lowball value. Also a potential buyer could be subject to a hefty capital gains tax unless they have their FM3 or FM2, when it came time for them to sell.

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Any idea of how much (%) the taxes might be?

thanks

It is a tax that applies to the profit made by the taxpayer for carrying out their activity, ie the amount you have after deducting the income received, and expenditure incurred.

Formula:

Accumulated Income

Minus Modified Income

= Modified Income

Minus Authorize deductions

= Capital Gains

Minus PTU in the service

Minus Loses updated

= Fiscal Result

Minus Tax affected by the 30%

Minus Provisional payments to SAT

Minus Interests retained and payed in the period

= CAPITAL GAINS TO PAY

That is why you never get an answer right away from the Notario, It has to be calculated. When selling a house seller pays CAPITAL GAINS (State and Federal), buyer pays Transmision Patrimonial.

Was this easy?

To cancel an FM3 is needed to do it trough the Immigration Department or a Penalty could be waiting on your file when enter again.

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