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Taxation Landlord / Tenant Obligations

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As a tenant when the landlord does not reside in Mexico are you aware you must withhold 25% tax and pay it on behalf of the landlord and you must do it by the 17th of the following month? http://www.soniadiaz.mx/real-estate.html

saludos

Sonia

 

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That sounds like something that should be legally required to be in every lease.

The landlord should have to specify where they live.

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Sonia - have you heard a rumour, or fact, that there is going to be some big changes for foreign property owners in Mexico, going into effect around the middle of December?

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29 minutes ago, CHILLIN said:

Sonia - have you heard a rumour, or fact, that there is going to be some big changes for foreign property owners in Mexico, going into effect around the middle of December?

I have not heard but maybe Spencer has.

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How can foreigners pay?  It is impossible as they need CURP an RFC to file and then pay online.  Long live the informal economy.  Mexico needs to stop trying to make everything so tech savvy. 

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Each of the persons referred to would have a CURP and then easy to get an RFC. The landlord in the law I posted is one who resides outside of Mexico but to earn income still needs a permiso para trabajar or is a PR, hence a CURP. The tenant as referred in the law is one who is a resident. A resident is a TR or PR and again has a CURP.

Every landlord regardless of where they live has a CURP or they are in violation of INM since earning income. 

The law is not referring to tenants who are tourists.

saludos

Sonia

 

 

 

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Hi,

I beg to differ as we presented papers for permission to work as in renting a home and immigration said it wasnt necessary although we insisted and they accepted the papers.  Tio me renting a home is passive income and is like buying property or owning stocks and shouldnt require permission. 

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Spencer certainly here INM wants permission to work or PR to earn income including landlord. I have submitted many applications based on one being a landlord for permission to work and for those who are PR. 

Then again the Chapala INM office has been known to be less than consistent and correct while being overly slow at times in processing applications when in fact the laws and processes are Federal.  

Mexico's greatest consistency is inconsistency.

Sonia

 

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Which is why attempting to give professional advice to folks in a different state can be problematic. Especially, if that advice is followed.

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Law is federal and you can err on the side of caution which is the best practice.  The rhetorical question is if a tourist buys a home and rents to a tourist, how can they pay taxes? 

 

 

Answer would be to hire a rental agency who would withhold and pay.

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I am sure I will get grief for expressing this opinion.  I find this whole idea of giving governments part of the rent money ludicrous for a house that the landlord has paid for, paid the maintenance, and paid the yearly property tax on. 

They offer no service on the property in exchange that we want, and I don't want to hear about the roads.  Tax money is already collected for many other sources for roads, for trash pick up, so it's not for the roads, and we sure do know how well the neighborhood roads are maintained anyway. 

Governments count on compliance and no one thinking critically about these rules.  In the US, everyone works for the IRS because everyone collects tax and Mexico is hoping for the same set up.  It all becomes just too much.  I say don't help them become the same way. It then creates more government jobs, paid for by those taxes, jobs we don't want them to do.  

The idea of also then having to hire a property management company, pay them a fee, so we can then turn around and give the a government more money!

It's bad enough those of us who are US citizens are forced to pay taxes to a country in which we are no longer residents.

Think outside the box, the box governments want to stick us all in.

Edited by Zeb
typing error
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The money you complain about giving to the Mexican government from the rent on a property is called income tax.

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51 minutes ago, Yo1 said:

The money you complain about giving to the Mexican government from the rent on a property is called income tax.

Lately they added the 16% IVA tax on rentals besides income tax. So both taxes add up to about 20% for our rentals [we get some returned at year end on the income tax portion] and is a federal law. SAT has access to anyones, any companys, bank account on a whim with no judge´s order lately. This alone makes it hard to not pay your taxes or they can invite you in for a meeting to explain where your money in the bank came from. Commercial property renters pay 16% IVA the owner collects and along with this and income taxes owners pay SAT every 3 months or their tenants can´t get a SAT computer generated "factura". With no SAT "factura"  [receipt] they cannot deduct rent as an operating expense.

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I asked the director of SMA INM today and she was very adamant a landlord renting out property must have permission to work which is not available without registering with SAT first or be a PR and inform INM you are a landlord and prove registered with SAT including providing your cedula (square personalized SAT scanner code). INM then accesses your SAT account to confirm. I have also asked in the past Paco and Manuel who are very knowledgeable and told same answer.

Sounds reasonable to me if the landlord is not residing in Mexico, then Mexico should expect to be paid taxes and the resident tenant (not a tourist) pays the tax monthly. 

Would a landlord in the US or Canada not be required to declare rental income? Of course they are. 

 

saludos

Sonia

 

 

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According to the Internal Revenue Service, rental income is considered "passive" income in the same class as interest or investment returns.  Why would a landlord need a work permit?  Are the passive income rules different in Mexico?

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Maybe ask SAT and INM why the laws they have. I posted the SAT law in English. 

FACTS: here is IRS position. https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping

 

 

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