Foreigners Who “Own” & Rent in Mexico….It’s Time to Get Legal!

Interesting thread on Mexconnect and another article

http://www.mexconnect.com/cgi-bin/forums/gforum.cgi?post=189489;sb=post_latest_reply;so=ASC;forum_view=forum_view_collapsed;;page=unread#unread

http://mexico.escapeartist.com/newsletter/foreigners-who-own-rent-mexico-its-time-to-get-legal

Muerte y Impuestos...

You couldn't get away with not paying taxes on a rental income in Canada or the U.S.
Why do people think they can get away with it in Mexico?

ferret wrote:
Why do people think they can get away with it in Mexico?

That ought bring on another four pages of posts.

ferret wrote:You couldn't get away with not paying taxes on a rental income in Canada or the U.S.
Why do people think they can get away with it in Mexico?

Because a lot of them do just that.

seisdedos wrote:

ferret wrote:You couldn't get away with not paying taxes on a rental income in Canada or the U.S.
Why do people think they can get away with it in Mexico?

Because a lot of them do just that.

If all the IVA and ISR were collected by Hacienda that would be legally due and payable on rentals in the expat area of Lakeside....rents would double.
Maybe with stricter enforcement of tax collection that is why the income requirements for foreigners have increased.
16%= IVA....35% of 65% of the rent (mas o menos)=ISR....plus CP honorarios...it ain't pretty.
I didn't mention rental commissions or managemnent fees as most people aren't avoiding those now.

slainte39 wrote:

seisdedos wrote:

ferret wrote:You couldn't get away with not paying taxes on a rental income in Canada or the U.S.
Why do people think they can get away with it in Mexico?

Because a lot of them do just that.

If all the IVA and ISR were collected by Hacienda that would be legally due and payable on rentals in the expat area of Lakeside....rents would double.
Maybe with stricter enforcement of tax collection that is why the income requirements for foreigners have increased.
16%= IVA....35% of 65% of the rent (mas o menos)=ISR....plus CP honorarios...it ain't pretty.
I didn't mention rental commissions or managemnent fees as most people aren't avoiding those now.

I understand that IVA is not payable if the house is unfurnished. Rents would not double because people would refuse to pay. Tenants would not move and rent increases would control the changes in rent (10%?). I would expect a lot of empty houses and a lot of furniture on the market to save paying the IVA. As a renter I am not paying the owners' tax liability. That is their expense and as NOB it is a cost of doing business. How does one rent a house for 2000.00 when the house next door is renting for 1000.00? Pay your taxes, it is not a free ride. Report the oncome NOB also. I have no pity for tax evadors.

Governments everywhere are getting desperate for money and looking under every rock.

On the other hand, everyone who makes money is trying to keep it away from the government.

Been that way since time began..........

ferret wrote:You couldn't get away with not paying taxes on a rental income in Canada or the U.S.
Why do people think they can get away with it in Mexico?

Yes, you can get away with it and many do in Canada. In fact just before we left there was a similar campaign in BC looking at rental ads for two reasons:

- One was to crack down on illegal rental units.

- Two was to collect taxes.

It's been a while since I've rented in Canada, but I vaguely remember a section where you filled in the amount of rent you paid to a landlord on your income tax form. Has that changed?...and, if not, isn't that a way for the government to find out who's paying rent and to whom?...especially in these days of computers.

We are sticklers for following the rules...wherever we live. "oh what a tangled web we weave, when first we practise to deceive." That's us...YMMV...and I don't mean that we're not going to seek out every legal loophole to defer taxes that is possible.

ferret wrote:It's been a while since I've rented in Canada, but I vaguely remember a section where you filled in the amount of rent you paid to a landlord on your income tax form. Has that changed?...and, if not, isn't that a way for the government to find out who's paying rent and to whom?...especially in these days of computers.

That would be one way, but would violate confidentiality laws concerning federal/provincial returns, which cover all gov't. dept.'s, accountants, tax-return preparers, and so on.

ferret wrote:It's been a while since I've rented in Canada, but I vaguely remember a section where you filled in the amount of rent you paid to a landlord on your income tax form. Has that changed?...and, if not, isn't that a way for the government to find out who's paying rent and to whom?...especially in these days of computers.

We are sticklers for following the rules...wherever we live. "oh what a tangled web we weave, when first we practise to deceive." That's us...YMMV...and I don't mean that we're not going to seek out every legal loophole to defer taxes that is possible.

The landlord gives a break on the rent as an "under the table" deal since their suite is usually illegal anyways. Most people are more than happy to screw the govt. out of some tax money and get a cheaper rent.

Paying taxes on our rental properties is easy and cheap. We and the B&B owners we know use:

L.C.P. Rodolfo Rivera O.
Contrador Publico
Ph: 766-1020 or 766-0892

Rodolfo speaks English and will be happy to meet with you and show you your options. Anguish not folks, this is simple stuff.

I totally agree Bob. I will be hooking up for regular tax payments on our rental casita's as soon as they are rented and we get our permanentes completed. I don't ever mess with the tax man........

Tax collectors should be on commission....and be armed.

DaveP wrote:

I understand that IVA is not payable if the house is unfurnished.

Can you imagine Hacienda sending out inspectors to determine if a rental is furnished or not or what the criteria is for how much can belong to the lessor or to the lessee. I would like to see the codigo civil that defines all that.