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| TAXES, that ugly word! |
by Prof. German Estrada
December 27, 2003 |
This article was written in 2001
(4 part), but some readers have asked me to repeat it
again as there are still many people that does not know
about the subject or have had a wrong explanation about
it.
TAXES, that ugly word! (4th part)
In following what we wrote
in our first article about rentals and taxes, I have
read some written articles from some of the Mexican
Lawyers that are marketing their services through
Internet or Newspapers and, to tell you the truth,
although I know what they mean, I don't believe that
all foreigners (or anyone else, for that matter!),
will understand exactly what is what they wish to
convey and make people aware of, clearly and understandable:
example: they write about <and
I transcribed what one this gentlemen is saying about
paying taxes if you rent out your property>., "Our
Fiscal Code establishes that it is taxable income which
individuals get from providing temporal use or enjoyment
of real estate, such as Leasing or sub-leasing and
in general for providing, for a price, the use and
or enjoyment of real estate"..
My very first question would
be...what does
it means <in this case>, real estate? The empty
lot one bought thinking that maybe one day one will
built something on it? A piece of land? What does
in reality means the term "providing temporal use
or enjoyment.. <for a price?>..,: why do they
have to go around and not simply write and say.."if
you rent out or lease your property (condo or residence)
you have to pay taxes". Amen!
One of our most common and
day after day used of our "idiosyncrasies", is the fact that many of
us cannot call a spade a spade and a tomato, tomato.
In our daily life we all have to endure at least
50% of what I call "the labyrinth of words", in order
to get to the point or, as it happens many other
times, just the opposite: in three words they answer
a question, letting the person that asked it "to
interpret" what they wanted to say. The button line
is, as it's in these cases of renting out properties
(whether one is Mexican, Chinese or has any other
nationality), that if we do rent or lease, we ALL
have to register with the Secretaría de Hacienda
(SAT=IRS), and that we better get an accountant so
that he/she handles, properly and professionally,
the way we pay the taxes.
(But "before" everything else, the Law
says that you <the person that is going to rent
a property>, will have to "tell" the bank that
hold your Trust", that you want to do that. Keep
in mind that the property is in the name of the
bank, and that whatever you want to do with the
property you have to get in contact with them and
let them know of your intentions).
I would like to repeat it,
because I believe it's important: a good, honest
and responsible accountant, (look for someone that
can be highly recommended!) is the "only" one that
can give you a good (and legal!) idea of what expenses
can be deducted from the taxes. Believe me, if there
is something complicated in life (as most of you
well know), are the Fiscal Laws, and the ones that
studied them, the professionals in this mater are,
you guessed, the accountants, and the Fiscal Lawyers*
(which deal with the most complicated fiscal matters),
and not exactly any lawyer or any notary.
If what I said above about
getting an accountant is not enough and doesn't convince
everybody about getting one, be advised that the
Fiscal Law (regarding taxes, of course!) will be
changed <probably> at
the beginning of next year (2004). The government
will be applying the latest reform concerning taxes.
I wonder if anybody, besides these "geniuses" (the
accountants) that deal all their lives with numbers,
will know anything about the new taxpayer structure.
Shoemaker to your shoes!
*(You don't need a Fiscal Lawyer to counsel
you for the payment of these taxes, unless you want
to end up paying to him what he may save you in possible
taxes. These Fiscal Lawyers should be consulted for
the real complicated cases, the ones to which your
accountant has no answers.)
gestrada@pvnet.com.mx
Prof. Germán
Estrada is the author of the best selling book,
"México
Mágico: Everything You Wanted To Know
About... But Nobody Told You..." available in Puerto
Vallarta at The Net House, Mail Boxes, Etc., Books,
Books as well as directly from the author by internet.
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