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What
to do after you have purchased real estate in Mexico - Part 2  The
Ampi Real Estate Study Notes from the report mentioned in the previous article,
stated that property owners would benefit from knowing more about the cost for
maintaining their property.
IVA is the sales tax that
is charged on all goods and services. The amount of sales tax varies by state.
In Vallarta it is 15%, in Cabo San Lucas it is 10%. The person receiving payment
for the service or product that you are buying collects this tax. It is the responsibility
of the person receiving the income to collect the sales tax and pay it to Hacienda,
the national tax authority similar to IRS. If you are
ever in the position of renting your home or condo or conducting some type of
business activity in Mexico, you should register with Hacienda. You will be issued
a tax number (RFC) on an official permit or cedula. When you are purchasing services
or goods for your business, you will want present your cedula and ask that the
receipt be made out in your tax name and number. A factura is an official receipt,
which can be tax deductible. Unofficial receipts are not deductible, even though
the expense may be in the correct category to be deductible against income. For
example, if you are able to deduct the cost of gasoline for your car, you need
to register your cedula with the station where you trade, and each month take
in the gas receipts to be changed into a formal factura, or deductible receipt.
A simple receipt like the gas receipt you receive at the pump is a record for
you of what you paid, but it cannot be turned in as a receipt to Hacienda.
If you don't know what a factura should look like, study the ones that you have
received, or ask a friend to see theirs. If you don't know how to read the factura,
you may receive an expired or bogus receipt that you can't use for tax purposes.
The factura should be numbered and have the name, address
and RFC number of the company/person that is giving you the receipt. The iva or
tax may be shown separately. The cost of the product or service will be totaled
at the bottom of the factura. Look for the date the facturas were printed and
the date that they expire. An expired factura cannot be used as a qualified receipt
for an expense. Somewhere on the factura there will be a copy of the cedula for
tax identification. Why all this detail for deductible
receipts? A lot of business is done in cash and an official factura becomes a
record of the amount of tax that is payable to the government. For example, a
receipt for cleaning supplies that may be deductible cannot be used unless you
have the RFC number and details of the merchant from whom you have bought the
goods. The printer for the facturas must show on the
facturas their address and authorization to print these receipts. Not all printers
have permission to print legal facturas. You will want to go to an approved printer,
and he will require information from you about your business status, in order
to agree to print the facturas for you. The person/company you are paying for
services or goods will receive the original receipt or factura, and you will turn
a copy into your accountant. Keep cancelled facturas, as you have to account for
the total number issued to you from the printer. You are
required to pay tax if you earn income, including rental income in Mexico. If
you earn income, you will owe iva and income tax. You can use allowable deductions
if you get proper receipts. You will need to file with Hacienda, in most cases,
monthly. If you are earning rental income, you may also be required to collect
a room tax. Interview and hire a good accountant to
help you do the reporting properly. Paying taxes properly is a subject that is
complex and the tax code changes. You want an accountant that stays current with
the law, and will furnish you monthly reports. If you have trouble with speaking
or writing Spanish, look for a bi-lingual accountant. You can't afford to not
understand each other. Expenses for maintenance on your
home may include electric, water, gas, telephone, cleaning and repairs. Electric
is charged by levels of usage. The more usage, the higher the rate. You will see
that your receipt from CFE has iva shown on it, and that your bill is an official
receipt or factura. Your telephone, or Telmex bill is also a factura and it shows
the iva tax charged. Your phone bill will include your rental of the line and
equipment, local, long distance, cellular calls and iva. The total charges will
be rounded up the next whole number. There is a lot of
discussion about what system or service to use for television. The local telecable
is available only in certain areas of town and has not been installed very far
south of downtown. Other choices are satellite companies, from which there are
several to choose. The satellite dish is small and the cost is part of the installation
price. The United States satellite companies which find their signal being illegally
broadcast into Mexico, have upped their efforts to scramble programming. Selecting
trades and services for your home is much easier if you remember a few pointers.
Education and certification standards for trades are different from what you are
familiar. Work experience, personal character traits and references should be
your guide in hiring. "Manaña" does not mean tomorrow, it means
some degree of later. "Manaña en la manaña" is tomorrow
morning. "Pasado manaña" is the day after. A
common complaint is that we think an appointment has been set and we stay home
all day waiting for someone that doesn't show up. What do you do? Keep your own
schedule and leave if you must. Hire someone else to sit and wait. Remember
time is not the same for everyone, and here is a case of where the differences
can be great. In Boye Lafayette's Book, " Mexican Etiquette and Ethics,"
he writes about the situational nature of traditional ethics and morality. Historically,
citizens of Mexico were not protected by justly enforced laws and were subject
to personal interests of those in power. The way to survive was to please those
in power, one way or the other. This meant that the individual had to learn to
interpret each situation from two personal viewpoints, theirs and the other person.
"The truth" would be determined by the circumstances at hand, not fundamental
principles of right and wrong. "The truth" would provide the most protection. Over
time, "the truth" became a matter of telling people what they wanted
to hear, so as not to disappoint or anger the other party. In social and business
situations, people can say things and make commitments that are intended to make
others feel good at the moment; they may not be making an actual commitment. Increase
your skill level in understanding by politely ask questions to determine what
has to be done before the repairman can return. What else will he need to pick
up or have done before he can return? If tomorrow is a major holiday, you may
be expected to know this is a not a day of work. If you
feel you need to criticize, do it diplomatically and in private. If a situation
is very sensitive, you may need to use a third party to avoid making the situation
worse. There are historical reasons why you do not want the other party to loose
"face." If you satisfy yourself by making the other person feel inferior,
you can loose their respect, and cooperation. Prior
cultural conditions have not allowed all individuals to be encouraged or rewarded
for assuming personal responsibility to make sure that a job gets done. Through
prior history, individual employees or workers were not allowed to act on their
own. Such behavior was unacceptable and there were strong sanctions against it.
If are aware of cultural conditioning when you are learning
to work with you staff, you will work toward solutions that come from understanding
their viewpoint. Regardless of their social level or circumstances, all citizens
expect to be treated with courtesy and respect by everyone. An
observation made by an American who has lived in Mexico for several years is that
we North Americans, who are not fluent in Spanish, tend to believe verbal statements
by other North Americans as if they were fact. We don't have the tools we normally
have (reading and writing) to assess a situation. This is an important point.
If we cannot understand the language, we rely on other English speaking people
to tell us the truth or " la verdad" about something. We can be manipulated
by misinformation. We are not using our ability to think critically because we
can't assess the information on our own. "Mexico's
Business and Cultural Code Words, NTC Business Books is a reference book that
will be helpful. The character and personality of the nation is linked to the
Spanish language, especially the keys words that delineate character and personality.
If you can learn the language, you do not open yourself up to as many misunderstandings
and gaps. "Every positive change - every jump to
a higher level of energy and awareness - involves a rite of passage. Each time
to ascend to a higher rung of the ladder of personal evolution; we must go through
a period of discomfort, or initiation. I have never found an exception."
Dan Millman This article is based upon legal opinions,
current practices and my personal experiences in the Puerto Vallarta-Bahia de
Banderas area. I recommend that each potential buyer conduct his own due diligence
and review. Harriet Murray,
Broker
For additional information on properties for sale or lease
within the bay, please call or e-mail me at: harriet@pvmirror.com
Thanks and until next week. Archives
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