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Jalisco Condo Manual

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Re: Jalisco Condo Manual

Postby Glasswiz » Fri Jul 24, 2015 12:34 pm

Where and how is this book available ?
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Re: Jalisco Condo Manual

Postby GillWoods » Fri Jul 24, 2015 5:53 pm

Jalisco Condo Law in English - Second Edition just came out on April 6th 2015, and is available on Amazon.com for $39.95.
by Garry Neil Musgrave

Even with the book, The developer often has complete control. We got 30 owners together in a group, hired a reputable attorney and communicated long and hard on the issue's. The owner, however, with his ownership,and proxies he held was able to call the shots. For instance, almost everyone present at the Homeowners transition meeting voted to not accept the new budget, but the developer alone, voted his votes and overruled the 30 of us there. All of our selections for the board failed to get elected, and only those in the developers pocket were elected.
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Re: Jalisco Condo Manual

Postby kcowan » Wed Mar 09, 2016 7:30 am

In the latest issue of the PV Mirror #383, Saturday 5 to Friday 11 March - 2016, on Legal Matters Page 33, the Ask Luis column covers current legal implications of renting our your condo:
Ask Luis
Luis Melgoza wrote:Dear Luis: Please inform us of the responsibilities of owners who rent their condos and homes to tourists. What are the income tax and other legal requirements for landlords?

What are the consequences for not reporting income, and other requirements?

Dear Reader: These are the prerequisites to renting real property to tourists:

1. If the owner is a foreigner, under any immigration status, the fideicomiso must be commercial in nature and it must be granted by and in benefit of a Mexican corporate entity. Residential fideicomisos do not permit the use of the real property for any commercial purposes (i.e. rentals); it is unlawful to rent the assets of a residential fideicomiso or to generate revenue in any way, shape, form or fashion from such assets.

2. The Mexican corporate entity must be registered with SAT (Mexico’s tax authority) as a renter, collect 16% IVA tax on all rentals, file monthly and annual tax returns, pay the collected 16% IVA tax and make a provisional Income Tax payment (a flat 25% of the income before IVA, without any deductions; or, up to 35% tax on the net income) to the SAT every month.

3. A city business license must be obtained to operate the rental business. A 3% hotel tax is assessed to each and every rent.

4. Rentals fees must be registered with Mexico’s Department of Tourism.

5. Tourism rental properties are subject to inspections by the health and fire departments; and to the jurisdiction of both Mexico’s Department of Tourism and Consumer Protection Agency (PROFECO).

6. All staff employed by the tourism rental property must receive all benefits mandated by Law.

7. The property must be offered to the general public, without discriminating, in any form, against any individual or group on the basis of ethnicity, national origin, gender, sexual orientation, marital status, age, disabilities, religion or political affiliations.

Failure to abide by the terms of a residential fideicomiso may carry the cancellation of the fideicomiso, forfeiting its assets in favor of Mexico.

Failure to register with SAT as a renter, or to file monthly and yearly tax returns, or to collect and pay the IVA tax, or any other unlawful or illegal avoidance of income tax liabilities subjects the offender to civil and criminal penalties, up to forfeiture of the fideicomiso assets, imprisonment and deportation.

The income and taxes paid must be reported to both Mexico and the landlady/lord’s country of citizenship (at least in the cases of Canada and the US); otherwise, there is a risk of double axation.

Failure to obtain a city business license and pay the 3% hotel tax may result in the permanent closure of the property and up to the sale of the said property at auction to the highest bidder to recover unpaid taxes.

Failure to register rental fees with the Department of Tourism, or to offer higher fees to the public than those registered, may carry fines.

Failure to provide all legal benefits to the staff may result in fines and, in some cases, criminal penalties.

Discrimination against and individual or group may result in the revocation of the city license to operate, fines by the Department of Tourism and up to permanent closure of the commercial establishment.

Other than the need of a commercial fideicomiso with a Mexican corporate entity as grantor and beneficiary, Mexican citizens are subject to the same requirements and penalties.

As I have mentioned many times before, all income from rentals (legal and illegal) of real property in Mexico are Mexican income and must be reported monthly and annually to Mexico; regardless of where the monies are paid or collected, because the income comes from a Mexican source: the real property.

The Puerto Vallarta Hotel Association is pushing very hard to ensure that federal, state and local laws are enforced. It is estimated that the number of condos and villas illegally rented to tourists in Puerto Vallarta equals over 50% of the hotel rooms legally available in the city.

Between the pressure of the local hotel association and SAT’s efforts to fight tax evasion, the chances of getting caught, if renting illegally, are higher every day. Not even considering the exchange of information between the governments of Canada, Mexico and the US to eliminate tax evasion and fraud, and money laundering.
I hope this helps those owners that wish to rent their condos.
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Re: Jalisco Condo Manual

Postby Marcos » Wed Mar 09, 2016 7:54 am

And I suspect that 99% of the existing available condos for rent would not comply with the above.
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Re: Jalisco Condo Manual

Postby kcowan » Wed Mar 09, 2016 9:52 am

I have been told that Luis is incorrect in his assertion that residential fideicomiso do not allow for rental. As long as rents are by the week or month, they are legal. Short-term rentals compete with hotel rooms and those items apply. All such revenues are taxable.

(The same person who pointed this out also made this comment: "too many people are not claiming the income they make from renting their property, whether it is in Mexico or the home country. And anyone who has been involved with SAT knows that in recent years they have become more and more sophisticated, especially at tax collection. It is only a matter of time before they go after people who aren't renting legally. And it is so easy to catch them as nearly all of them list their properties on the Internet.")

I have no dog in this hunt. We keep our place empty when we are not here. Of course such "ckicken little" warnings are not new!
Last edited by kcowan on Wed Mar 09, 2016 2:00 pm, edited 1 time in total.
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Re: Jalisco Condo Manual

Postby Alphonse » Wed Mar 09, 2016 12:15 pm

“It's Mexico and every word in the book may be true........or not."

I liked to quote this phrase because it resumes what’s really are going on, now and forever, here in Mexico. Especially about paying taxes and things like that. In several occasion I had written about how a condo owner has to manage the right way to avoid paying unnecessary taxes. Here I go again; it’s all related about and has to do with, “need to know bases”.

How is that the SAT knows if you are actually renting (or not) your condo? The fact is that they don’t know that, they don’t and have any idea of what are you doing with your private property. It’s up to you if you decide to rent your house or condo, or not.
For better understand this let put an easy example. How about if any of you decide to rent your place to me for example, let’s said I am going to pay one thousand USD cash only for a full week rental fee. At this point I know that I am making a deal with direct property owner, I know that the property owner don’t have any legal receipt of any kind to give me, either way I don’t want it in any case. I understand at the same as he, that we are making a private deal just within me and him. He is charging me the lowest rental fee and this is understood perfectly within us.

What would do happened if an inspector from the SAT knocks out the door (which is extremely unlikely to happen and besides it would be against the law) and ask me, “hey Al, we the government SAT knows you rented this place and we need to know how much did you pay and to whom did you pay it”. My first reaction it would be…”Ho yeah, according to whom you got this info and I need to see any receipt prove or any kind of what are you saying please? , ( I know there is no prove at all because the deal was made in cash only) , then my answer will goes to…”You got it all wrong, the true is this place belongs to my Canadian cousins and he just let me used for free...” I think this will make clear my point.

In the other hand, if you are planning to rent your place in an open tourist business and hire cleaning and staff housing personal etc. then it would be wise to have it register as a legally operate business. Then and only then, you would have to be bounded to pay IMSS and all the legal rules that having workers are impelling by Mexican law.

As for the book I did not have read it either but according for what some of you who already read it are implying about, and knowing for a fact that here in Mexico never take lawyer word for granted, its better have all the information gather in one place saved in your head that fall in the hand of a money hungry unscrupulous lawyer.
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Re: Jalisco Condo Manual

Postby waltandjean » Wed Mar 09, 2016 12:43 pm

Under your scenario the chances of being caught are very slim as you pointed out.
If a landlord accepts checks, credit cards, or PayPal probably the greatest chance of getting caught would be from a disgruntled renter who decides to make a complaint.
I also understand they are beginning to troll VRBO, Home Away, and similar sites for ads.
As you correctly point out, we all have to decide for ourselves.
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