Mexatua Real Estate Attorney

Capital Gains Tax in Mexico

Liliana — Wed, 22 Feb 2012 13:53:10 +0000

I have written this post to help buyers unsderstand why mexican taxes are an important part of the real estate purchase proccess, but nothing will substitute legal advice or professional tax consultation in your particular case. What you do at purchase will dictates your tax liabilities at sell.

The concept of capital gains tax in Mexico does not exist. The earnings that one receives from the sale of a property (home or land) is considered as normal income and treated as such. The general tax applied to any income in México is called Impuesto Sobre la Renta (aka I.S.R.).

It has been extremely common in Michoacan to record a lower value than what is actually paid for a property, the tax liability is simply passed along to the new owner. But that is not the only problem, there is a fraud commited against the government and everyone involved in it would be responsible. Of course guess who will be the first chassed by Hacienda (mexican IRS)? Yes, the owner (aka the buyer who was convinced to record a lower value in the deed).

Impuesto Sobre la Renta (capital gains tax) is sellers responsibility. Buyers will take that liability if the real price paid is not recorded on the deed. Never record a lower value than what you actually paid for the property. Doing so simply establishes a lower cost basis for the property, which increases your ISR (Capital Gains) Tax liability.

Remember, just because a lot of people is doing it, doesn´t mean you can do it.

To give you my advice, I will use Ross E. Buck words in his Smart Mexico Real Estate blog “A good rule of thumb is . . . if you wouldn’t do it in the States, don’t do it in Mexico. Another good rule of thumb would be to read ALL documents BEFORE you sign them. In the states we get inundated by the onslaught of legal-eaze in our paperwork and therefore get accustomed to only skimming through documents. In Mexico, slow down. There’s no rush. Take your time and READ your documents carefully. Obviously if they’re in Spanish, you’ll need them to be translated and preferably by a certified translator“.

Lake View & Pines (1.2 acre of Land)

Liliana — Fri, 17 Feb 2012 16:47:23 +0000

Code: T135
Size: 5137 sq meters (22.24 acres)
Location: on the road Ihuatzio – Tzintzuntzan
City: Ihuatzio
Price: $120,000 USD

Features: Stone fence surrounding the property.

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Beautiful piece of land surrounded by a stone fence. There are several kind of pines & fruit trees: avocados, limes, oranges, walnuts and cypress. Bounderies and measures: North 67.17 m; south 48.93 m; east 98.98 m and west: 103.77 m.

This property is located between Tzintzuntzan “The City of Hummingbirds” (translated from Purepecha to English) and Ihuatzio. Tzintzuntzan was the capital and the most important ceremonial center of the Purepecha Empire, because this place was were all the tribute was received. The Day of the Death celebration is very important in this place. The population is around 12,260.

Ihuatzio means Place of Coyotes (translated from Purepecha to English). It is located 10 kilometers far from Patzcuaro. There is an archiological center with 2 pyramids to honor “Curicaveri” y “Xaratanga”. The population is around 3547.

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Lake View Home in Zirahuen

Liliana — Tue, 14 Feb 2012 16:39:22 +0000

Code: Z57
Size: 280 sq meters
Lot: 662 sq meters
Bedrooms: 4
Bathrooms: 4
Location: in town
City: Zirahuen
Price: $240,000.00 USD

Features: Jacuzzi tub, 2 fire places, laundry room, paintry and storage place. Workshop, outdoor grill, two outdoor breakfast places. Two car garage, cistern, septic system and grey water system. Michoacan style architectural design.

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Every corner in the garden was designed to enjoy nature. The grill (el asador) is ready to prepare some barbeque, Seat on the bench (la banca) to admire the beauty of the lake, The chairs (las sillas) to meet and chat with friends surrounded by nature and la veranda to have breakfast or lunch while listening the sounds of running water from the fountain. This beautiful home was totally built with adobe, the walls were finished and painted with organic materials.

This is a 2 level house. First level.- There is a terrace with lake view, hallway to access the living room at right, one bathroom at the end and the dining room and kitchen at left. There is a gorgeous view of the lake from the dining room and kitchen. There is access to the laundry room, walk in pantry and small gym hrough the kitchen.

Second level.- The master bedroom with walking closet and private bathroom with shower and jacuzzi. There is a floor to ceiling window with the best view of the lake and a fire place. There is a second bedroom with a cozy terrace.

The third bedroom has its own bathroom and independant entrance from the front terrace. The fourth is actually a spacious and independant studio with bathroom. This is a beautiful room full of windows to enjoy the beauty of the lake and mountains.

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Land in Zirahuen: 9 Hectares All services (Pine trees and Lake View)

Liliana — Thu, 09 Feb 2012 15:56:10 +0000

Code: Z56
Size: 9 hectares (22.24 acres)
Location: on the hills
Address: Paraño area
City: Zirahuen
Price: $523,000.00 USD

Features: A mix of clear, forest, canyon and view of lake and mountains.

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These property has huge potential for development:

- 200 meters of road front
- less than 1 mile from the town of Zirahuén
- Easy access through a cobblestone road/dirt road
- Electricity service
- Water service

It will takes very little investment to improve the access road.

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These land (22.24 acres) is a special place. It has a mix of clear, forest, canyon and view of lake and mountains. It is a tranquil place far enough from the bustle of town.

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2,152 sq. feet House in Downtown Patzcuaro

Liliana — Wed, 01 Feb 2012 15:41:16 +0000

Code: P82
Size: 2,152 sq
Lot: 1,614 sq
Bedrooms: 3
Bathrooms: 3
Location: downtown
Address: Corregidora 9
City: Patzcuaro
Price: $177,000.00 USD

Features: roof-top terrace, balcony, jacuzzi tub, fireplace, US-style electrical work and plumbing, talavera tiles in bathrooms & kitchen, Michoacan style architectural design.

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This 2,152 sq. feet two level home sits on a 1,614 sq. ft. lot which fronts a typical Patzcuaro cobblestone street. A carport provides parking for one car. In addition you will have a first floor small patio and a roof-top terrace for convenient and pleasant outdoor living.

The first floor features a great room (living room/dining room/kitchen) with firepplace and a bedroom suite (or office) with closet and bathroom. The kitchen features a cooking-center island, wooden cabinets, talavera tiles and copper sink.

The second floor features a master bedroom suite with balcony, walk-in closet, and bathroom with Jacuzzi tub; a second bedroom suite with balcony, walk-in closet and shower; and convenient full-size laundry with washer and dryer hook-ups. The stairway – from the first floor to the roof- features clay tile.

The architectural design features of this home include traditional materials -adobe, wood pillars and beams, red tile (teja) roofs, stone work (cantera) and woven overlapping strips of pine ceilings (tejamanil)- a distinct and elegant characteristic of classical Mexican architecture.

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Unlike many new homes built in this part of Mexico, the construction of this home was supervised by an American engineer allowing for important safety features of US-style electrical work: ample grounded/polarized outlets, appropriate amperage, and personalized phone and computer hook-ups. Plumbing was supervised as well to assure drainage and adequate water pressure through-out. Because there are no building codes or government inspections, the added benefit of supervisory engineering assures both safety and convenience.

The property itself is in a great location – 4 blocks from the main plaza, 3 blocks from the bus station, close to a colorful market, and best of all – 2 blocks from the main road (Libramiento) which circles the city.

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10 Important Documents You (Buyer) Must Have Before Closing

Liliana — Fri, 27 Jan 2012 16:06:54 +0000

Por Liliana Elena González

@mexatua

If you have buyer´s agent, make sure he/she is an attorney, or a certified Mexican Realtor. However, nowadays more than ever, owners are selling their properties by themselves and buyers are brave enough to risk their investment buying with no appropriate legal representation.

If you are one of those “brave hearts” mentioned above, this post is for you. I have written this list to help you a little bit, but nothing will substitute legal advice in your particular case.

Anyway, make sure seller provides the following documents:

1.- Certificate of free liens (CLG: certificado de libertad de gravamen)

2. – Predial (yearly taxes) payment receipts for the last 5 years

3. – Water payment receipts for the last 5 years (or a certificate of “no debt”)

4. – Payment receipts for services such as phone line, cable TV, Skype, Dish or similar.

5. – Cancellation letter for any service installed in the house that you don´t wish to continue.

6. – Liquidation letter for each worker of the house, like gardener, house cleaning person, etc.

7. – Certificate of número oficial (if the house number does not match the escritura).

8. – Certificate of IMSS payment (if the house was built within the last 5 years).

9. – Certificate of “terminacion de obra” (if the house was built within the last 3 years).

10. – Builder´s agreement or any other document stating building warranties, no payments owed and so on.

Some of these might not apply to your purchase but better be safe than sorry. Don´t you think?

Finally, my advice on this matter is: get appropriate legal representation please.

Latin America’s Illuminated City Gets More lights

Liliana — Fri, 13 Jan 2012 16:14:26 +0000

By John K. Glaab, CIPS

Morelia is more than the political capital of Michoacan. It is also the cultural center. In 2003, the city embarked on an activity,” Plan Luz.” Buildings and historical monuments are lit up at night. The architecture is a true sixteenth century jewel…

In 2010, Morelia was named, “Latin America’s Illuminated City”, by the organization, Lighting Urban Community International. Created in 2002, at the behest of the City of Lyon, today LUCI is an organization of nearly 100 members, comprising around 63 cities covering four continents and 35 associated members (international companies, lighting designers and architects, universities, independent lighting professionals.)

One of the first buildings to be lit was the city’s magnificent cathedral. It has the second largest organ in Latin America. The cathedral is home to the annual International Organ Festival. Speaking of festivals, there is a new one starting almost every week. Among them are the International Organ Festival, Mariachi Festival, Cine Festival, Dance Festival and the popular International Music Festival, which honours a different country every year. Conservatorio de Las Rosas, founded in 1743 is said to be the oldest music conservatory in the new world. Along with the Cathedral it is lit up at night.

Plan Luz continues with new sites being added every year. At the end of 2011, there were 38 sites that are lit up each evening. This includes, buildings, monuments, and plazas. On Saturdays fireworks and music can be seen and heard in front of the cathedral. Locals and tourists alike crowd the closed Calle Madero.

Morelia is certainly a city worth visiting.

About the Author: John Glaab is a founding member of AMPI Los Cabos. A Certified International Property Specialist, he is active in the National Association of Realtors® Business Alliances group. John is Vice President of International Marketing for The Settlement Company® Mexico’s oldest escrow and title company.

Colonial House in a Gated Community 5 Minutes from Patzcuaro

Liliana — Mon, 07 Nov 2011 16:04:10 +0000

Code: P129
Size: 232 sq meters
Lot: 1011 sq meters
Bedrooms: 4
Bathrooms: 4
Location: Corazon de Durazno
City: Patzcuaro
Price: $245,000.00 USD

2500 sq ft livable space featuring living room w/wood-burning fireplace insert from Spain, dining room w/gas heater, 4 BR/4 BA, home office, soaking tub, whirlpool tub, 2 tankless hot water heaters, laundry room w/under-counter washer and dryer and cistern.

This property is located in Corazon de Durazno, five minutes far from Patzcuaro. This is a gated community of 34 Michoacan Colonial Style houses surounded by gardens, pine trees and lake & mountains views.

Corazón de Durazno features Lake Patzcuaro and mountain views, cobbled stone streets, gated entrance and more. Each home has a pressurized water system, private cistern and they are all linked to a state of the art water treatment plant belonging privately to the subdivision. Entrance gate and security fence for 24 hour a day security.

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The living room has 2 large picture windows, a wood-burning fireplace with lovely hand-carved cantera mantel, long range mountain views as well as views to the inner courtyard. The formal dining room features a large picture window and french doors with views of the garden and Mt Estribo, and leads to a sunny wrap-around portico. A great place to sit and watch the fabulous sunsets.

The kitchen is located in front of the dining room. It has talavera tiles and a large island work-place, instalations for appliances: refrigerator, stove, microwave and dishwasher. Double-basin stainless steel sink with soap dispenser and spray nozzle.

The laundry/sewing has washer and dryer instalations, long counter area for sewing or other hobbies, Iron-Away built-in ironing board with timer, hot iron storage shelf, appliance outlet, and lamp. Plenty of cabinets, drawers, and shelves to store all your sewing, laundry, hardware, tools, and pantry items here.

There are 2 bedrooms w/closets and private bathrooms in the first level. One of them opens onto the sunny inner courtyard that features a cantera fountain and lush tropical plantings.

There are 2 bedrooms w/closets and private bathrooms in the second level. One of them opens onto a sunny private balcony with long range mountain views and view to inner courtyard patio.

An spiral staircase leads to a fabulous sunny roof-top terrace with 360 degree long range territorial views of the Western Sierra Madre Mountains, Lake Patzcuaro, and the Island of Janitzio.

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Day of The Dead Celebrations in Michoacan (Part 7)

Liliana — Sat, 29 Oct 2011 16:55:38 +0000

Altar

By Lic. Benjamin Lucas Juarez.

The making of the altar, its size and complexity depends on the tastes of those involved. But if it’s the first year of celebration or if it is a small altar just for family souls are facts that are also taken into account.

It has been said without sufficient grounds that the altar has four levels that correspond with its elements. As it has been explained, each community lives its customs in a particular a way, which allows finding similarities in terms of the use given to certain elements, but there is no single model to follow. There are models where the space of an entire room is used and others that have just a little cross and a small space defined by a mat or petate (Bed roll made out of woven fibers) on the floor where the offering is placed. The best-known altars are those that have an altar-table with ketsï’takua in the frontal an lateral spaces.

One must not forget that a decorated grave constitutes an altar around which the ritual of waiting happens.

Concluding remarks

As it is known, since November 2003, UNESCO declared the Day of the Dead celebration as a Masterpiece of oral and intangible human heritage. It was said that it is “… one of the most important representations of the living heritage of Mexico and the world, and one of the oldest and strongest cultural expressions of indigenous groups in the country.” Making an explicit reference to the indigenous origin of this celebration, we seek to promote this event and its conservation through an informed and respectful approach to manifestations that have a great cultural value for the owners of the tradition but also for humanity.

Finally, the same declaration document warns about the individual and institutional endeavors and tasks “…its aesthetic and cultural dimension must be kept from the growing number of non-indigenous expressions of a commercial nature that tend to affect its intangible content.”

Image credits: Prácticas comunicacionales

Day of The Dead Celebrations in Michoacan (Part 6)

Liliana — Fri, 28 Oct 2011 16:45:12 +0000

The Offering

By Lic. Benjamin Lucas Juarez.

In Purépecha communities there is a basic principle of reciprocity, which greatly strengthens community life. Mutual help and service spirit is reflected in major activities and holidays like animecheeri k’uinchekua.

A lot has been said about the different stages of the offering, but what is the offering?

Apparently, the offering is nothing more than a container with chayotes, bananas, guavas, loquats, corncob, candles and bread, either to place it over the grave of the souls that are awaited or in the altar set at home for the same reason. However, because of values that come from indigenous cultures, sometimes it’s not easy for the average visitor to understand why a chayote, a corncob, a flower or a cigarette has such value that it’s offered at a celebration as relevant as this one. It’s necessary to understand that there are cultures that place a special value to what they sowed, cultivated and cared for. As a result of that effort, nature responds with fruits and products that are worthy of being offered. This is the offering for the souls, something that is not only worth because of what it is but also for the value that represents for both the giver as the receiver of the offering. In this particular case, offerings are made with food that is truly the sustenance of the living, the gods and the souls.

Certainly, the Purépecha knows and feels what this celebration is all about. However, much of that is expressed through several symbolic elements that are present before, during and after animeecheri k’uinchekua.

As an example, one of the elements that stands out for its aroma and abundance is the tiringuini flower (Cempasúchil in Nahuatl), that most people know as “flower of the dead”, which is the name used in non-indigenous societies. How can it be explained that for the Purépecha world the flower has a totally opposite sense compared to the one indicated by its Spanish name? Tiringuini Tsïtsïki is the flower most associated with the sacred. Because of its color and shape, the flower is a sign of celebration, life and joy (tsipekua). By placing it in abundance, the flower transmits these qualities to the space it’s in. It revives and purifies things. It sets a clean environment for the encounter with the soul and the sacred.

Another element is bread, but not just any bread. The shape is important. It has a human form: male, female and child, and although it’s made with bread flour used for other celebrations, it has another meaning: it has the shape of the soul that is awaited. It’s placed next to the altar or grave, where the soul eats it and soaks it with his divine essence at the same time. This way, when people feed off of it, the essence of the soul nurtures them. It is understood that the round type of bread with little bread bones is not significant in this case, even if it is in the context of other cultures and regions.

Much has been said of the food. In a nutshell, the offerings consist of “what the deceased liked”, and as noted above, the food is the result of a process in which each community defines what is significant according to the occasion.

The same happens with alcoholic beverages or cigarettes. It is often argued that these are offered because the deceased liked them, but if we understand the role of these elements in all Purépecha celebration, we will understand that both elements relate to the concept of community. Thus, when they are present in the offerings, they renew family, relatives and community ties. That is, cigarettes and drinks help recognized souls as important parts of community life.

If all these explanations show diversity, what happens with the rest of details that are also a part of the altars and offerings yet to explain, such as candles, floral crosses, arches, incense, corncobs, honeycomb, chilacayotes (Cucurbita ficifolia a type of squash), pumpkins, fruit (bananas, guavas, oranges, loquats, sugar cane), personal objects, religious icons, flowers, water, salt, tools or toys, items of clothing and photographs among others.

Image credits: Nirundia