All about facturas

by linda neil 

AFTER THE PURCHASE IS COMPLETED - PART III

Miscellaneous information for new property owners   

The Baja Peninsula is a place of incredible natural beauty; wonderful mountains, delightful beaches, lots of good activities.  
You have wonderful properties to select from and capable real estate professionals to guide you.
It is Easy to fall in love!!

Once the ink is dry on the deed, you may have some questions and concerns.  Let’s talk about those questions and concerns.

LET’S DISCUSS THE FACTURA…that is the legal invoice required on all purchases in order from them to be deductible when you rent or sell your property.
…….…….what does it look like?  Feel like?   It does NOT look like A ROLL OF TAPE FROM AN ADDING MACHINE!!

The format for a facture is carefully controlled by the Mexican government.    It bears the name of the individual or company issuing the facture, its address, its tax identification number (RFC) and a description of the services or products sold to the consumer.

The consumer information must include legal name of the buyer (must match the name on buyer’s deed or Mexcian bank trust), Legal address of the Mexican property and Buyer’s taxpayer identification number.   
What happens if the buyer doesn’t have an RFC (taxpayer identification number)?
If you are a foreigner, without the taxpayer identification number, many will say, “we cannot make a facture for you!!”

WRONG!

SAT-hacienda says a factura made to your legal name and LOCAL ADDRESS is valid and acceptable.    Since you do not have an RFC   (taxpayer identification number)   you have the vendor put in:

XEXX010101000

Some factura programs now require the foreigner’s social security number from the US or social insurance number from Canada.   Be prepared to provide this information.

File these facturas and pull them out when you sell your property or when you make your monthly income declarations if you rent your property.

Modifications, commissions, legal fees, can affect your TAX BASIS when you sell,    reducing the tax you have to pay. 

Property Tax is a municipal tax with assessments made annually by the local tax office.   Generally the property tax in Mexico is extremely low when compared with property taxes in the US and in Canada

Another important tax is on income from rental properties
Many foreigners, thinking ahead to eventual retirement, will buy a small home or an apartment building, rent it out to cover costs and maintenance while they are still working at their jobs in the US or in Canada.   They let appreciation work for them in areas where a property is a wise investment.

Details on payment and responsibility for these taxes will be covered in more details in Part IV of this series.

About the author:

LINDA NEIL is the founder of The Settlement Company, which specializes in real estate transfers, escrows,and consultations.  Just added as a new service, Settlement will now prepare monthly tax declarations on rental properties, file them and perform additional essential landlord accounting services.
For reprints of this article or for further information on tax paying services, please contact The Settlement Company® at info@settlement-co.com, and website: http://www.settlement-co.com