with its Riviera Maya, Nuevo Vallarta, and Mayan Palace resorts. However, a few places and most notably in Los Cabos, Puerto Vallarta, San Miguel de Allende, Ajijic/Chapala, and Cancun/Riviera Maya, home prices are often seen quoted in US dollars. Unless youre within the stipulated rescission period, your best option would be to sell or rent your Mexico property for money. However, such a position - to deduct a loss on sale - should be discussed carefully with your tax advisor and should be considered in conjunction with the complex rental loss rules discussed at length in the related tax article on rental income. The re-seller will request you wire funds to an escrow account in Mexico for appraisal fees or transfer fees, but in the end, the sale never happens, the money is gone, and the property and its obligations remain in your name. As explained above, generally, that loss would not be deductible. Have a broker or lawyer look over the contract or have them draw one up for you. These scammers obviously know enough about Mexican laws to twist all that tax information around when they target unwitting sellers. -Lauren. Re: In There Really a 30% Mexican Tax on timeshare sales????? Timeshare properties are a way of having your vacation area available at your disposal and a way to make rental profits, as well. The Main Qualification to Avoid Tax Provide proof that the property was your principal residence. "A one-quarter fractional interest in a beachfront property that allows use during the summer may be more expensive than one that allows use during the spring," explained Mr. Hernandez, who practices law in both California and Mexico. But we are happy to look at your situation and explain the best way to deal with your particular unit. If you transfer money, it is going straight to someones bank account, and you will never see it again. But Ive got nothing to do with any of this, as they stole my identity and that of my real estate company which had been inactive for quite some time. The Notary Public dealing with the matter will interpret the law; some will apply the capital gains exemptions only if the seller hasresidente permanente status; some Notary Public offices may apply the exemptions to foreign residents with residente temporal status. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Your tax cost is equal to your original cost plus (1) closing costs (title policy, recording fees, etc.) Reply. Our goal is to give you the best advice to help you make smart personal finance decisions. But it is only a tax on the income derived from the sale of certain higher-end properties worth several hundred thousand dollars. You arent trapped at that overpriced Mexican beach resort. The offers that appear on this site are from companies that compensate us. Here's an explanation for how we make money One additional note on calculating cost for loss purposes. Please remember that your use of this website is governed by Bankrates Terms of Use. In both the timeshare and fractional scenarios, the costs associated with property taxes usually are passed along to the members, owners and investors through their "maintenance" fees, he said. The difference though is that Vrbo is not a Mexico based company. If the same home is properly co-titled with your spouse or other family member and they are resident in Mexico* with a Mexican tax ID,and the house is their primary residence too, you can deduct an additional 700,000 UDIs in their name. A one-time tax allowance exemption is available under Article 92, Fraction XIX a) of Mexican income tax law that reduces the tax liability for many family homes, although you and the property must meet certain criteria to qualify for the exemption: The flat-rate exemption is the peso equivalent of700,000 UDIs; the value of UDIs fluctuates and you can get current UDI exchanges rates on the Bank of Mexico website. These offers to sell a timeshare at a cost are most likely a scam, and since many of the scams are operated by Canadian and American expats, it makes it easier for the owner to trust since it is a fellow national offering advice and a solution for their situation. With a fideicomiso, investors receive a beneficiary interest but "are notconsidered the direct owners for purposes oflocal property tax," he said. I am selling my timeshare and I understand I have to pay a foreign sales tax and report the sales because the amount is in excess of $10,000. We do not sell, trade, or otherwise transfer to outside parties your personally identifiable . At Bankrate we strive to help you make smarter financial decisions. The gain should generally be reported on Schedule D. The tax law generally treats a timeshare that you own as a personal asset, much like your personal automobile. Make sure you have removed any personal property that you do not want to part with. I am being told that I must pay the Mexican tax to "SAT" in Mexico before the sale can be completed. They will also be able to help you find out the fees associated with selling. What to do when you lose your 401(k) match, file a complaint with the U.S. Federal Trade Commission, Mexicos consumer-advocacy agency, PROFECO, Taking out a personal loan to buy a timeshare, California Consumer Financial Privacy Notice. You have just sold that unwanted timeshare and now it's time to get your tax information ready for your income tax return. Contact us today for a free consultation and case evaluation, and let us see what we can do for you. the land subject tothe sale must not exceedthree times the size of the construction on that land (measured in square meters); you can only claim this exemption once every three years. Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. This article will focus on how to best exit your Mexico timeshare. BR Tech Services, Inc. NMLS ID #1743443 | NMLS Consumer Access. Its a beautiful country with lots of developers, like Vidanta with its Riviera Maya, Nuevo Vallarta, and Mayan Palace resorts. The content is broad in scope and does not consider your personal financial situation. But practically speaking, it is very difficult to obtain refunds from resorts because PROFECOs power is very limited under the law. Timeshare Resale Scams to Avoid: Another Mexico timeshare scam to avoid in 2021 relates to resale scams. who ensure everything we publish is objective, accurate and trustworthy. Shares the stories you may have missed from the world of luxury real estate, COPYRIGHT 2023 MANSION GLOBAL. The criminals will use an actual real estate brokers name and license number in an attempt to legitimize the transaction. Despite the number of scams out there, there are options available through legitimate resale companies. Additionally, you can contact the English-language site of Mexicos consumer-advocacy agency, PROFECO. Expats and Capital Gains Tax on Mexican Real Estate You are also entitled to a refund of what you have paid. The Costs and Taxes of Selling Property in Mexico. First, though, the sellers will just need to prepay some contrived closing costs and other fees and deposit them into a sham escrow account for reimbursement upon closing, which of course, never happens. Additionally, timeshare resale markets . You can elect to pay a straight 25% of the gross amount of the sale . I am in the process, I think, of selling my timeshare in Mexico. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. However, if the grace period has passed by the time the buyer realizes they have either been defrauded or do not want the expense or inconvenience of owning a timeshare, they look for ways to sell it and rid themselves of its obligations. They have the licenses and know-how to finalize the sale for you and the buyer. There is no need to sell a timeshare in Mexico as Mexico DOES NOT sell timeshare. For the optimum Mansion Global experience, please turn off any ad blockers and refresh this page. The tax-deductible allowance is not automatic: you must qualify, and you must prove the qualification. Timeshare properties are a way of having your vacation area available at your disposal and a way to make rental profits, as well. Taxation on residential property sales is a complex area of Mexican tax law and every case will be slightly different depending on the circumstances. Carlos was consistent in his behavior at age 80 as he was 30 years ago when we first met him. Its a beautiful country with lots of developers, like. We have refined our marketing processes for maximum reach to help owners find interested buyers. selling price, net of any selling expenses. . We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Now that you know the destination in Mexico where you want your timeshare, you need to find a resort in that destination that sells timeshare. so you can trust that were putting your interests first. Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. When buying a home in Mexico, up-front costs will vary depending on the circumstances, although the ongoing costs of A hidden cost of selling your Mexican home might lay in the 'exchange rate effect'although worthwhile tax allowances are UDIs were introduced as an inflation-protected unit and are still used today for mortgages, bonds, and some financial calculations. She is a graduate of Rollins College with a Bachelor of Arts in Communication Studies. that offers some limited assistance with the process. Before you sell your ownership, we recommend calling your developer. Hello Suzanne! I don't know how to calculate the taxes on the sale or where to . We invite you to use our commenting platform to engage in insightful conversations about issues in our community. You can also choose to go with a broker. They may ask that you wire a few thousand dollars to pay a tax and allow them to open a Mexican bank account in your name to transfer the compensation for the timeshare, again not correct. They will request funds transferred to them in a way that cannot be traced, for example cashiers cheque, money order, cash or other forms of non-traceable payment. Note also that if you are not a Mexican national then you might also be liable to taxes in your home country and you should seek advice from a specialist tax accountant in that respect, too. You transfer money, it is very difficult to obtain refunds from because. Above, generally, that loss would not be deductible when they target unwitting sellers like Vidanta its... Do for you make smart personal finance decisions hundred thousand dollars lots of developers, like way to deal your... Beach resort Mexican real estate you are also entitled to a refund of you. That the property was your principal residence you may have missed from world. 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