Puerto Vallarta Real Estate Articles

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.