| Tax Free Income Possibilities in Yucatán, Mexico |
| www.PlanetaVerdeMarAzul.org www.Green Planet Blue Sea.com The Official Website for Maya Neem Farms, Yucatan, Mexico A Model Neem Plantation in Progress for Profitable, Integrated, Sustainable and Ecologically Balanced Rural Development, Renewable Land, Sea and Water Use, and Resource Conservation |
Introduction: A Big K.I.S. ("Keep it Simple!") to you for dropping by. This will be a quick and easy intro to at least a couple of concepts that very few people know about...or at least talk about...in terms of investments in Mexico. We will address two ways that even foreigners can make great returns...legally...and in short order, and not pay a peso of taxes in Mexico.... No "fine print" here but as individuals and not as licensed tax or legal "professionals" we are obliged and happy to suggest the following: Please note that we are talking about...Mexico... and you may need to consult your own tax experts (if you wish) in your country of origin to see what if any consequences income from Mexico may have upon your standing and/ or responsibilities and/or tax liabilities in the country you came from. Again, we are only talking about Mexico and as lay people, not as professionals in the tax or legal field. We are sharing with you from the knowledge we have gained from our own experts and counselors and from our years of experience here in Mexico, as well as several other Latin American countries, and will, upon request, refer you directly to these same experts, who, by the way, are fluent in English and probably a couple of other languages we may not even know about. They are also experts and very well known professionals here in Real Estate, Business, Tax, Immigration and most other types of law and finance and are used by individuals (especially incoming ex pats and investors) as well as some of the largest Real Estate and investment companies on the Yucatán Peninsula |
| Option I: Tax Free Loans secured by Real Property This is a straight forward investment for qualified lenders as well as borrowers. The person borrowing will be a known or existing client of our attorney who will, after reviewing each individual loan arrangement and after having a licensed Architect/Contractor appraise the property to be used as collateral, recommend (or not) the loan. Real Estate to be used as collateral will generally have a conservative, current market value of 4-5 times the amount of the loan being sought. If you are a foreigner, you may have a hard time believing this but 12% interest on a secured loan in Mexico is literally considered a "gift"!. In reality, as a borrower in this scenario, you can expect and will generally be paying 17-25% per year or more depending on the term and amount of the loan. But what about banks? In general, banks will only loan to nationals or foreigners with a LONG STANDING, excellent local (as in Mexico.... Your credit abroad is generally not taken into consideration regardless of your "millions" outside of Mexico) credit. Count on interest rates from 17% to 25% to over 50% per year on most types of credit...if and only if... you "Qualify". Is it any wonder that Mexico is generally considered a cash and carry economy? OK Borrowers: $17% - 25% or a good deal more for credit with a very high security to loan ratio and...good, local, personal and credit history already established with the attorney which arranges the loan...if you qualify. Your loan will be the equivalent to a 1st Trust Deed in the States (for example) It will be registered with the government. It will supersede any other debts (In fact you will not qualify if your collateral property already has debts or liens of any kind!) and... you will agree in writing NOT to further encumber the collateral property until your loan is paid in full and cancellation or debt is filed with the State Registrar´s office (AKA: "Catastro"). As with a 1st TD, another very important protection for the lender here is that the loan gets paid off first if the borrower gets in hot water personally with some other person, company, or agency that then tries to lien their possessions (Personal property or Real Estate). The first TD holder is first in line and is therefore protected as such. One final point in terms of the basics: The borrower pays for the processing, filing and cancellation of the loan when it is paid off. The initial fees are approximately $13,000.00 MN (pesos). When the loan is to be paid off and cancelled, it costs another $3,000.00 pesos for this process including the filing with the State. The lender incurs no fees during any part of the process. Unless otherwise provided for in the loan contract, the borrower may pay off the entire debt at any time without penalty of any kind. The Lender: Let´s say the loan is made, all the papers filed, and the money is dispersed to the borrower on November 1st. 30 days later, on December first, the borrower goes to the Lender´s bank of choice and deposits a check in Lender´s account for at least 1/12 of the annual interest unless other arrangements have been made such as amortization. In the case of short term loans (IE. 1- 3 years or less), most borrowers prefer interest only with a full-payment, balloon pay off at the end of the loan´s term, if not sooner. There is NO TAX on the loan or the interest payments whatsoever. Simple and sweet. For some reason, this loan arrangement IS NOT treated as regular or business income by the Mexican IRS (AKA: Hacienda). Your government, if you report it, may take a different view but that is between you and them and your personal values and conscience. "Qualified Lenders"? Remember we mentioned this at the beginning. The Lender needs to be known by our attorney as well. He or she needs to be known for good character and have some credible explanation of where the money to be lent is coming from. The reason for this these days should be obvious. How much will you earn if your money is accepted? Generally between 15% and 20% and always and only paid in pesos. How much will this loan cost you the lender, if anything? Absolutely ...NOTHING. What percentage of your profit or income from this loan will you, the lender, be paying in the form of taxes to the Mexican government? None. Zero%. This is non-taxable income. What about your country of origin in terms of income taxes? That´s between you and them. Generally however, and in our experience of knowing and working with ex pats, most ex pats treat income (especially if they will re-invest or spend it here) in Mexico, including buying and selling Real Estate, like they would a trip to Las Vegas: "What happens in Vegas, stays in Vegas". What you do personally will depend upon your relationship with your country of origin and your qualified and trusty tax professional. Something to consider. Perhaps not your first week or month here but just a little ways down the road, let us say that 99.9% of all of our clients and friends use this group of outstanding professionals for all of the legal, financial, and accounting needs here in Mexico. You as a potential lender might establish your relationship and personal history with our "loan specialist", by first establishing your LLC (Limited Liability) or other corporation here in Mexico through his company. He will help you set up everything from A-Z and even coordinate with your personal accountant who will also do your monthly and year end filings (Please CLICK HERE or see "Buying Property in Mexico" on the home page of our sister site: www.YucatanRanchFarmandHome.com for further extensive information). It pays to have the best legal and accounting services available, especially if the folks you are going to be working with are not only 110% reliable, and professional, but economical and fully bi-lingual as well! |
Option II: Buying/Operating a Ranch, Farm, Plantation or other agricultural property. Very briefly, these operations are considered the economic and cultural backbone of the country and its economy. You as a Mexican citizen or Mexican corporation (LLC) are therefore not taxed. Not only does the farm, rancho, or plantation not pay income taxes but you also receive a bi-annual refund of most of the sales taxes (at 16% that can add up to a considerable savings at the end of the year!) you will be charged throughout the year on an amazing number of business and most often very indirectly related "business" expenses which might include, but not be limited to, your new truck, car, gasoline, maintenance, trips for XYZ reason, that are in some wise "business related" plus all of your food and hotel costs. FYI, if your waiter puts down on your restaurant tab that you had a glass of wine with your steak and lobster dinner, you will not be allowed a deduction on the wine but you will be free to receive the refund on the rest of your dinner.......... Most waiters, especially at higher end venues are hip to the drill if you mention that you will be needing a "factura", or official receipt, or will pay with your MEXICAN CREDIT CARD... for your meal and so will simply list the meal and a total cost without itemizing every last shrimp cocktail, Piña Colada, or those beverages that sometimes come with colorful paper umbrellas? Back at home, don´t forget to get a "factura" at the supermarket (once or twice a month you will be in Merida or Cancun anyway) for a 5 star dinner, a symphony, serious shopping, or to take in a movie. While you are there, why not pick up the bulk of your major items at Sam´s or Costco or various other marvelous and modern venues while you are there. 16% off your bulk or other items plus just about everything else, will pay for your shopping trip even if it turns into a mini-vacation! |
| There are probably additional options but these are the ones we know about, are involved in, and can help you with. The 3rd related option or "Joint or Co-managed Venture" (Click Here...) is covered on another page and also on our sister site and is designed for folks who may want to reap great, inflation-protected, mostly tax-free, returns on their investments but may be saying "What the heck do I know about Farming, Ranching, or Reforestation in Mexico ?" Worth having a look. You will be, we think, intrigued and pleasantly surprised and, we can help! Thanks for your interest! |
| Home Contact Us YucatanRanchFarmandHome.com Buying Property/Mexico |
| We Proudly Offer & Promote Sustainable & Profitable Green Investments! Please visit our sister site: YucatanRanchFarmandHome.com |