Essential Expat Tax Advice

Expat tax advice is essential to retirees planning to spend their retirement years in Mexico or in other countries.

It is extremely important for the future expat to get good solid advice from a CPA with country specific information and experience to ensure that the expat’s transition go smoothly.

In addition, the expat tax advice is just as important in Mexico as in the USA. If the expat plans to earn income within Mexico and avoid tax issues with the S.A.T., formerly known as “Hacienda”, the Mexican IRS, and additionally with immigration you must have the correct visa to earn income in Mexico and report all income.

Sell Your Fideicomiso Rights

In Mexico you can sell your Fideicomiso rights, and property but you will be paying a capital gains tax. Additionally, Form 3520 must be included in your US Fed. tax return, 3520A thereafter with your Federal Tax Return if you own a fideocomiso. A knowledgeable tax accountant should be involved prior to, and through, the sale to avoid overpaying SAT/Hacienda.

Often the full amount of the purchase price is not reported to SAT/Hacienda to avoid purchase fees but that comes back to bite when you sell your property in capital gains. It’s better to pay up front than to have to pay the capital gains tax at the end.

If you own property or business interest in a Mexican corporation you must file form 5471 yearly with your Federal taxes.

The expat is well advised to hire a Mexican lawyer and a Contador Publica, “Public Accountant” in order to avoid issues and immigration conflicts as well as a CPA well versed in US/Mexican tax issues.

The expat should not underestimate Hacienda’s ability to collect its share of taxes nor its ability to confiscate properties in order to do so.

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