Facts about Factura's Please

by **dean** Tue Apr 19, 2016 11:49 am

lpg wrote:Facts about Factura's Please
Posted by: "Simon Loftus" simon@amistadrea.com simonl
Date: Tue Apr 19, 2016 10:06 am ((PDT))

If you have purchased a home and are remodeling it yourselves with the plan
to sell it. Then yes asking for facturas is an important step.

You don't need to file them as you would with a business, but you do need
to hold onto them so that when the Notario Public is calculating your
Capital Gains taxes, you can prove that you have indeed invested the money
into the home.

Assuming you aren't a registered business, as otherwise you wouldn't be
asking the question, you will want to use a Generic RFC which means a
Generic Tax Code. The Generic Tax Code for a foreigner is always
XEXX010101000 and then you will want to have it filled out with your name
and address of the home you are remodeling. Any and all repairs can by
included.

Capital Gains tax is 30%, so any receipt with a factura gifts you with a
30% refund against your taxes when selling. This is important because some
repairmen who work under the table may be more than 30% cheaper than the
guy paying his taxes. Morally and legally you should of course pay the guy
who is paying his taxes and giving you a factura, but if it is your local
handyman, then you might just pay him 30% less than the other guy and not
worry about a receipt.

If your capital gain is going to be huge, e.g. you paid $100,000US and are
going to sell it for $300,000US but forgot to get receipts along the way,
there is a process called Remanifesting, which allows you to pay a % of the
total property value (e.g. your planned sales price), typically around 5%
once all fees are accounted for, and the local government adjusts your tax
base value. This is a common process for foreigners who didn't get
receipts on their build.

If you own your home through anything else other than a Fideicomiso (Bank
Trust), this information is not 100% relevant to you as have to do things
differently (e.g. Mexican owned property in Title, or home owned through a
Corporation).