# Transfer money from Mexican bank to U.S.



## bellabird

We are finally selling our house in Mexico and will have $40,000 deposited into our Mexican bank account. Does anyone know how we can transfer that amount to our US bank account without incurring a very large fee? Does anyone know of any problems that we might have with this transaction?


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## sparks

A bank to bank transfer cost us about $40us on either end .... but I believe it's a standard fee not based on percentage. I would talk to both banks and see what they say


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## pappabee

I would also talk to someone regarding taxes. I have no idea what they might be but I have heard that if you make ANY profit in Mexico you have taxes to pay.


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## RVGRINGO

Taxes due in Mexico will be settled at the real estate closing.


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## DNP

pappabee said:


> I would also talk to someone regarding taxes. I have no idea what they might be but I have heard that if you make ANY profit in Mexico you have taxes to pay.


You had no idea? What's most surprising is that you're surprised!


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## Schmo

Taxes, oh boy howdy. It depends on your status here. I'm here on a "No Inmigrante" as are many folks. That means when you sell you pay 25% on the sale price up to what you paid for it. If you make a profit it goes to 30% and that is of the total sales price not just on the profit. I'm getting ready to sell and have confirmed this with two different attorneys.


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## AlanMexicali

*Capital gains in Mexico*



Schmo said:


> Taxes, oh boy howdy. It depends on your status here. I'm here on a "No Inmigrante" as are many folks. That means when you sell you pay 25% on the sale price up to what you paid for it. If you make a profit it goes to 30% and that is of the total sales price not just on the profit. I'm getting ready to sell and have confirmed this with two different attorneys.


Can you please explain your situation better as to why you are paying 25% on the appraisal value of your house and not the profit as this would be capital gains taxes which is what I understand is due at the time of sale. To me what you stated doesn't make any sense. What type of property do you intend on selling?

Mexican taxes: here, there, taxes, everywhere : Mexico Living


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## RVGRINGO

Is the house your principal residence? For how long?


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## AlanMexicali

*Sale of property*



RVGRINGO said:


> Is the house your principal residence? For how long?


"Income Tax on Property Gains: If the home has not been your main residence for at least the last two years, will be required to pay income tax on the property. You may either pay 20% on the gross amount of the transaction, or elect to pay 38- 40% tax on the net profit obtained from the property. This law prevents short-term speculation on the property market. Commercial property is taxed at above rates, regardless."

Closing taxes in Mexico - Teresa Gutierrez

This is interesting from the site above. I have never heard of this yet.


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## Schmo

This highlights some of my frustration. This has been my primary residence for 18 months. When I didn't like the answer I got from the first attorney I went to a second who is well known in San Miguel and is experienced in property transactions for foreigners. He confirmed what the first told me. I asked about the two year time frame but he said it didn't matter. I read the Caldwell Banker page but I wonder if anyone has a code or statute to quote?


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## AlanMexicali

*Capital Gains*



Schmo said:


> This highlights some of my frustration. This has been my primary residence for 18 months. When I didn't like the answer I got from the first attorney I went to a second who is well known in San Miguel and is experienced in property transactions for foreigners. He confirmed what the first told me. I asked about the two year time frame but he said it didn't matter. I read the Caldwell Banker page but I wonder if anyone has a code or statute to quote?


It appears they have changed the laws regarding foreigners selling property in Mexico last year with a few hard to meet stipulations.

Are you seeing a Notario or Abogado?

Mexico Capital Gains Tax Article Vallarta Real Estate Weblog


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## Schmo

I forget that I should not use the generic term attorney. The advice came from someone who is both.


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## AlanMexicali

*Notario*



Schmo said:


> I forget that I should not use the generic term attorney. The advice came from someone who is both.[/QUOT
> 
> Why not go to a Notario in the city of Celaya, not an Abogado, and see what they tell you? The taxes are due on closing and possibly once you do close it will just be 20% to 26% of the capital gains plus the other low percentage taxes for selling a property. As many here have pointed out different places see things differently and whatever the status quo is there is what will happen without a problem.


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## pappabee

DNP said:


> You had no idea? What's most surprising is that you're surprised!


I didn't say that I was surprised and since I haven't purchased or sold property in Mexico I have no idea what the consequences might be. IMHO it's always better to cross your t's and dot your i's prior to doing something that might come back an bite you in your 'southern posterior'.


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## scubakevin

Regarding the 40K if you have a Mexican Bank account with an international debit card you could leave the money there are withdraw as you need it at an ATM. Otherwise remember that all transactions of 10K and more are reported to both the IRS and Homeland security in the US so a transaction of 40K in the grand scheme of things is small but still will set off the reporting system.

When I was moving monies from the US to Mexico I moved it in transfers of numbers between 9,100 and 9,900 until all what I needed was moved. I also payed for alot with my Credit Card and payed the card from that same account.

Now as far as the guy who is paying on the total sale of the house you need to check as you can either end up paying 20% of the full sale price or thirty something percent of the NET GAIN which would be like a net gains tax. You need to see which benefits you, the system was designed to avoid short term real estate investments for profit.


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## rfairbro

Our situation is a little bit different as we have set up a corporation and bought our house through it. This was the best avenue for us as we are years away from retirement and want to keep our options open for the future. Our accountant explained very clearly what we should and shouldn't do throughout the renovation process so that we pay the least amount of tax if and when we decide to sell it.
Some things that should be considered:
When buying your house you pay, in essence a property purchase tax. This is based on either the assessed value or you may opt to pay it on the purchase price. As is often the case for foreigners (especially in the '****** gulch' areas of your community) is that the purchase price far exceeds the assessed value. If you never plan to sell your house, you may opt to pay on the lesser value. If you don't know what the future holds for you and your house, it may be wiser to bite the bullet and pay on the purchase price. It's going to be cheaper in the long term and has to do with capital gains. If you sell your house for more than you paid for it, and let's hope you do, you pay that nasty 30%+ capital gain tax on the difference between the declared value at purchase time and what it's sold for at the time of sale. If you have done renovations, the ONLY expenses you are going to be able to declare are those that you get a factura, or official receipt for. The money you spend hiring those in the informal economy to do the renovation and/or material from suppliers that don't offer facturas can't be used to help off-set the gain. From Hacienda's point of view, and quite correctly so, they consider that you have already saved by hiring informally rather than hiring a contractor in the formal economy. Same with material. In order to get a factura, you need to provide a cedula, or your contractor needs to do it. He can only get one if he has a formal business and therefore pays tax to Hacienda like businesses in Canada & US do. 

So then to put all this into perspective, one needs to calculate costs ahead of time and make the best decision for the future. For example, let's use 30% for capital gains, 2% for a property purchase tax, 100,000 US purchase price, 50,000 US assessed value, renovation costs from a contractor in the formal economy of $80,000 Us and costs from a contractor in the informal economy of of $65,000 US. The sale price of the house is $250,000 US.

In the first example, the purchaser decides to do everything the most economical way. 
Purchase price: $100,000.00
Property purchase tax: 1,000.00
(assessed value) 
Renovations: 65,000.00[/U]
Total: $166,000.00

Sale Price: $250,000.00
Profit: $84,000.00
Capital gains (30%) $60,000.00
Net profit: $24,000.00
Capital gains in this example is calculated on the gain between the sale price of 250,000 and the assessed value the purchase tax was paid on at the time of purchase of 50,000 (30% of 200,000). The initial savings going the 'economical way' was $16,000.00 consisting of a savings of $1000.00 on the property purchase tax (paying on assessed value over purchase price) and the 15,000 savings going with a contractor in the informal economy, but not being able to claim this as a tax credit upon selling.

Example 2 is someone who pays more initially at purchase time, but ends up with more profit at closing time.

Purchase price: $100,000.00
Property purchase tax: 2,000.00
(purchase value) 
Renovations:  80,000.00
Total: $182,000.00

Sale Price: $250,000.00
Profit: $68,000.00
Capital gains (30%) $21,000.00
Net profit: $47,000.00

So while it may appear to be a savings at purchase and renovation time to go the 'economical route', as can be seen, it costs an extra $23,000 at closing time in capital gains. All this in order to save the extra 1000.00 on property purchase tax and 15,000 on the contractor. Even accounting for the higher costs paid to these two entities (16,000) one walks away with an extra 7000.00 at closing time. Of course, there are other factors that must be considered, but the general idea is to calculate the cost before in order to benefit the most after.


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