US TAX RETURN REQUIREMENTS IF YOUR MEXICAN PROPERTY IF OWNED IN A MEXICAN FIDEICOMISO HAVE CHANGED - You still must pay your US income taxes and Mexican income taxes on that rental income.

 

Prior to June of 2013, the IRS refused to rule whether or not Fideiciomisos which are used to own property in Mexico when the property is purchased by a non Mexican were foreign trusts and required forms 3520 and 3520 A to be filed.  In that month they announced in almost every situation a Fideicomiso was NOT a foreign trust and was not required to file the US tax foreign trust forms. You should have your fideicomiso reviewed to make certain it is not the exception to the non filing requirement. It is not automatically covered by the ruling if it includes certain non standard provisions.

Important Information

You must be certain to pay your US taxes on rental income for property held in a fideicomiso. It is reported on Schedule E and treated the same as US rental property except that the depreciation period is longer for property located abroad and in Mexico. GO TO THIS LINK TO GET THE LATEST DEVELOPMENTS http://us-mexicantax.blogspot.com/

Don't forget to pay the taxes due in Mexico on your rental income.  Many Americans and Canadians are encountering penalties from the Mexican SAT for not paying their income taxes (and sometimes IVA taxes) on their rental income from their property located in Mexico.  Read more about the Mexican tax rules and how to pay your Mexican taxes on that income http://rentaltaxmexico.com/

 

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Don D. Nelson,  US  INTERNATIONAL & EXPATRIATE TAX Attorney
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