By Dolores Pérez Islas
CEO SILMÉXICO
Tax obligations for the provision of services and leasing of real estate are stipulated in the Income Tax Law and the Value Added Tax Law, said taxes are paid through provisional payments according to the type of declaration and registration regime in which the taxpayer is before the Tax Administration System.
It is important to mention that the payment of taxes does not apply in the same way to all types of property, and neither to the type of person since the Mexican tax system differentiates individuals from legal entities.
A clear example is the distinction of real estate provided by section II of article 20 of the Value Added Tax Law, which establishes its exception to the payment of VAT on rent or sale of a house-room, however said exemption is inapplicable if the Property is rented with furniture, or its use is intended to provide hotel services or lodging houses, it is important to mention that the law does not specify the exemption or obligation to pay taxes in terms of temporality, that is, it does not specify whether it is taxed. in long or short rentals. This last type of lease today represents higher tax burdens for the owner, so it is extremely important to have adequate instruments to be able to have the correct strategy that helps the owner to better manage their real estate assets.
Another example is the use or destination other than that of the house, the same as the law differentiates between commercial or industrial use, for these cases, the tax to collect will be the Value Added Tax (VAT) whose rate represents 16 % of the total value.
The lease includes two deduction options for Income Tax purposes, the first on the payments made of the property tax, local contributions for improvement, planning or cooperation with public works, maintenance expenses that do not imply additions or improvements to the property. in question and for water consumption, interest paid by loan used for the purchase, construction or improvements of real estate, salaries and contributions related to the property, investments in construction, including actions and improvements, which are contemplated in Article 115 of the Income Tax Law. The second, contained in the second paragraph of article 115 of the Income Tax Law considers the blind deduction of 35% of the income obtained from the lease of real estate, in this option it is not necessary to make the expense or have tax receipts and also contemplates the deduction of property tax.
Now, for the specific case provided for in article 116 of the Income Tax Law on the withholding of 10% of Income Tax applies when income is obtained from the lease of legal entities, they must withhold as provisional payment the amount resulting from applying the 10% rate on the amount thereof, without any deduction. In addition to considering that the lessor is obliged to issue the Tax Receipts (CFDI) that cover the rental income, for which it is extremely important that the tax receipts of the consideration received are issued.
In conclusion, depending on the type of lease if it is short or long-term residential or commercial, in addition to the type of taxpayer if it is a natural or legal person, the calculations of the taxes to be paid must be made. Although it may seem like a tax that punishes owners who want to receive income from the rental of their properties, the reality is that with proper planning of their investments, expenses and rental strategies, the owner can count on the certainty of a return on investment. attractive regardless of the corresponding tax contributions.
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