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Fideicomisos And Fatca Clarification


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#1 Coz2wonder

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Posted 26 December 2012 - 09:18 AM

The article is well worth the read if you hold a Fideicomiso.

"Yucalandia reader “Pedro” offered a very helpful reference/comment in our FBAR’s and Fideicomisos: To File or Not to File, That is the Question article.

Up to this point, the FATCA reporting requirements for US citizens owning property in Mexico using a Fideicomiso, have not been clear. Fortunately, with US TAX SEASON looming, the US Treasury (parent of the IRS) has issued a guidance document that describes how the U.S. Treasury Department collects information regarding financial accounts and products held by American citizens residing in Mexico, and how the US Treasury is committed to exchanging such information with the Ministry of Finance of Mexico and pursuing equivalent levels of exchange"

Location of complete document:
http://yucalandia.co...g-requirements/

proper attribution: YucaLandia/Surviving Yucatan.
© Steven M. Fry
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#2 cvchief

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Posted 26 December 2012 - 10:28 AM

So.... Is that saying MX might not report a Fide, but doesn't answer the question are you still supposed to file? Like basically you can get away with not filing though that ain't quite legal?
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#3 DebB

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Posted 26 December 2012 - 10:47 AM

As I understand things at this point in time:

-- If and until the IRS officially rules that involuntary Mexican real estate fides are not trusts for US income-tax reporting purposes, US property holders with this type of Mexican fide should continue filing forms 3520 and 3520-A. (Under terms of the US/MX agreement, the fiduciary will not be required to submit 3520-A's so it will still be up to us to assure submission of this return.)

-- A US person who owns financial accounts in Mexico that have balances of $10K US or more at any time during the year needs to file the FBAR. (The value of the fide on your residence doesn't count.)

-- A US person who receives income (interest, dividends, distributions, proceeds of sale, etc.) from securities, annuities, investment trusts, or similar instruments held in Mexico is subject to discovery under the US/Mexican information treaty beginning FYE 2013 and should disclose that income in accordance with FATCA. (The value of the fide on your residence doesn't count.)
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#4 Coz2wonder

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Posted 26 December 2012 - 10:49 AM

just pulling one quote out "This seems to tie a nice bow onto the question of whether US expats who own homes/property using Mexican real estate trusts (Fideicomisos ): Since no cash, nor stocks, nor options are transferring is moving in or out, Fideicomiso trusts for Mexican real estate do not require Form TD F 90-22.1 filing. If you have aggregate foreign bank accounts or investment or cash trusts exceeding $10K in that Tax Year, you still have to file".

A fidei is not an a cash account.

I would talk with your lawyer or tax account.
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#5 DebB

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Posted 26 December 2012 - 10:56 AM

The private letter rulings that Yuclandia's blog refer to is explained by Brian Mahany, a CPA, in his promotional article, "Ownership of Property in Mexico -- Fideicomisos & FATCA", which states:

A recent private letter revenue ruling released by the IRS in November found that a fideicomisos (called a Mexican Land Trust by the IRS) is not a trust for U.S. tax purposes. IRS counsel found that the sole purpose of the fideicomisos was to satisfy the Mexican Constitution's prohibition of foreign ownership of certain land. The ruling found that "the trustee has no duty defend, maintain, or manage the property. Taxpayer retains sole authority to manage and control the property, the direct right to collect any rents or proceeds generated by the property, and the direct obligation to pay all taxes and liabilities related to the property. We also note that there is no arrangement between Bank [the titleholder] … or any other person to utilize the condominium in an activity for profit, such that ownership of the condominium could be classified as a business entity."

A private letter ruling is only binding on the person who requested and paid for the determination. They do carry persuasive weight with the IRS, however, and are published so that tax practitioners and the public can better understand the position of the IRS on complex tax matters. While not binding on others, the message from the IRS is clear. If you simply have a home in Mexico for your own personal use, the fact that it is owned by a Mexican Land Trust is probably of no special consequence.
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#6 cvchief

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Posted 26 December 2012 - 11:05 AM

So, some guy got told he didn't have to file 3520s, but you can't trust that applies to you? Or are you talking about more than 3520s?
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#7 DebB

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Posted 26 December 2012 - 11:11 AM

The letter was in response to a request for 3520 (late filing penalty) waiver. The ruling applies only to the specific fide owner to whom the letter was addressed. While everyone hopes that the IRS will wake up and issue a new rule that agrees with this determination, the rest of us remain subject to 3520 reporting.

If the only asset that you own in MX is your residence, then that's the only thing you need to report. You're not subject to FBAR or to FATCA. (as I understand everything right NOW!)
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#8 cvchief

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Posted 26 December 2012 - 11:19 AM

OH, so this was all about something ELSE than the 3520s?
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#9 DebB

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Posted 26 December 2012 - 11:31 AM

Yes.
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#10 Ron

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Posted 26 December 2012 - 11:55 AM

Paula
I called Washington two years ago and spoke to someone who was involved with righting the Fbar law. The Fedi is not included for filing purposes. I also emailed Fbar and explained what I was told and I got an email back one word saying correct.
As far as Facta if you have less then a certain amount of money and it raises if it is joint you also do not have to file if you have been living outside of the U.S. for the full year. Last year I had to file since I was not hear the full year

P.S
I also called Washington this year no changes
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