You now need an RFC (Mexican Tax ID) to buy property in Mexico

Capital Gains Tax ISR

UPDATE: December 10, 2020

Foreigners can now apply for an RFC (Mexican tax payer ID) without requiring the need to become residents of Mexico.

Visit the SAT website to learn how to inscribe for an RFC as a fiscal person as a foreigner.

UPDATE: February 22, 2016

Since Mr. Peña Nieto has taken office at the President of Mexico he has imposed sweeping tax reforms. These reforms are trickling down and making major impacts on the secondary laws, rules and applications in Mexico.

One of the most recent rules is the requirement for all buyers of Mexican real estate to have a Mexican Tax Identification or “RFC” in order to purchase. If a buyer does not have one, the Notary handling the closing will not be able to issue the necessary closing documents and the deal will be delayed until the RFC of the buyer is acquired. In order for a foreigner to acquire an “RFC” the tax law sets out two options:
Option One

RFC for “Visitors Visas” without a “CURP” or Personal Identification Number. For Canadians and Americans, “Visitor Visas” are granted when you go through immigration at the airport or border. If you are entering as under a Visitor Visa, I highly recommend that you check the box “other” (not the tourist box) and write in next to the “other” box the words “real estate purchase”.
Option One is the quickest option as it cuts down the time involved with getting a RFC. However while Option One is an existing legal option, the Tax Authority (SAT) has been asking foreigners to provide a CURP to get an RFC, but by law Visitors are not issued CURP’s. If you are going to try to get an RFC with a Visitor Visa, make sure you have all the requirements in order. The requirements to get an RFC with a Visitors Visa are: a) Original passport and 2 copies, original FMM (Visitor Visa), proof of address in Mexico (see incise a and b under number 5 below), e-mail address for notifications, and a certified copy of your Tax ID in the country you reside in (with “apostille” or legalization). Once you have these documents you need to set a meeting with SAT to get the RFC.
Option Two

RFC for Resident Visas (Temporary or Permanent). Option Two is the “path of least resistance”, but not the shortest path. The following is an outline of the procedure to follow to get a Resident Visa, a CURP and an RFC:

Making the offer to purchase or signing a preliminary agreement to purchase. The offer or preliminary sales agreement should make reference to the fact that it is subject to the foreign buyer obtaining his “Visa, CURP and RFC” and if for any reason it cannot be obtained, the agreement/offer can be extended until such documents are in place (or canceled if the Visa is denied). Before a buyer makes an offer he should be explained his OPTIONS to get an RFC so that coordination of this can begin as soon as the offer is accepted.

Set your appointment to get your RFC. Once the offer is accepted, the foreigner buyer needs to immediately set up a meeting with SAT to get the RFC. Coordination is key here as the Resident Visa and CURP will be needed at the meeting to get the RFC and a meeting date must be set to get the RFC. The foreign buyer needs to make sure that the date of the meeting with SAT gives him or her enough time to get the Resident Visa and CURP prior to the meeting. We recommend that you give yourself 30 – 40 days from the date the offer is accepted to set the meeting to get the RFC. At the meeting the foreign buyer will be issued the RFC if they have all their documents in order. Do not expect to show up at SAT without a set meeting.

Getting the VISA. The petition for a Resident Visa (Temporary or Permanent) has to be applied for at a Mexican Consulate outside of Mexico. We recommend that the Mexican Consulate nearest to the foreigners home be used. In most cases foreign buyers will return to their country of origin after the acceptance of the offer but prior to closing. At this time the buyer needs to proceed as soon as possible to apply for his Resident Visa. Contact the nearest Mexican Consulate to set up this appointment. In most cases it is recommended to apply for a “Temporary Resident Visa” as this category of visa has the fewest requirements. There are several sub-categories of “Temporary Resident Visas” and it is recommended to get advice on which one will best fit the buyers needs.
Visa registry in Mexico and CURP. Once the Mexican Consulate authorizes the Resident Visa, the foreign buyer will need to travel to Mexico to register the Resident Visa at the office of immigration that corresponds to the location of the property being purchased. Immigration will issue the foreigner the Resident Visa card as well as a CURP. This process takes from 1 – 3 weeks from the time you appear at the local offices of immigration in Mexico. Unfortunately this is a trip the buyer will have to make that he or she probably did not plan on. Please note that if the buyer is not able to wait in Mexico for the 1 – 3 weeks for the Resident Visa card and CURP to be issued, he or she will need a letter from the local immigration office to leave the country and return while the Resident Visa card is in process of being issued. If you need this letter make sure you tell the immigration officer when you appear at the local office to process your Resident Visa card and CURP. Do not attempt to leave the country without this letter from immigration or your procedure will be rejected and you will have to start all over.

Getting the RFC. Once you have the Resident Visa card and CURP, you can apply for your RFC, which should be issued the same day you appear at your meeting (you set your meeting in step 2 above). You will also need to provide the Tax authority with a proof of address in Mexico. Here we have the “chicken or the egg” scenario, because how can you show proof of address in Mexico if you have not bought yet? Our recomendation is as follows:

a) If you are buying a home or condominium (or other type of dwelling), the seller should provide you with an original of the most recent electrical or telephone bill. The tax authority will accept this document as proof of address even though it is in the name of the seller party. Other types of bills will also work but we find that the tax authority prefers electrical or telephone bills.
b) If you are buying raw land or some other type of property that does not yet have a dwelling with an electrical or telephone bill, we recommend that you contact an accounting firm and ask them to use their address until a physical presence can be set.

When you register with the Tax authority we recommend that you register as a “Taxpayer with non-business activity” unless you plan on conducting business in Mexico. Conducting business in Mexico will require the appropriate Visa and tax registry.

Acquiring an RFC should not hold up the closing of a property purchase in Mexico if the people involved in the transaction are well coordinated and professional. We do expect the tax authority to put in place further rules to clarify certain aspects of this new requirement, especially to facilitate the RFC procedure for Visitors.

If you are going to hire someone to help you with these procedure, please make sure that they go over all of the steps above mentioned with you and give you an accurate quote of costs and fees to handle each step.

The present article was written jointly by David W. Connell of Connell & Associates and Gabriela Rojas of Teran Rojas & Assoc. For more information send an email to [email protected] or [email protected]. All rights are reserved.

Vallarta Lifestyles - February 22, 2016