FYI FOR NEW CABO HOMEOWNERS

Maintaining Your Trust

Since you purchased in the restricted zone you have a Fideicomiso, a bank trust. These trusts require annual payment of administration fees. Those fees are paid to the bank you used to setup the trust. Most banks will use the closing date as the due date for next year’s payment while others prorate the first year fee and start the second year on January 1st. You need to know that date and remember to pay before it goes past due to avoid late fees. And, most banks will not send you notice that fees are due so it is your bailiwick. You must know the trust account number in order to pay and this number is not recorded on your deed. When you pay make sure you get an receipt. If you have a property manager handle it for you, ensure they get a receipt as well.

Property Taxes

Impuesta Predial, or Property Tax, is paid yearly at the local municipal office. In order to pay you’ll need your Cuenta Catastral, the Property Tax Account number associated with your real estate holding(s). You don’t want to wait for the tax authority to send you a bill, not receiving one is no excuse for not paying. Smart property owners will pay It right after the turn of the calendar year but if you pay before the end of March, most municipalities offer some level of discount. By April, your bill is due and late penalties soon start.

In Los Cabos, if we pay in January it is a 20% discount. Pay by the end of February and the discount is 10%. By the end of March the discount is only 5%.If you are a senior citizen (over 60) and a permanent resident, you qualify for an Inapam card. This is a senior discount card and with that in hand you pay only 50% of the predial tax bill.

Your tax bill is based upon the Valor Catastral, or Property Tax Value. Rates are set locally so they may differ in your neck of the woods. It’s always wise to double check their math to ensure you are being charged the proper tax rate and that the calculated amount is correct before paying. The good news is that the Valor Catastral is generally very low and as such, so is your tax bill. Compared with the U.S. the cost of the predial is quite reasonable. It is a local tax and payable yearly. Here in Los Cabos, the average is approximately 0.1% of the assessed value of the property at the time of sale.If you are used to the average rates in the U.S. this is a huge difference. If you live in Hawaii (the lowest rate in the nation) you are paying 0.28%, in Iowa 1.7% and in Illinois a whopping 2.25%.

When you, or your agent pays, make sure to get a copy of bill and receipt and double check to confirm that the information on the receipt is correct; i.e. Property Location, Cuenta Catastral (Tax ID), Name of Owner (in the case of a fideicomiso this will be the bank that you used to setup the trust). Payments should be made to Tesoreria Municipal, the Municipal Treasurer. The receipt should also include an official stamp and date of payment. There are often other fees on your tax bill; pro-educacion, pro-caminos, etc… these are normal and aid with budget items like schools, roads and others. Just make sure that the fee rate charged is listed as a percentage of the tax amount. Keep your receipt copy!

To make things easier, now you can pay your Los Cabos Mexico Property taxes on line. The website is in Spanish but it's easy. Log on to www.eloscabos.gob.mx, click on Impuesto Predial (property taxes in Spanish).Enter your Clave Catastral Number (tax ID number).You will find this number on your deed (Escritura if you’re a national or if you’re a foreigner). The amount of tax due will be shown in PESOS. Enter your card payment information and your credit card account will be debited at the exchange rate of the day.

Utility Bills

With few exceptions, most folks won’t be getting their utility bills sent to their residence in Los Cabos. If you live in a guard-gated community, you’ll probably find them at the guard house. Regardless, not getting the bill is no excuse for not paying and services will be turned off for non-payment startlingly quickly. KNOW WHEN YOUR BILLS ARE DUE! Paying at the local utility office or service provider is usually the way to go. Make sure you have your current or last bill when you go to help make identifying the account easy for the clerk. Most providers will accept credit cards and cash, few take personal checks. Some take online payments from Mexican bank accounts or credit/debit cards.

Gas (propane) is another animal in itself. You are responsible for keeping an eye on your propane tank level and calling for a refill when needed. That’s a pay when you get it program. Cali-Gas and Global are the biggest providers of propane service. Cash or credit card payments on the spot are the norm but confirm that the supplier you call on takes credit cards before assuming. Best to have cash on hand (pesos are best) in case of credit card processor failures out in the field.

Insurance

This is optional but as a rule, if there’s construction on your property, INSURE IT! When you get your policy, make sure that you know what currency your policy is written in whether US or Canadian Dollars or Mexican Pesos. Like the utility companies, the insurance company won’t be sending you renewal reminders. Know the date your policy expires and make sure to pay before then. Always get a receipt. If you do have the need to file a claim, do it in writing. Filing a claim over the phone will not work - you can start the process that way but all claims must be in writing or you risk not getting covered.

Hiring Workers

Most folks will tell you that when you need something done on your property, just hire a local. Most of the time that will work, that is, until someone gets or claims to be hurt while working on your property. Then BIG problems come. Hiring and firing workers in Mexico is tough some say it's one of the toughest places to hire or legally terminate a worker. At minimum you should have workers sign an employment agreement that outlines the necessary points required by law and having an attorney prepared agreement is the best way to go. For small projects you probably have no real concerns but for longer-term, larger-scale projects you need to be prepared for tax consequences, vacation pay, bonuses, etc. Be wise and be legal is the best advice we can give you.

Rental Income

A great deal of buyers will be renting out their property when they aren’t staying in it. That’s a great way to recoup some of your costs but it comes with the responsibility of paying tax on the income. Fail to report the rental income on your Cabo property and you’ll end up with a tax lien encumbering your property. If you rent, get an accountant and get registered and start filing and paying as required by law.