Fideicomiso and the IRS, To Report or Not – Only You Can Decide

Once again the question of whether we USAmericans holding property in Mexico in Fideicomisos/Trusts are required to file Forms 3520 and 3520-A with the IRS.

TheTrust/Fideicomiso is a requirement of any property that is within 50(?) kilometers of the border or beach and purchased by a foreigner. This is the Trust/Fideicomiso for which we pay an annual fee to the Bank to manage and hold for us

Now this question is only about, NON INCOME Receiving Trusts. Obviously  if you earn ANY type of premium/interest/income you must fill out the forms.  There is also a deadline – one needs to file these required forms by September 23 to guarantee against IRS penalties.
 

Tom,  being fairly pro-active decided to place a call to the IRS to get to the root of this debate.
Here is what he found:
The IRS has been deliberating as to how to handle the ownership of property via a fideicomisio/trust in MX and how it would be affected and/or reported if at all.   As of today, and at this time, the IRS has not made a determination  – and the forms 3520 and 3520-A do not need to be filed.. Once the IRS makes the determination it will be posted on their website.
I don’t know about the rest of you, but I make no income from my house.  I don’t rent space in it, in fact I only pay out – I pay my yearly taxes, and I pay my yearly Fideicomiso fees.  So shouldn’t I be getting a tax deduction?
Here is a link to the IRS’s most recent update about these forms – 
Here is a private blog with a lot of interesting information that you may read and assess for yourselves as to accuracy or validity.  I make no recommendations or offer no opinions –

http://fideicomiso.wordpress.com/?ref=spelling 

If any of you have any other info or updates please let us all know.

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About Debi in Merida

I moved from Colorado Springs, Colorado USA to Merida, Yucatan, MX in January 2006. I love to read, garden, travel, and hang out with friends.
This entry was posted in fideicomiso. Bookmark the permalink.

5 Responses to Fideicomiso and the IRS, To Report or Not – Only You Can Decide

  1. BaxtersCZM says:

    After several calls to the IRS, there is no doubt that they consider a Fideicomiso a “Trust” and the forms should be filed. There's no harm in filing and you could avoid substantial penalties. The forms do not fit very well, but I'd suggest that we all do it anyways. At least you've put the IRS on notice that there is a trust.

  2. mcm says:

    Debi
    Thanks so much for this info…we've ignored this “requirement” for many years, but I've been curious since there's been a fair amount of “chatter” about it on various Mexico forums.
    I like your conclusion!

    Your car-nationalizing (not) blog was another winner…I'm selfishly glad that you did the research on that one (rather than me)…this confirms our “drive it til it dies and then buy a car in Mexico” strategy…

  3. 1st Mate says:

    Your post today is very timely, as we have been considering buying a condo, and we do still earn money, from a US source, not a Mexican one. We'll have to add your sources to our considerations. Thanks.

  4. Tom and Debi says:

    YES, Tom dialed the IRS, waited quite a while, and ACTUALLY spoke with someone, who told him paraphrasing: “…As of today, and at this time, the IRS has not made a determination – and the forms 3520 and 3520-A do not need to be filed.. Once the IRS makes the determination it will be posted on their website…”
    The question isn't about owning property, it is about having a “Trust”; which is our Fideicomiso.
    Now whether you chose to file or not is completely up to you. But this is what was told to Tom today by an IRS Representative. Will that hold up in court, or keep you from paying a fine – NO!

  5. Susan says:

    I still am not sure what to do!! So you are saying that your esposo talked to the IRS and at this time we do not need to file if we do not make any income off our house?? That would be nice! I just don't see how they can ask us to file and there not be a similar 'thing' for owners away from the 50km zone. Geez. Ok – so maybe I won't file right now!!

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