Building & Manifesting
There are specific details about contracting services in México that some people are unaware of and thereby find challenging when they later try to sell their custom built home. At Cabo Dream Homes, we ensure that you are educated about the importance of obtaining legal receipts known as “facturas.” A factura, in México, serves as proof of services rendered and evidence that the vendor has collected funds and VAT sales tax (called I.V.A.).
When building a home, the factura receipt must be completed with accuracy starting with the legal names of those who appear as owners on your legal ownership documents. If filled out properly, these facturas allow you to manifest your home most accurately and give eligibility to deduct your costs against any capital gain generated upon a resale. They are also used to set actualized values and the cost basis that has been invested in the construction of the property. Your builder is required to prepare and present these documents to legally manifest the home upon completion. However, it’s important to realize that not all items are deductible, such as furniture, appliances, fixtures, and décor for example.
The Manifestation & IMSS
There are several things that must be completed in order for the builder, or a lawyer, to manifest your home. The manifestation, or total value of the completed construction, is calculated on all the materials purchased to build the home (proof of factura), as well as the value of the employment and services it took to do it. You should confirm that your builder is paying the Instituto Mexicano del Seguro Social (I.M.S.S.) equivalent to Social Security Taxes and collecting the proper invoices (facturas) throughout the construction. There should also be building licenses that state the value you have budgeted for the home.
With these three documents in hand, your builder files for a “Terminación de Obra,” which is a letter which states that construction is complete and allows the recording of the manifested home’s value with the Municipal Township and State. This document is also crucial to submit at the time of a resale.
It’s important that this process is monitored carefully, as the difference in values can prevent proper filling and have cost implications further down the road. Additionally, if the manifestation value is listed too low, it can negatively impact you when you later decide to sell your home. This is just another scenario where Cabo Dream Homes can help ensure that you are making good decisions when you are in the contracting phase.