#925 – The Expat Files: Shipping, Taxes, and Building a Home in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came out to play and now I wonder Hello there all you ex-pat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started All right, just a little announcement before we get started today Now as you longtime listeners know my personal email address is the expat files at gmail.com So when you want to send me questions and comments send them to the expat files at gmail.com

[00:46] I've had that email address for 10 years or so now and even though I absolutely hate Google and the idea that they're running These free accounts and websites like they're doing us a favor Meanwhile, we are the product and they're stealing and selling our data, but most of us do have Gmail don't we? I'm still kind of stuck as well as me and so many others who started with that service many moons ago and over the years I've accumulated so many tens of thousands of emails and files You know as well as I do it would really be a pain in the ass to switch to another account though I have a couple of paid email accounts that are encrypted private and secure and you should too That is have a paid for email service like proton or start mail one that guarantees They're not selling your information or cataloging any of your information

[01:34] But then again, it's gonna cost you anywhere from 30 to 60 bucks a year You know, nothing's for nothing and you're the product when you get a free email service. That's how they make their money They sell you off to the highest maybe even the lowest bidder on top of that. They bombard you with junk mail and ads So you can keep sending your questions and comments to the expat files at gmail.com But as for my personal website that for a long time was the expat files comm well Just a heads up here as of today I'm ditching that one for various reasons and my new website now write this down is expat plan be calm now, that's easy to remember Expat plan be calm and if you go there right now expat plan be calm

[02:19] You'll see it does connect you're on my home page and that's where you'll find my 2020 Latin American health care report And that's where you'll find my updates and sign-up sheet, etc for my upcoming July 2020 expat insider seminar And although the details haven't been announced yet because we're five months away from when it kicks off in July 2020 Anyway, my new website expat plan be calm is where you'll find the details and updates and if you're a longtime listener You know, I do those seminars twice a year They're a week long and nearly always in the first or second week of January and July So I repeat my old website the expat files calm has been changed The new website is expat plan be calm So as the upcoming seminar information gets finalized and some of my new reports become available. I'll be sending you to that website

[03:12] Alright back to today's show. What are we gonna talk about? Well, I've got a hefty backlog of emails questions So today we'll try to hit on some of the more interesting ones like this one coming from Frankie He says Johnny some Latin American freight forwarding companies ask you to email them a bill of lading That is I suppose to give them advanced notice of how much to charge you as far as shipping and import taxes, etc My question is does it ever help to photoshop the charges on that bill of lading you send them You know kind of knocking down the prices where you can or would you say it's futile? Because the original bill of lading is also included in the box with the item So Johnny, I was wondering if customs or the aduana as they call it in Latin America

[03:57] Still charge you import taxes on the original invoice Anyway, even if you photoshop the bill of lading and stretch it a bit in your favor Thanks much Frankie. All right Frankie. Thanks for those questions Some of them don't have cut and dried answers, but I'll give it my best shot here goes Frankie I'm assuming you're talking about having things packed in your house up north in the states Then contacting a freight forwarding service and having the item shipped down in boxes Or maybe even having a whole house worth of stuff shipped in a 40-foot container to your Latin American destination Which I would never recommend not these days though years ago when you just couldn't get us appliances and electronics It was very doable, but now you can get everything down here. So why would you want to ship anything but personal keepsakes?

[04:45] Now if you're gonna do it to save money, well, that's probably not gonna happen Why you're looking at anywhere from thirty five hundred to six seven or even eight thousand bucks to have a container shipped down insured and have the taxes cleared and paid in customs and Frankie you're almost right about those invoices. Everything has to be labeled and categorized on a bill of lading Actually, you'll have to have two bills of lading or a combined one in English and Spanish By the way, I have an actual sample of a well-done bill of lading from a 40-foot container So if you're interested in having things shipped down whether a full container was worth which I don't recommend or just a couple of boxes Full of useless Hummel keepsakes and grandma's hand knit doilies Send me an email the expert files at gmail.com and I'll send you a copy of a very nicely done bill of lading

[05:35] Now Frankie asks in his email does it ever help to photoshop the charges on that before sending it on The thing is if you're hand packing stuff in boxes to ship 99% of the time that stuff is gonna be used I mean you have it in your house you bought it and you've been using it, right? Now if you do have something brand new and it's still in the box take it out and make it look a little bit used So when you're making out the bill of lading you put down whirlpool microwave model, whatever x6 718 used Approximate value 25 bucks In other words low ball the hell out of it And if you don't know the approximate value go on the internet and check for a similar item on eBay or other places used And how do you really know anyway suppose you had a set of dishware a place setting for eight you paid 200 bucks for it And now eight years and 27 cracks and chips later the question is what's it really worth ten bucks?

[06:25] Maybe at a rummage sale now the thing is even if you're not shipping a container which like I said I don't recommend and you're shipping just a couple of boxes down your best bet all around Unless you're shipping something very heavy like books or tools is to box them up and tape them yourself Using boxes about the size of a large piece of luggage Then you bring them down with you as extra pieces of stowed luggage Assuming of course you pack the boxes yourself you're gonna fly back down to your Latin destination Why not bring them with you the thing is as long as they don't weigh over 50 pounds each They can fly with you as stowed luggage and the cost depending on the airline from 50 to 150 bucks each All airline websites will have that info though on average an extra stowed box or bag Will cost you around a hundred bucks as long as it's not over 50 pounds

[07:13] Although there are some much cheaper ways to go for example There's a freight forwarding service out of Miami to Guatemala and various other Central American countries called trans cargo or trans cargo Express and since they're sending the stuff by boat They don't charge by weight but by volume so one cubic foot I think right now is 14 bucks with a minimum of two cubic feet So you're gonna be paying minimum 28 bucks though It might take a month for to get from Miami to your doorstep So how it works is you'll have to pack it and send it to their offices in Miami and they'll ship it from there Remember, it's my volume. So there's really no weight limit within reason, of course. I mean you're not shipping barbells, right? I hope not by the way Some of these freight forwarding services like trans cargo when you consider that $14 per cubic foot fee

[08:02] Consider this a large stowed piece the luggage is probably five cubic feet Which could cost you a hundred bucks or so as an extra piece of stowed luggage However, if you sent five cubic feet by a shipper like trans cargo, that'd be five times 14 or 70 bucks, right? But here's the kicker a lot of those services like trans cargo Take care of all the taxes and the Duana fees in that 14 bucks a cubic foot So if you use them, you'll never have to pay an additional import tax or a Duana fee Now if you use a regular freight forwarding service that goes by air like for example in Guatemala, there's a lot of them But one in particular is called rep a detail Express They'll charge you something like six dollars a pound And if the product whatever you're having shipped is worth two hundred dollars or less you'll pay no

[08:48] Adwana import fees or taxes and it's all because of Amazon like them or not It seems the volume of packages now coming in from Amazon has forced most Latin countries to drop their import Taxes on items under 200 bucks. All right full disclosure here as much as I hate Amazon I still use them. So then how did Amazon pull it off? How were they able to get these Latin countries to drop their taxes on products under 200 bucks? Well with the sudden influx in the last couple of years of millions of packages coming from the US Mostly from Amazon the lazy ass slugs in the tax offices and aduanas in Latin countries Just could not handle the overflow now What you have to know is there's a big difference between Packing your own stuff in your garage your house in Cleveland

[09:34] Whatever and sending it down to Latin America using a freight forwarding service Versus ordering from a company online like Amazon and having it shipped directly to a Miami office Like the previously mentioned rapadito Express that would be a service You already set up an account with online and by the way setting up an account with any of these services is free Then as mentioned in a previous show You just use your own name along with a code that the forwarding service gives you along with their address in Miami And you use it for everything you order online Then the company like Amazon you order from thinks it's you at that address in Miami They're sending it to where in actuality They're really just delivering it to a middleman a service that sends your packages on a plane to your latin country of choice

[10:21] Then once it arrives you get an email from the company Telling you how much it weighs how much you're gonna pay and they ask whether you want to come pick it up at their office Or do you want it delivered usually by motorcycle and that cost you another two or three bucks and believe me Even if it's something big like a TV They'll bring it on a motorcycle You ought to see those guys ripping down the highway with huge packages strapped to their rice burners And yes, they'll deliver it by motorcycle to any place in your Latin American country Or you can do what I do because I like to remain anonymous and always pick it up at their office So they never really know where you live By the way, they've all got rules on how long you can leave it there without picking it up, too All of these freight forwarding services have different policies, but suppose it lands in your new country El Salvador

[11:08] For example, and you're not there to pick it up. Maybe you're up in the States around a trip to South America or Europe Well, you have to check with your freight forwarding services because after a month or two or three depending on the service And their terms and conditions they own it not you But they're flexible and this is Latin America So if you send them an email saying you're out of the country and you won't be back for weeks or months They'll hold it for you too But you have to remember they all have a big room with lots of stuff in it that people have not picked up And some of it will never get picked up and you have to ask yourself why Why order something and never pick it up? Well, I could tell you that almost never happens to gringos and expats because they do their homework For example, I know of a Latino guy lives in Panama He's bilingual and a few months ago, he discovered Amazon

[11:55] So he got on the Amazon website bought himself a Stanley table saw was about 200 bucks And in Panama's hardware stores, he found the very same saw for around 400 bucks He thought man, this Amazon thing is fantastic He bought it online at its ship to the Miami office with his name and code and all that and Amazon shifted free to Miami too and Since it was around 200 bucks He didn't have to pay any adwana or import taxes and he knew that so far so good But what he didn't take into account was the fact that thing weighed 65 pounds and his mail forwarding service Charged six bucks a pound because again, it was going by air not by boat You remember me telling you you want to send big heavy stuff by boat if you can for example using that previously mentioned company

[12:45] Transcargo, so do the math 65 pounds at 6 bucks a pound That's 390 bucks for shipping plus the 200 bucks for the saw that's 590 bucks for a saw he could have bought 400 at the hardware store So then what this Latino guy do this guy who thought he was so clever When he got the email saying it was 65 pounds and he owed 390 bucks He just never went to the office to pick it up and with his shipping company If it's there over three months and you don't pick it up They own it and believe me they make out too cuz think of it He paid 200 bucks on his credit card to have it ordered from Amazon Right and the freight forwarding company that shipped it though. They charge six bucks a pound to their clients Certainly only cost them probably a dollar a pound to ship it

[13:31] They rent space on a big cargo plane and just pack things in so their total cost for the item since it's already paid for 65 bucks or what they have in it for shipping probably less And now it's there so they can sell it new. I mean hell it's brand new in the box It'd be an easy sell. Wait a minute. Wait a minute. I know what you're thinking now That guy can never use that service again, right because he's got a piece waiting for him that he hasn't picked up So he's proven to them. He's a deadbeat. He left them holding the bag so to speak Well, the thing is Panama's got at least a 25 freight forwarding company so he can just move on to another one So our clever Panamanian guy who certainly learned a few things about shipping the hard way after all it cost him 200 bucks and he's got nothing to show for it Nevertheless, he can start ordering from Amazon again and be smart about it this time

[14:20] But back to Frankie's original question about photoshopping the bill of lading before you send it off and therefore trying to pay less in Adwana and tax fees. Well, like Frankie says if you order something from the States, they'll send the original bill of lading down So if it's over 200 bucks the Adwana and customs people will get a hold of it You'll pay taxes and fees on that and photoshopping won't help plus if customs gets a hold of it That's at least a week or two delay But here's the thing if you order stuff from eBay or Amazon The stuff will almost always come in an Amazon box or Amazon prime box And if you order a bunch of stuff They'll combine it and there will not be a receipt or a bill of lading from Amazon anywhere to be found Though sometimes when you're digging through one of those boxes and you open up and you pull out the packing bubbles and all that

[15:08] You'll find a receipt in there But it's almost always deep down in the box and not pasted on the outside like a bill of lading The fact is and I order stuff from Amazon I've never seen a bill of lading attached to an Amazon box Which does offer you a lot of wiggle room if you order stuff over 200 bucks from Amazon or eBay or any of the big Outfits because what'll happen is when the stuff arrives in Miami from Amazon and they ship it off to whatever Latin country And it'll end up at the airport the customs and a lot of people will come in and inspect the boxes They'll see Amazon and eBay boxes none of them with a bill of lading attached They'll let most all small and light stuff pass right through the stuff. They figure is worth under 200 bucks But they'll figure for example if they see a piece of machinery

[15:54] It's worth more than 200 bucks or an appliance or electronic brand name like craftsman Stan Lee Panasonic Sony and many boxes with brand name stuff in them will have a picture of the tool or kitchen appliance Whatever on the box and the adwana and tax guys will spot those boxes right away though. They probably won't open them They'll ask the freight forwarding company for a copy of the invoice that's happened to me a number of times So for example, and it's a real example. I ordered a certain brand name cordless drill for 135 bucks, of course down here in Latin America. You can get the very same thing for around 250 bucks and it didn't weigh that much only around two or three pounds So I figured it was worth it because the shipping from Miami to Guatemala via my freight forwarding service is only 15 bucks

[16:41] So I bought it and it got hung up in customs because the picture of the thing was on the package I got an email saying send the invoice, please. I copied the invoice You can get it right off Amazon. You just click a box. I Few days or a week later It was out of customs with no extra fees or taxes because it was under the $200 tax limit And of course, I provided the Amazon invoice as proof now I think the reason why Frankie is bringing up the Photoshop angle is because let's say that drill was 300 bucks and Amazon sent it to my Miami freight forwarding address and they in turn sent it down to Guatemala and it got tagged in customs at the airport because they saw the picture of a name brand cordless drill on the box and

[17:29] They knew it wasn't a cheap Chinese no-name brand or a black and Decker Now remember in this example, my Amazon receipt says 350 bucks That means I'd have to pay anywhere from 15 to 30 percent combined taxes import tax and value added tax called Eva down here One way to avoid those taxes is to take the Amazon invoice and Photoshop it Now I'm not advocating here that you do anything illegal But believe me people who know how to Photoshop are doing just that and though I'm still not Navigating you do anything illegal. Just telling you what many gringles and expats will do to avoid paying those taxes And you know anytime you're thinking of screwing around like that. You have to weigh the risk to reward ratio So in the end, what could they do if they found out you pulled something like that so far from what I can see

[18:17] The worst they could do is hold it up for a while and make you pay taxes on the legit price But could that really happen if you're worried All you have to do is make a quick trip down to the aduano office in any Latin American City You'll see it's beyond chaos a terrible mess You got a bunch of lard ass potbellied slugs sitting around watching soccer games fiddling with their smartphones Surrounded by piles of papers and boxes stacked up everywhere. It looks at first glance They could never dig their way out of that mess. Sure. They've got computers and stuff, but half of mine aren't working I'm telling you it's truly medieval and by the way, almost none of them speak English So when they do look over invoices from Sears eBay Amazon, you name it They only see the numbers because the words are in English. So bottom line, what can I tell you?

[19:07] Don't do anything illegal, but it sure is tempting Isn't it especially here in Latin America where it seems like everybody and I mean everybody is working some kind of angle to evade taxes Then again, can you blame them? I mean their government does absolutely nothing for them except steal their money I know I know that sounds all too familiar Doesn't it at least down here in Latin America the government only dips into your pocket for maybe 10 to 20% Whereas in the US Canada and Europe every working person I mean every working person is paying over 50% in taxes And if you don't believe that send me an email the expat files at gmail.com and I'll send you a list of over 50 Taxes, you didn't even know existed, but you're paying whether you know it or not So as it works out down here in Latin America, you keep 80 to 90 percent of what you make

[19:53] That is if you're on the books if you're off the books you keep everything Whereas if you're up in the States, you're working a half year or more for Uncle Salmon. What do you get for it? Nada. Oh, and by the way, the other day I just came across an article when I was checking how many employees and contractors work for the US government Now this is really gonna make you sick. It did me for sure This should get your plan B into turbo drive turns out the US Embassy in Baghdad is on a hundred and four acres It costs nearly a billion dollars to construct and it has a staff and support personnel of get this are you sitting down? 16,000 US government and US government contract employees Yep, you heard right? 16,000 you know what that calls for a pregnant pause

[20:44] I'll tell you the US has its own kind of cancer and there's no cure for it But figures like that are good to know because the next time you get in an argument with someone who's defending the US or the US government foreign policy Or when you run into someone who says the US military is a weak shell of its former self and it needs to be built up Just mention the 16,000 Completely worthless US government employees in Baghdad that you and I are paying for oh And if anyone questions your motives as to why you have a plan B and you want to leave the late great US of a go ahead and mention that magic number 16,000 again followed by the phrase I Rest my case and if they don't get it, there's no use wasting any more words You're talking to a lost cause you can bet they'll be going down with the ship and you won't now speaking of getting that plan B

[21:35] In action, here's an email from Clyde and I'll paraphrase this a bit. He says good day, Johnny and happy New Year Hope it's a good one. I have a few questions regarding construction in Latin America Apropos coming on the heels of your solar and waterproofing episodes I've been down here about eight months now and decided I'm gonna build rather than rent or buy something that's already built Prices are higher in Antigua area But it's where we want to be and the only way to mitigate that is to build roughly a half to a third of the cost Of buying new or used of course, it's in a guarded gated community Anyway, he says we plan on building a 2,000 square foot home And I'm a little confused as to how to estimate the amount of energy. I will need for a house here in Latin America Then he says the websites for solar power calculators seem to focus on US home needs obviously not

[22:23] Necessary in the Latin American altiplano So here are my solar energy questions number one What resource or resources do you use to estimate the solar needs specifically in the altiplano region of Guatemala or Central America? What is recommended for a building similar to what I am doing 2,000 square feet two adults no kids Electric washer and dry then he says that electric dryer is because I'll have free solar energy with panels Then he says I'd also like to size it for an eventual electric car And currently we're using around 350 kilowatt hours per month Then he says number two. Do you recommend a solar water heater and solar power for the remainder of the house number three? Do you recommend one of those whole house instant hot water heaters or a point of use heater for each water source?

[23:13] You know, we call them suicide shower heads here Simply because you gotta see how these things are wired. That is when they're wired by Latinos not Kringos Then he says are there any other factors? I should consider my second construction related question is regarding closets What is your thought on built-in wood closets? Maybe cedar or cypress or the beautiful wardrobes? They sell all around here. I'm thinking it might be a good substitute to the walk-in closet And he spells walk-in closet as walking closet W-a-l-k-i-n-g not W-a-l-k-i-n Walk-in that's how clueless Latino real estate brokers who are extreme gringo wannabes unwittingly misspell it in their monthly glossy real estate magazines

[24:02] The way they spell it walking W-a-l-k-i-n-g is as if the closet has a brain and one day Just decides to start walking around Hey, I'm not kidding. I must have seen the word walking W-a-l-k-i-n-g as opposed to the correct hyphenated word walk in a 100 times in these pamphlets, man. Are they clueless? Talk about not doing your homework. It's not walking closet idiot. It's walk-in closet Hey, but that's why they call it the third world, right? Right, then Clyde says in his email if we do build walk-in closets Some sort of ventilation will be required as per your podcast. By the way, Johnny Can you recommend one or two shipping companies that ship via sea? Then he says here are some updates to pass on to your listeners based on our own experiences number one

[24:51] We are currently paying a hundred fifty eight dollars a month for an 80-20 insurance plan I'm 51 and the wife 48 our full coverage auto insurance is around 300 bucks a year We also open a bank account at GT continental without a lawyer or residency Alright me Johnny here by the way Clyde. Good luck with that You must know by now if you don't have residency Countries will just shut your bank account down Arbitrarily because you're a gringo, but if you have residency they won't it can though I know you're proud of the fact that you opened the bank account all by yourself though I'm telling you without residency to back it up a bank account even a long-term bank account could get shut down at any time Then Clyde closes out by saying if you're up for lunch or coffee, let me know

[25:37] Well, thanks for that email Clyde But I'll tell you those questions aren't so specific to your case that I really can't do justice to them in this half-hour podcast If you really want to dig into the details, we're better off doing a one-on-one consult But I will tell you this you're asking for trouble if you get an electric dryer and I'll tell you why and this is important Suppose you're doing a couple of loads of wash and you have your dryer running for three hours in one day Your average electric dryer uses around 3,000 watts an hour. So that's nine thousand watts if it's three hours in one day, right? Well, the truth is a very nice solar backup battery system for practically any house in the Latin American Altiplano would be rated at around 12 kilowatts But when it's charged and ready to use each day or night It'll only deliver about 80% of that because you don't want to drop below 80% of a lithium batteries rated wattage

[26:27] And if by running your dryer three hours in one day pulls 9 kilowatts of the 10 kilowatts available Your dryer has pretty much depleted your battery for an entire day that's why you should always get a gas dryer and I'll tell you why because the gas dryer has an electric motor of about a Quarter horsepower or 200 watts and if you use it three hours a day, that's only 600 watts That's less than a tenth of the electricity consumption of an electric dryer Because with a gas dryer you get the real heat to dry the clothes with propane gas Which is very cheap and efficient here in Latin America, too You know for 50 bucks you can get a hundred pound tank filled and that'll probably last you three to six months It'll run your stove your oven and your gas dryer Of course, there's a hell of a lot more that goes into sizing a particular solar system for an individual house

[27:17] We've just covered one tiny piece of it. Oh and another thing Clyde I don't believe in full coverage car insurance unless your cars less than three years old Why because car repairs here in Latin America are ridiculously cheap. So stick with liability coverage You've been listening to the expat files living in Latin America If you need some help with your own plan B We can schedule a one-on-one phone or Skype consult Just send me an email the expat files at gmail.com And if you want to get on the waiting list for my next week long expat Insider seminar in Central America where you're guaranteed to get a two to five year head start on your plan B Send me an email the expat files at gmail.com. No spamos