Understanding Capital Gains TAX in Mexico

Understanding Capital Gains TAX in Mexico

401k, Bank Accounts, Ejido, FAQ, Mexico, Money, News
Capital Gains Tax Capital gains tax law in Mexico states that tax is owed on the profit you receive when you sell your home or property. By law, you have two options when it comes to capital gains and you can use whichever is the better of the two options for you: 1. You pay 28 percent* of the net profit. (There are a variety of deductions included in this option.) 2. You pay 25 percent* of the gross sales amount with no deductions. Although a 28 percent capital gains tax may seem high, Mexico does have several laws and procedures that will assist you in maximizing your cost basis, thereby reducing your net profit and lowering your capital gains. The key is to understand these laws before you buy,…
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Manifesting my construction to save on Capital Gains Tax in Mexico

Manifesting my construction to save on Capital Gains Tax in Mexico

401k, Bank Accounts, Beachfront Lots, Ejido, FAQ, Land for sale in puerto vallarta, Mexico, Money, News
What is manifesting? Manifesting is simply recording the amount of money spent on a home’s construction or remodel, in order to add it to the Owners’ cost basis. Adding to your cost basis is the key to reducing your capital gains tax. Proper documentation and manifesting your construction are vital to building your new home. Why do I need to manifest my construction? When you sell your home, the manifested cost plus the cost of your lot stated in your trust (title), will be used to determine the basis for capital gains tax. If you have not manifested your construction, Mexican tax law will not recognize your construction costs and you will not be able to use them as a deductible expense. All of your receipts, cancelled checks and bank…
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Mexico has high taxes on rental income

Mexico has high taxes on rental income

Mexico, Money, News
INDIVIDUAL TAXATION Nonresident individuals are liable to pay tax on their Mexican-sourced income. Married couples are taxed separately. INCOME TAX (Impuesto Sobre la Renta, ISR) Income earned by nonresidents is taxed at progressive rates. INCOME TAX 2013 FOR NON-RESIDENTS TAXABLE INCOME, MXP (US$) TAX RATE Up to 125,900 (US$8,393) 0% 125,900 – 1 million (US$66,667) 15% Over 1 million (US$66,667) 30% Source: Global Property Guide   However, nonresidents may be liable to pay 25% withholding tax on their Mexican-sourced income. RENTAL INCOME There are several ways to tax rental income earned by nonresident individuals in Mexico: (1) through the 25% withholding tax and (2) by electing the business income option. 25% Withholding Tax Gross rental income from the leasing of real estate, property and time-sharing services by a nonresident individual…
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How to purchase Real Estate and Property in Mexico

How to purchase Real Estate and Property in Mexico

Uncategorized
The acquisition of real estate in Mexico by foreign citizens requires adherence to strict formalities established by the Mexican constitution, laws, and civil law tradition. Foreigners who acquire property in Mexico without abiding by these formalities and laws run the risk of losing their investment and being subject to fines and penalties. Moreover, the Mexican title system is not as technologically advanced as its counterparts in developed countries. Title reports from public registries may sometimes be unreliable or inaccurate, and these offices in almost all states lack computer filing systems or records—thereby making them vulnerable to human error and corruption. Traditionally, the Mexican Notario Público—a quasi-public official who attests to the legality and authenticity of the transaction—has played the most important role in ensuring the transfer of clean title. However,…
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