Frequently Asked Questions about Taxes

Taxes when buying or selling property

If you own property in Mexico, when you bought it you paid a transfer or acquisition tax. This tax in most states is a percentage of the tax value of the property. The percentage varies, but is generally less than 2% of the tax value.

As an owner, you are also obligated to pay yearly property taxes. (see Property Tax)

Other than acquisition and real estate property taxes, you pay IVA or sales tax and income tax when applicable. Nationals and foreigners alike must pay IVA and income tax, when applicable.

Upon sale, a property can be charged capital gains tax. Both nationals and foreigners must pay capital gains tax unless they are exempt.

Find an accountant and a real estate professional whom you trust to guide you properly.

Taxes when renting a property

In addition to property taxes, if you rent your property you must pay IVA (sales tax) and income tax. In some areas, you will also have to pay an occupancy tax (hotel tax).

IVA or sales tax is 15% in Jalisco and most states. In some states, it may be lower.

IVA is charged when purchasing goods and services. The owner of the property is responsible for collecting and paying IVA and occupancy tax on rental income. There may be allowable deductions against the IVA that you must pay.

Besides sales tax or IVA, income tax is due from the owner on income earned. There are allowable deductions against income before the tax is computed.

You need to learn how to properly deduct expenses. In order to use deductions against income, you need to be registered in Mexico as a business and file tax returns in Mexico.

Find an accountant whom you trust to guide you properly.

Pay your taxes, review and keep your receipts.