Tax Strategies
On the topic of ‘Buying or Selling Property within the country of Mexico,’ it is important to know that any resultant Capital Gains revenues (associated with a given real estate transaction) are subject to Mexican tax codes & tax laws
Payments of capital gains taxes are stringently enforced by the Mexican Federal government; regardless of an individual’s legal status in this country (i.e. Visitor, Temporary Resident, Permanent Resident, Dual Citizenship or Full Citizenship)
Mexico utilizes advanced financial intelligence tools to ensure compliance with Federal tax laws …. as well as to identify & legally pursue any indicators of potential “Money Laundering” (which includes attempting to hide Mexican capital gains revenues via sheltering - hiding in foreign held bank accounts)
“But in this world, nothing can be said to be certain, except death and taxes”
- Benjamin Franklin, 1789
Capital Gains in Mexico:
Two Very Important Factors to Keep in Mind
1
A foreign country’s capital gains tax rates (on real estate transactions) do not necessarily mirror the tax rates applied within the borders of Mexico. Mexico’s capital gains tax schedules may differ from those existing abroad
2
Mexico’s punitive fines for non-compliance of Federal tax regulations are, in a word … “HEFTY”
These fines are calculated and applied by several Government entities; and the local/specific Notario will participate in ensuring compliance, as well as the processing of any resultant tax code penalties and/or late fees
Other Tax Considerations
When BUYING a Property in Mexico
It is important that you think ahead about future capital gains tax implications. If you are purchasing your property through a “Fideicomiso” Bank Trust, you need to research the bank’s capital gains policies before choosing your Trust company. The Bank Trustee (and their Notario) may have a policy that does not accept deductions, and may automatically charge a 25% tax on the full sale price …… before releasing the title to a subsequent / downstream buyer
Certified Tax Accountant vs Notario ?
Mexican Tax Accounting is a unique profession. Notarios are not necessarily the experts in this specific area. Not a dig on Notarios, but a Certified Tax Accountant …. and a Notario are not typically ‘one in the same.’ A qualified Tax Account is often critical / beneficial in complex, client specific tax scenarios (aka. “Lots of Moving Parts”)
When SELLING a Property in Mexico
As a non-Citizen …. the capital gains tax will be calculated by applying a 25% rate to the total gross income …. OR at a rate of 35% of the net gain (minus expenses for improvements, commissions, and other allowable deductibles). If improvements have been made on the structure, and your upgrade expenses exceed 20% of the purchase price (assuming that you have retained all the expense “Facturas” associated with the property’s renovations and improvements), you may need to have a revised ‘value assessment’ conducted by the local property Tax Authority who holds jurisdiction
Set an appointment with us by calling:
(954) 102-4314
At The Puerto Escondido Group, our Team can assist you in regard to any Tax scenarios that you might be facing
We partner with a select few of the finest accredited / certified Tax experts in the State of Oaxaca. These individuals are very adept at developing personal & unique “Tax Strategy Plans” which are tailored to assist you in optimizing (and fully complying with) the short-term and long-term financial impacts of your specific Federal Tax obligation(s) in Mexico
Words to the Wise ..... Do NOT "drag your feet" in this category. The country of Mexico is aggressive about enforcing compliance respective to this Country's various Tax Codes & Regulations
If you have any questions about this 'value add" service, feel free to contact us directly
