Search Homes in Mexico
Member Login
Taxes
Income Taxes
If you work in Mexico and receive income from a Mexican-sourced income, you will need to pay personal income tax in Mexico and file a Mexican tax return each year. If you are a United States citizen or a US green-card holder, you must also file a tax return in the United States, if your income (all your income worldwide, not just your US income or Mexican income alone) exceeds a low minimum threshold (see your tax professional or the IRS to find out the threshold for your filing status); however, the United States has agreements with most countries, including Mexico, so that you won’t be liable for double taxation (in other words, you would not pay taxes twice). Also, your first $82,400 should be exempt from US federal income tax (this varies from year to year, so again check with your tax professional or the IRS; if you need a tax professional conversant with the tax issues of American nationals residing in Mexico, MexRetire’s Concierge service will be happy to match you with one). One further piece of good news: as an expatriate, you probably will pay no US city or state income tax. It depends on the state you’re coming from. In Florida or Texas, yes, you’ll pay no taxes. Others do not consider a move abroad to be acceptable as a change in domicile.The IRS also allows you a tax credit for income tax you’ve paid to the Mexican government. NOTE: Even if you will be exempt from owing tax to the US government, YOU MUST STILL FILE A RETURN. We advise you to consult with your tax advisor on these matters, and preferably with an international tax planner in your home country. Click here for a list of international and expatriate tax experts.
More tax information is available for those already outside the USA, or for those considering moving abroad at americantaxhelp.com. And be sure to see our blog where we are covering tax issues for people moving abroad all the time.
Sales Tax/Value-added Tax
Value-added Tax (IVA, or Impuesto al Valor Agregado) adds 10-15% to the cost of most goods and services in Mexico;
Inheritance & Gift Tax
Mexico does not charge an estate or inheritance tax; however, gifts of real estate, if they are not gifts to your husband, wife, or immediate family, may be taxable, with the tax to be paid by the recipient of the gift . Please consult with your tax advisor before making a gift of your Mexican real estate. Of course, we’ll be happy to refer one.
Transfer Tax
Property that’s transferred, sold, donated, subdivided, merged with another property, or placed in trust, is subject to an Acquisition Tax of 2% of the assessed value of the home (see also Realty Assistance/Real Estate Taxes and Fees).
Capital Gains Tax, or ISR (Impuesto Sobre la Renta)
When buying property, the seller pays the Capital Gains Tax, or ISR, unless the buyer has agreed to do so. The Mexican Notario (Notary Public—see Realty Assistance/The Notario Publico) will advise you of the amount . If you sell your Mexican home, you are not liable for Capital Gains Tax provided the home has been your primary residence for at least the past two years. Otherwise, you are liable for Capital Gains Tax at a rate of 20% of the declared value of the transaction, or 40% of the net gain on the sale of the home, less the value of improvements made, commissions paid, and certain other allowable deductions. (see also Real Estate Taxes).
Rental Income Tax
If you rent out your property, but reside outside of Mexico, your rental fees are taxable at a rate of 21% in Withholding Tax. If you rent out your property but do reside in Mexico, your rental fees are taxable at regular personal income tax rates.