Taxes are a part of everyday life, for as much as we’d prefer otherwise, so we might as well know them and know how to deal with them. After all, they’re only taxes, right? Sure…but what about foreign tax laws? Foreign, real estate related tax laws? Now, now, there’s no reason to panic, it’s nothing a quick run-through and point by point explanation can’t fix. So sit back, relax and see how the numbers crunch this side of the border, the four different ways:

Income Tax

The big difference between residents of Mexico and foreign investors, like yourself, is that Mexican residents must register in Hacienda (the IRS equivalent) and report their income. You, however, do not have to meddle with Hacienda or anything of the sort you only have to worry about your own tax service company.

With that said, you must declare any income generated in Mexico, but these tax payments can very well become deductions if you know how to work things out. Make sure to check with your accountant to get the most out of them.

Facturas

A factura is the way any authorized expense can become a deductible. How? The taxpayer (let’s say, yourself in this case) must first obtain said factura. This special receipt must be printed by a government-authorized establishment, which must contain the ID of the taxpayer and/or the company issuing the receipt. 

Some of these companies might ask for some extra if you ask for a factura, but remember, that’s money well-spent, and it’s also the way they can calculate the tax amount due on the sale of the property.

Capital Gains Tax (Sellers)

If you happen to be a seller on Mexican soil, Capital Gains Tax is something you really need to consider. This type of tax is owed on the profits you make off a sold property, by contrast, when you’re a buyer your actions when purchasing a home will lead to future tax consequences (i.e. more money spent).

Reverse Capital Gains (Buyers)

This one you’ve probably never heard of, but it’s best you know about it. This specific kind of tax, otherwise known as “paid by the buyer”, applies when someone sells his or her property at a loss of 10% or more. This percentage should be open-information when it comes to the pricing of the property, but you should still double-check with your realtor, for safety’s sake.

There you go. All the different kinds of taxes you may find in the neighboring country; demystified and packed up in a manageable, bite-sized reading package. So go ahead and start planning your next real estate business venture, because there ain’t nothing to be afraid of, except for shady, too-good-to-be-true type deals, do watch out for those.

As always, stay sharp and keep your head on the game!