Mexico Rental Property Owners Must Pay Mexican Taxes
John K. Glaab - The Settlement Company
May 6, 2016
La Paz, BCS - Mexican newspapers are full of headlines about the growing problem of foreigners who are renting their homes or condominiums and failing to pay Mexican taxes. Not only is this a violation of the terms of most bank trusts (Fideicomisos), but also it is a violation of Mexican tax law and reprisals are severe.
If you own rental property anywhere in Mexico you are required to pay the following Mexican taxes:
• Mexico Income Tax
• Mexico Value Added Taxes - IVA (16%) - if the unit is furnished
IVA is paid by tenant but collected and declared by the owner.
Many non-residents of Mexico have never paid any taxes on their rental income from properties owned in Mexico. This is a violation of Mexican tax law. The Mexico tax code clearly states that these Mexican taxes must be paid on rental income from apartments, houses, and commercial property. Failure to do so can result (and has resulted) in substantial penalties and legal problems with the Mexican tax authorities.
It is now easy for you to pay these taxes and avoid problems - even if you do not have a Mexican tax identification number. The Settlement Company® has developed a simple and easy procedure which will allow you to be tax compliant on your rental income. You do not have to suffer the consequences of failing to pay. Email or call us now at 52-612-123-5056 Ext 0 to learn more and to get started.
The Good News: The IVA you pay in Mexico is deductible on your US tax return and the income taxes you pay in Mexico can offset your US taxes on the same income dollar for dollar. You will not be double taxed.
For additional information, please email us at rentaltaxmexico(at)