What are the consequences of failing to report the rental income in Mexico? You will be liable for not being enrolled as a taxpayer which can cost you from 2,740. to 8,230 pesos when assessed by the SAT. The penalty for not making rental tax declarations as required range from 1,100. pesos to 13,720. pesos per month in addition to interest for not paying on time and as required is 1.13% per month. The amount of the penalty may depend upon whether or not this is your first violation.
Should you go back and pay in those taxes for past years when you failed to pay the rental income and VAT taxes? If the Mexico tax authorities have not notified you are in violation of the tax code, you probably will not need to file back taxes (but there are no guarantees). The important point is to begin paying now on your rental income from your Mexican properties and to be consistent in the future.
target="_ Remember also to pay your US taxes on that rental income. You can then claim a credit or deduction for the taxes you paid in Mexico on the same income so you are not double taxed. Have questions? Email us at ddnelson@gmail.com
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