Capital gains and income taxes on property in Mexico?

[Val Berechet]

Does someone have a good link or can provide info on laws regarding capital gains taxes and income taxes on property in Mexico? Am looking to buy something in the Tulum area that will be used as a vacation home but also rented out via Airbnb (mostly rented out for a while as we’ll only probably be able to go down there 3-4 weeks a year combined max for now). 

When we would sell the pro poetry in the future, are there capital gains taxes due to the Mexican government as non residents?

How about taxes on income earned from renting via Airbnb? I know taxes would be owed to try IRS state side but what about on the Mexico side?

[Mike Lambert]

Rental income is subject to a 21% withholding tax if you rent out the property while residing outside of Mexico.

There is a 2% acquisition tax when you buy the property.

Annual property taxes in Mexico are very low. It is quite common to have annual property taxes of $100 or less, and they seldom run higher than about $300.

There are a few different ways Mexico allows you to calculate your capital gains. Your first option is to pay 25% of the declared value. Second, you can use the net value and pay 35%. Net value uses the assessed value from purchase and sale, figuring the difference, with consideration of any miscellaneous contributions over the course of ownership. There are other instances where it is possible to not have any capital gains tax. This would be based on the type of ownership, property, and other factors.

The United States taxes its citizens and permanent residents on their worldwide income. If you earn any income or capital gains in Mexico it must be declared on your U.S. tax return. You will get credit on your US taxes, however, for taxes you have already paid in Mexico.

You can 1031 exchange after selling as long as the property you buy is outside of the US.

Don't consider this as legal advice. It's always a good idea to get professional advice when it comes to taxation.