Investing in real estate in Mexico, particularly in popular destinations like Tulum and Playa del Carmen in the Riviera Maya, offers not only a chance to own a piece of paradise but also significant tax advantages, especially for non-Mexican citizens. In this blog post, we’ll explore the various tax benefits that come with owning property in Mexico and how you can make the most of them.
- Lower Property Taxes: Property taxes in Mexico are significantly lower than in the United States and Canada. This presents a significant advantage for property owners in Tulum, Playa del Carmen, and other parts of the Riviera Maya. Furthermore, if you have permanent residency in Mexico, you may qualify for additional tax breaks, including potential tax exemptions if your property serves as your primary residence.
- Capital Gains Tax Exemption: Unlike the United States and Canada, Mexico does not always impose a capital gains tax when you sell your residential property. This means that if you hold onto your property for at least three years, as a Mexican citizen or you are a permanent resident, you can avoid paying capital gains tax on any profits from the sale. This can result in substantial tax savings, making long-term property investments in the region even more attractive.
- Foreign Tax Credits: American and Canadian citizens who own property in Mexico may be eligible for foreign tax credits. This means that you can offset your tax liability by claiming a credit for taxes paid in Mexico. For instance, if you paid $1,000 in property taxes in Mexico, you can potentially reduce your tax bill by $1,000. This offers significant tax savings for non-Mexican property owners in the Riviera Maya.
