FOREIGNERS HAVE TAX OBLIGATIONS IN MEXICO TOO!
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 penalties can be very severe.
FOREIGNERS ARE OBLIGATED TO PAY TAXES ON INCOME GENERATED IN MEXICO. Mexico’s tax law is patterned after those of the United States and Canada and states that:
“Physical persons (individuals) and legal persons (companies) who are residents of Mexico and who receive income in this country, are obligated to declare their income and pay their taxes, regardless of the source”;
“Individuals and companies who are residents in a foreign country (outside Mexico) with rental properties in Mexico must declare their rental income and pay their taxes on all income generated in Mexico.”
If you own a property in Mexico and rent it often or only occasionally, ENJOY your rental income and SLEEP EASILY KNOWING YOU HAVE COMPLIED WITH TAX LAWS! Tax treaties between Mexico, the United States and Canada now make it virtually impossible to hide income generated in one country from tax authorities of ANY of the countries!
Hacienda,(SAT), Mexico’s equivalent of the USA’s IRS, and Revenue Canada (CRA) are reviewing websites and internet offerings daily. Once penalties are assessed for non-compliance, it is not possible to back track and start over with a clean slate. Better to get legal before the tax authorities find you!
In order to pay your taxes you need to either hire an accountant to take care of this for you or go through a prperty management company qho can handle rentals and taxes for you. Visit our web-page for more information: www.wolf-pm.com
Information Provided by: The Settlement Company, La Paz, BCS