Post What taxes do I have to pay in Mexico?

Several taxes may apply to you once you've acquired property in Mexico. These include :

Acquisition tax (when buying a property)

Annual property tax (for all property owners)

Rental income tax (if applicable)

Value-added tax (if applicable)

Capital gains tax (on sale of property)

Income tax (if applicable)

Acquisition tax' is paid on any property you buy. The level of taxation is different in each Mexican state, and rates vary from less than 2% to 4.5% of the property's appraised value at the time of purchase.

The annual property tax is actually quite low. Also known as predial, this annual tax is always due in January, and the amount of tax you pay will depend on the size and location of your property.  One of the best things about this tax is that if you pay it in advance (in December), the government gives you a 25% discount. And if you pay the tax immediately in January, you'll get another 20% discount!

Tax on rental income only applies if you rent out your property for profit. In Spanish, this tax is called impuesto sobre la renta, and if you receive any form of rent, it is considered a form of income, which means you have to pay the tax. These taxes are supposed to be paid monthly to the SAT, which can be done electronically.

Value-added tax, also known as IVA, is a tax on goods and services set at 16%. An acronym of the Spanish term impuesto al valor agregado, IVA is payable only on the purchase of commercial goods, but not on the purchase of residential goods. It also applies only to new purchases, not used goods. For most goods and services in Mexico, IVA is included in the advertised price.

Capital gains tax is only payable when you sell real estate in Mexico. The amount due will be determined by a number of factors, including the profit you made on the sale, the length of time you lived in the house before the sale, and certain other factors. For advice on all matters relating to tax, please contact us: approximately 25% of the profit you made on the transaction.

Finally, anyone employed in Mexico is required to pay income tax. Although Mexican employers generally withhold the tax and submit it to SAT on your behalf, if they do not, the tax generally amounts to around 25% of your gross income. This figure may change depending on the deductions made.