IVA, Income Taxes and Other Taxes Must be Paid by residents and nonresidents on Income earned by rental properties in Mexico. Learn all of the details here

1. RENTAL
PROPERTIES IN
MEXICO
An excellent investment option for
the foreigner
…………………… compliance with
legal and tax obligations is easier
than ever before!

2. Rental Properties in Mexico
In a first rate tourist area rental income
from well chosen properties can represent
an excellent investment
Location, desirable amenities essential
A professional management team is a
must, and
Sound fiscal planning is also a must!

3. Rental Properties in Mexico
The RFC hassle and
headache!!
Rentals on internet
SAT loss of income

4. Rental Properties in Mexico
Option ONE
35% blind deduction
Example:: 10,000 rent received
3,500. 35% blind
deduction
6,500. remainder, taxed at
35%
7,725. after tax income

5. Rental Taxes in Mexico
RFC requirements
TEMPORARY RESIDENT or PERMANENT
RESIDENT, with permission to receive
rental income
May be physical person only, no LLC or
other partnerships
Must come to Mexico to validate the
RESIDENT CARD

6. Rental Taxes in Mexico
Option One
Registro Federal de
Causantes
Monthly Tax Declaration
Full accountability,
receipts, audits

7. Rental Tax Program
Option Two
February 2010 Resolution issued by
SAT
Foreigners may pay taxes without
obtaining the RFC
No special Migratory Status is
required
Must be done through a Mexican

8. Rental Tax Program
Option Two
Tax is 25% of income
Not a retention, no annual
declaration
IVA tax is collected by the
owner from the tenant

9. Rental Tax Program
Option Two
Example:
$10,000. income
 2,500 25% tax
__________________
$ 7,500. after tax income

10. RENTAL TAX PROGRAM
Compare!
OPTION ONE: 7,725. USD after tax income
 RFC, FM – additional accounting expense
OPTION TWO:7,500. USD after tax income
 No receipts need be kept, no monthly or annual
declarations !

11. Rental Tax Program
Option Two
Requirements:
Copy of deed
Copy of latest tax receipt
Copy of owner’s passport
Information sheet and authorization
Power of attorney to Settlement Company
COST: 290.USD – set up fee and 290.00 USD
each quarter

12. Rental Tax Program
Benefits for US taxpayers
If property is owned in individual name all
rental income and expenses are reported
on Schedule E of the 1040.
All allowable expenses are the same as for
a US property.
Management fees, interest, property taxes,
utilities, repairs maintenance, association
dues, insurance, depreciation…ALL are
deductible!

13. Rental Tax Program
Benefits for US taxpayers
Depreciation on a Mexican property is 40
years, rather than the shorter term
permitted in some US properties
Taxpayer can take a CREDIT against US
federal income tax for income taxes paid
to Mexico on net rental income after
deducting all expenses.
Credit is limited to amount paid on rental
income, carryover permitted

14. Rental Tax Program
Benefits for US taxpayers
IVA collected from the renter must be
included in rental income, but then
deducted out so no double taxation
Applicable to vacation homes when
owner occupied part of year and rented
out to third parties at other times.
IN A SALE OF THE PROPERTY, net gain is
taxed in the US at the applicable lower
capital gains rates and Mexican ISR paid is
a credit on that profit.

15. RENTAL TAX PROGRAM
and the settlement company
Five years in the development of the
program in close consultation with
SAT
25 years experience in titles, transfers
in the Los Cabos marketplace

16. Rental Tax Program
the settlement company®
twenty five years as your safety net in
Mexico!
Integrity, reliability, and professionalism!
Information:
info@settlement-co.com
www.settlement-co.com