Property taxes in the United States have hit a high note lately. And it seems to be no coincidence that the states that have the highest property taxes are also the ones reflecting higher migration rates. The hassle of actually buying a home is already enough to drain people’s pockets, bank accounts and futures (because of hefty loans)…high taxes are just adding to the problem. Today’s generations – and even the many ones before us – are not in economic positions to be draining savings so drastically.
Lately, people have decided to invest in homes and properties in states with lower taxes or even in other countries. Mexico is a popular destination for people around the world, and for Americans (an estimated million Americans live in Mexico) it is quite the attraction. Many of them are looking to invest where they get more bang for their buck.
However, moving to Mexico is not something you can just do overnight; there is research to be done. To make your move and process of purchasing property abroad more pleasant, here are the type of taxes you can be expected to pay in this beautiful and diverse country.
Predial – this tax is the general property tax that has to be paid once a year and is paid to the Service Tax Administration (SAT). The payment must be done within the first two months if you are looking to receive a discount, but can be paid afterwards or in six equal payments every two months. This tax represents 0.1% of the assessed value of the property when it is purchased. If you’re buying an expensive and luxurious home, don’t be surprised if this tax is a bit higher than that of your friends who own properties in Mexico!
Acquisition taxes – this represents approximately 2% of the value of the property (at time of purchase) but depends on where in Mexico you are buying. This tax must be paid whether the property you are purchasing is new, used, being transferred or inherited.
VAT sales taxes – If you are purchasing a commercial property, you do not have to pay this tax, as it only applies to residential properties. However, as most Americans investing in Mexico are doing so in private homes, it applies. This is liable to the VAT rate that is currently running.
Appraisal tax – The tax authorities do random selections for appraisal. If your property is selected for such, and the value is greater than 10% of the original sales price, then you are obliged to pay a 20% appraisal tax on the difference between the value of the purchase and the appraisal.
These are only a handful of expenses that you have to keep in mind when buying a property – whether you do so in the USA or in Mexico. You must remember that you need to hire lawyers, notaries, pay foreign office permits, register your home and work out the loans and bank trust fees.
Regardless of all the money you will put into purchasing a home in Mexico, it will be considerably lower than purchasing a home back in the United States, especially in states such as New Jersey (2.38%), Illinois (2.32%), New Hampshire (2.15%) or Connecticut (1.98%) – this according to Forbes in a recently published article. Besides, can you really say no to the gorgeous beaches of the Caribbean coast, or the mountains of the country’s center? Can you deny loving authentic street food and the warmth of the people?
Seems like Mexico is quite the great opportunity for a great life!
By Thomas Lloyd
Thomas, from Indiana, is a graduate from the prestigious Krannert School of Management at Purdue University, where he obtained a degree in Administration with the Financial Management option.
He has been working professionally in Mexico since 1995, and in 2011 he was the first person to ever attain a new nationally regulated Real Estate degree and professional identification number for the Country of Mexico.
In 2009 he was voted Realtor of the year, because of his professionalism, attention to customers and knowledge of procedures and the market. Also, he has been active in the real estate community serving on the real estate association’s Honor and Justice Committee.
Thomas founded TOP Mexico Real Estate to help non-Mexicans have an enjoyable and safe experience as they purchase and invest in real estate in Mexico.
more recommended stories
As usually for the last 30 years, Cancun will draw thousands of college students for “Spring Break 2019”
College students all over the US and.
AAA Adds Five Hotels in Mexico to Five Diamond List (two of them in the Yucatan Peninsula)
AAA has released its annual list of.
Yucatan Symphony Orchestra celebrates 15 years
The Yucatan Symphony Orchestra (OSY) will.
Municipal government began installing cultural-sites signage along Mérida’s downtown
With an investment of 170,000 pesos,.
19-year-old girl missing in Mérida finally found safe and sound
A 19-year-old girl left her home.
Whomever accuses the Church is related to the devil: Pope Francis
ROME (EFE).- Pope Francis criticized on.
Canadian company in Yucatan leaves hundreds of employees “hanging”
Workers ask for the intervention of.
Mérida’s Colonia Industrial residents concerned about lack of water
MERIDA .- “We have absolutely no.
Renán Barrera joins forces with Boy Scouts to preserve Mérida’s environment
With high-impact goals that will further.
FORBES travel expert features editorial on Tulum’s “Taste Of Mexico Festival”
Lauren Mowery: author, Forbes.com contributor and Travel.