Are you thinking about buying a vacation home in Mexico as a Canadian? If so, you might be wondering about tax. After all, it’s not uncommon for Canadians to buy property in other countries with the intention of renting it out as an investment. However, there are some important things that you need to know about taxes on rental income in Mexico.
Yes. You will pay taxes on your rental income in Mexico as a Canadian.
Although this may be a good thing to hear, you will pay taxes on your rental income in Mexico as a Canadian. In fact, the Mexican government imposes income taxes, IVA, and other taxes on all rental income derived by Landlords from renting properties in Mexico. As a Canadian must pay these taxes even if you do not live in Mexico.
The amount of tax you will be required to pay will depend on several factors but mainly your rental income and the type of property being rented out (whether it is commercial or residential property).
It’s called the 25% withholding tax. That means that if you rent out your house for a month, and it costs $10,000 in rent, you will pay $2,500 in taxes.
Note: We are not tax specialists in Mexico. You should seek advice from a specialist who is update to date with taxation policies and changes for Canadians who own rental property in Mexico.
Seek advice from a Mexican tax Specialist who helps Canadians
If you’re a Canadian citizen in Mexico, seek advice from a Mexican tax specialist who can help you with the best course of action. A specialist who helps Canadians is the right person to talk to if you have any questions about your taxes or are facing difficulties due to inconsistent tax laws.
In summary
In the end, you will be required to pay taxes on your rental income in Mexico as a Canadian. You should expect that the amount of tax you pay will depend on a number of different factors. Seek advice from a tax specialist in Mexico who works with other Canadians.
If you are a Canadian who is looking at buying property in Riviera Maya Mexico then chat with our real estate agents who can advise you on the type of property to buy, rental income projections and explain everything you need to know.
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