Property taxes in Mexico are infamously low, in stark contrast to the property taxes in the U.S. and Canada. It is quite common to have annual property taxes of $100 or less, and they seldom run higher than about $300.
Many U.S. citizens save thousands every year, on property tax, with a move to Mexico. Scottie and Jim Watson, 72 and 70, respectively, have lived in Playa del Carmen, for six years.
"It's less expensive to exist down here," says Jim, who says they pay $200 a year, in tax on their condo. "Instead of paying $6,000 to $8,000 in property taxes in the U.S.."
Annual property tax
The municipality of residence in each state sets the rate of each property. The average home or condo property tax may only be a few hundred dollars per year. Properties in rural areas may be assessed at less than $100 per year.
Expat Gary DeRose says, "My annual property taxes in Merida are $100. Compare that to the $11,000 I paid in San Francisco a decade ago."
Capital gains tax
There are two ways to calculate capital gains tax in Mexico.
- 25% of the declared value of the transaction, or
- 30% of the net value—that is, the difference between the assessed values at the time you bought the property and when you sell it, taking into consideration the time the property was held, any improvements made, any commissions paid, and other allowable expenses.
Capital gains tax should be calculated both ways with the help of an accountant or notario(notary), and the lower rate paid.