It’s not uncommon to hear your neighbors, friends and family in America complain about paying high taxes on everything. Perhaps even you are complaining. When it comes to property, no one is sure about what to do anymore. But some thousands of people have hit the nail on the head and found the easy solution: moving! According to CNBC news, the states with the highest taxes also have the highest migration rates. Coincidence?
Now, this may not sound like the easiest solution, but think about it…you could be saving thousands of dollars on taxes if you simply moved to either other states with lower property taxes or even another country.
Take Mexico, for example. Property taxes in Mexico are called predial and it is collected by the state’s SAT (Service Tax Administration, for its initials in Spanish). The tax is paid annually and, if paid within the first two months of the year, a significant discount is granted. For those unable to afford the full payment, it can be split in up to six payments payed every two months.
Compared to the property taxes in the USA, the predial is very cheap. It represents 0.1% of the assessed value of the property at the time of sale. The assessed value, however, can vary and be much lower than the real market value of the property (sometimes up to 40% of the actual price) depending on the assessor evaluating the property. This benefits your pocket when it comes to paying taxes! Some even say that taxes are so low that they are not even a source of revenue for the government of the country.
Mexico is really no different than the USA or Canada. You must pay agent fees and taxes like in any other country. But, there are certain things that will help you understand taxes in Mexico better for when you decide to buy.
Acquisition taxes: when you purchase a property in Mexico, you must pay an acquisition tax that is approximately 2% of the cost of the property (this varies from state to state). This applies whether you are buying a new or used property, transferring, or any other form of property acquisition.
IVA (or VAT) sales tax: This is only paid on residential properties (so if you’re purchasing a commercial property you do not have to worry about it). It is liable to the current VAT rate.
Appraisal tax: Your property can undergo appraisal at random (this depends on the tax authority). If the value is greater than 10% of the property purchase, then you must pay a 20% appraisal tax on the difference between both values.
Amongst other expenses that you must consider are: notary fee, registry fee, bank trust or Mexican corporations, lawyers, foreign office permits, and others. Even once you add all the final expenses the costs are considerably lower than staying back in the United States, Canada or some other expensive countries.
And if you really need a little more convincing to move to Mexico…just think of the beautiful paradise beaches, amazing gastronomy, beautiful culture, friendly people and gorgeous architecture you will find!
Top Mexico Real Estate is an American-owned real estate company – leader in its field – based in Playa del Carmen. Catering to American and Canadian people looking to retire in paradise, we offer thousands of amazing properties throughout the country. If you are ready to leave behind that high tax country of yours, contact one of our Top Mexico Buyers’ Representatives who will gladly guide you through the process and help you become a homeowner in Mexico.
And remember, here at Top Mexico Real Estate…
We Make It Happen!