In this latest episode of The Nick Fong PODCAST, Nick reveals what you need to know about how to deal with U.S. taxes explained by an expert if you’re living in Baja California Sur or somewhere else in Mexico. Nick Fong is the broker and founder of Ronival Real Estate, the largest real estate firm in Baja Sur.
Together with Don Nelson, an attorney and CPA from the U.S. and a long-time resident in Baja Sur, Nick helps you gain an understanding of what you must do with your taxes if you earn money while in Mexico. After that, see if you can do a 1030 exchange. That is explained in this article and in the video. Now, read on to uncover even more.
About Don Nelson and how he helps with taxes
Don Nelson first arrived in Cabo about 30 years ago. As he says in the video, he started meeting people who were not filing their U.S. taxes. His idea was to help them file their taxes, since he was already there in Cabo. Since then, Don now helps well over 200 people per year to do their tax returns in the U.S.
On top of tax returns for U.S. citizens living in Baja Sur, Don Nelson also helps his clients render tax planning and estate planning along with other tax advise for people living in Cabo and throughout Baja California Sur.
American tax return requirements
According to Don Nelson, U.S. citizens must file income tax returns regardless of where they live in the world. That means, they must report their world-wide income. But of course, Americans get credit for taxes paid in foreign countries along with other benefits. As Don mentions, many U.S. citizens are not aware of this. As such, he helps them get caught up on their income tax returns.
IVA tax in Mexico REVEALED
Watch the video to see how Nick Fong reveals what the Mexican IVA tax, which is a sales tax in Mexico, is all about. The IVA tax is charged by the Federal government on all products and services. It is 16% of the purchase price. Fortunately, this tax does not apply to real estate, which has a 2% acquisition tax instead.
When you shop around in places like at Costco, expect to pay this sales tax just like in the United States and Canada. But of course, many of the small shops and taco stands don’t charge IVA.
Learn about Mexican Capital Gains Taxes
Similar to how you are taxed in the United States and Canada, whenever you sell a property for more than you spent for it, that profit is treated as Capital Gains and is taxes as such.
Once you make a purchase, your currency is converted into Mexican Pesos at the current rate. Then, those Pesos are used to purchase your new property. As such, that purchase price is presented in Pesos. Next, when closing the sale, the selling price in Pesos is compared to what you originally paid for it in Pesos. If the selling price is higher than the purchase price, a Capital Gains tax is calculated.
Now listen to this new episode of The Nick Fong Podcast
Spotify
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Apple
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Baja California Sur real estate
Many Americans, Canadians, and people from other countries choose to make Los Cabos and other magical towns in Baja California Sur, Mexico, their home or vacation home. Discover how to purchase your dream home in Baja. Make an appointment with the top Real Estate Broker in Baja: Nick Fong, featured on HGTV’s Beachfront Bargain Hunt.
Since 2010, Ronival has been helping clients find the best homes in Cabo and throughout Baja California Sur. And, they’re highly-skilled negotiators that’ll get you the best price. Whether you plan to buy a property or quickly sell your Baja real estate, they’ve got you covered!
If you’d like to take a tour of a property in Cabo or anywhere else in Baja California Sur, just click CONTACT to inquire. Or, call directly at 619-831-2000. Ronival will be happy to answer your questions You can also schedule a time to show you around this breathtaking location.
Ronival on YouTube
See Nick Fong in action on his Ronival YouTube Channel. Find his videos on the Rovival VLOG, where you can read a short, yet in-depth post. Below is an example of one of Nick Fong’s Ronival videos:
Thank you for reading The Nick Fong PODCAST: What to know about U.S. taxes when living in Mexico. Be sure to read other posts about Cabo and Baja California Sur on the Ronival blog. There, learn about the many wonderful aspects of Baja California Sur, Mexico, from blog posts like this.