Taxes and utility payments for property owners in Mexico

Taxes and utility payments for property owners in Mexico

This article provides a detailed overview of important aspects related to tax obligations and utility expenses for property owners in Mexico. The discussion focuses on the taxes that need to be paid when purchasing, owning, and selling real estate, as well as various costs associated with maintaining and managing the property.

Tax on the transfer of ownership rights

When purchasing real estate in Mexico, the buyer should keep in mind that they will have to pay a property transfer tax, which amounts to2%from the appointed estimated value of the asset. This is just the beginning: after this transaction, regular tax obligations begin, which must be fulfilled without exceptions. It is worth noting that there are no special tax benefits for foreign investors, which makes this procedure universal for everyone.

Annual property tax

The annual property tax, more commonly known aspredial, amounts to0.12%from the cadastral valuation of real estate. For example, if we consider an apartment with an area of 99 square meters in Cancun with a value of about$176,000the owner will have to contribute approximately$211per year in the form of property tax.

Restrictions for foreign citizens

It should also be noted that foreigners face certain restrictions when purchasing real estate in coastal areas that are within a radius.50 kilometersfrom the sea. In addition, there are special rules for acquiring land within100 kilometersfrom the border. In such cases, it is advisable to consider the possibility of using a bank trust, or to create a Mexican legal entity for the lawful conduct of real estate transactions.

Bank trust

If an investor plans to acquire just one property in special zones, the best option would be to use a bank trust, which can be registered for a period of up to50 years...with the possibility of extension. Setting up such a trust can cost up to...$1,500and the annual maintenance costs will be around$500for each object.

Owners' rights and legal aspects

A banking trust provides owners with the necessary rights to manage their property, while this real estate is not considered a bank asset and fully belongs to the buyer. Each property is registered within its own trust, which helps minimize legal complexities and protect the owner's rights.

Conclusions

Thus, Mexico has a system of taxes and payments that should be taken into account when purchasing real estate. The obligation to pay taxes begins immediately after the transaction is completed and continues throughout the entire period of property ownership. Foreigners wishing to invest in Mexican real estate should be aware of all the nuances and approach the process thoroughly to avoid legal issues and effectively protect their interests.

As a result, for large investors who intend to simultaneously purchase several properties, it is recommended to organize property registration through a corporation in Mexico. The process of creating a company for non-residents is quick and without significant obstacles. However, there are certain conditions: the corporation must have at least two founders who are not citizens of the country; one of the founders must hold the position of manager and have a residence permit. Additionally, such a company must prepare monthly financial reports and submit them to the local tax authorities. These reports can be prepared independently or entrusted to a qualified accountant, whose services start at $100 per month, depending on the number of properties registered under the company.

The process of registering a company

To register a company in Mexico, a foreigner can seek the services of a notary. The costs for the notary's services in preparing the founding documents and registering the legal entity will be at least $1,500. For example, let's consider the average amount of annual tax payments:

• Annual property tax– 120 dollars.
• Annual fee for maintaining a bank trust– 500 dollars.
• Total tax amount for the year– 620 dollars.

Opportunities for purchasing real estate in Mexico

If you are considering the possibility of purchasing real estate in Mexico, here are a few options:

• For the amount of 233,567 euros, there is an opportunity to buy.apartments with an area of 62 m2with one bedroom in picturesque Playa del Carmen, located in one of the most prestigious areas. This boutique complex will be the perfect place for a pleasant getaway in the hot summer, where you can enjoy coconut juice or morning coffee in January, admiring all the shades of Caribbean turquoise.
• Another attractive opportunity offersresidential boutique complex with apartments of 106 m2and two bedrooms for 342,075 euros. This luxurious property is also located in the popular area of Playa del Carmen, where you can enjoy all the amenities of a Caribbean getaway.
• It is also suggestedpenthouse with an area of 404 m2 featuring three bedroomsFor 541,619 euros. This elite residential complex is located on the coast with the pristine beaches of the Caribbean Sea and offers excellent conditions for relaxation in Riviera Maya, Mexico. With its stunning modern architecture by the sea, the AAA Four Diamond boutique hotel provides a variety of options for family vacations, romantic getaways, weddings, or honeymoons in Playa del Carmen.

Conclusion

Thus, investing in real estate in Mexico can be a profitable solution, providing a stable income, especially if you follow the advice and register the property through a local company. This approach guarantees you protection and tax benefits while staying in the country.

Real estate in Mexico: investor interest

Real estate in Mexico is an attractive option for investors due to the variety of unique properties and picturesque locations. For example, the luxurious boutique penthouse presented is priced at234,487 €and occupies146 square metersIn this exceptional residential complex, completed in2020There are two bedrooms, and its location is justin ten minutesfrom Tulum and beyondfifteen minutesThe proximity to the coast makes it especially desirable. The penthouse is located in a building with six carefully designed apartments that embody style and comfort.

Luxurious villa in Tulum

Another magnificent property is a luxurious villa worth440,467 €, the area of which is185 square metersThe villa includes three bedrooms and three bathrooms, built by a renowned developer specializing in elite eco-homes in Tulum. The master bedroom connects to a covered terrace, where you can enjoy the morning tranquility or have a great time with friends and family while sipping cocktails outdoors. The open layout combines the kitchen and living space, creating an atmosphere of warmth and comfort.

A house with a garden near Tulum

Price proposal124,140 €regarding a wonderful house with a garden near Tulum, with a total area100 square metersThis impressive property includes three bedrooms and two bathrooms. It is surrounded by jungles, offering luxurious conditions for comfortable living and relaxation. At the same time, it is just a few minutes away from Tulum, where there is access to various amenities and entertainment, as well as the opportunity to enjoy the natural tranquility.

Apartments in Puerto Aventuras

If you are looking for an apartment, it is worth considering a property priced at734,725 €, with an area of203 square meters, which also has three bedrooms and three bathrooms. The cityPuerto Aventurasin which they are located was founded more than35 years agoon the coast of the Riviera Maya. This cozy resort town is located on the shores of the Caribbean Sea, just a15 kilometersfrom Playa del Carmen and in80 kilometersfrom Cancun International Airport, which provides convenient access to many tourist destinations, including Tulum.

Other apartment options

Other apartments are also available in this city.

• An apartment worth716,334 €, with an area of169 square meters
• An apartment worth593,114 €, with an area of185 square meters

These apartments have all the necessary amenities for comfortable living, providing their owners with a high level of convenience and security. The development of the secured area, as well as the space in350 hectares...contributes to creating a relaxing atmosphere for the residents.

Conclusion

In conclusion, prices for apartments in Puerto Aventuras start from387,133 €for area options179 square meters...that feature two bedrooms and two bathrooms. There is a wide selection of properties available, allowing you to find the perfect home just for you. Here, in this corner of paradise, nature and modern amenities blend harmoniously, creating the atmosphere that everyone dreams of.

Puerto Aventuras is a charming little town located on the picturesque coast of the Riviera Maya, founded over 35 years ago. This small municipality is snugly situated on the shores of the Caribbean Sea, just 15 kilometers from the famous Playa del Carmen and 80 kilometers from Cancun International Airport. If you plan to visit Tulum, you can reach it in just half an hour, as the distance is only 30 kilometers. Puerto Aventuras covers an impressive area of 350 hectares, all of which is protected, making it a favorite spot for those who value safety and a peaceful lifestyle.

Accommodation options

This area offers a variety of housing options, including both luxurious apartments and stunning penthouses. As part of the Caribbean Club project, you can be offered a standard apartment with an area of 181 square meters for a price of 520,469 euros. It includes three bedrooms and three bathrooms. A highlight is the option to conduct an online viewing and arrange the deal remotely, which significantly simplifies the process for international buyers.

Development and infrastructure

Puerto Aventuras is actively developing, and on its territory, you can find many new residential complexes, including modern apartments and impressive penthouses. In particular, among the housing options, there is an offer for the sale of a magnificent penthouse with an area of 520 square meters. This elegant apartment includes five bedrooms, five bathrooms, and a terrace that can accommodate up to eight people, allowing you to enjoy picturesque views.

Puerto Cancun

It is also worth noting the attractive area of Puerto Cancun. This new elite destination is located right by the sea and offers its residents luxurious residential complexes and villas with high-quality finishes. Residents and guests of Puerto Cancun can enjoy stunning panoramic views from their apartment windows, with all the amenities for comfortable living in a luxurious setting.

Investment opportunities

For those looking to invest in real estate, there is a wide range of options available here, from compact apartments to spacious villas that offer all the necessary amenities for living. Everyone can find the perfect option for themselves and enjoy all the delights of life in one of the most attractive places on the Caribbean coast.

Attractiveness of the region

Puerto Aventuras and Puerto Cancun combine stunning nature with modern comfort, making these areas attractive to people from all over the world. The unique climate, pristine beaches, and diverse amenities make these places an excellent choice for both permanent living and vacationing or renting accommodation.

Climate and ecology

Caring aboutenvironmental cleanlinessanddeveloped infrastructureIncluding shops, restaurants, and entertainment venues, life here becomes especially enjoyable. The Riviera Maya is not just a place; it is a whole complex of rich emotions and vivid experiences that continually attracts both locals and tourists from all over the world.

Conclusion

Anyone who dreams of a life by the sea will find all the conditions here to make their wishes come true. Your new life in Puerto Aventuras can become a reality, and here you will be able to enjoy every minute, immersing yourself in the atmosphere of this true tropical paradise.

Caribbean Club project: townhouse in Mexico for €268,510

Our review features an amazing townhouse located in the picturesque city of San Cristóbal, situated in Mérida, Mexico. This cozy home has a total area of 201 square meters and includes three bedrooms, two full bathrooms, and two kitchens, as well as two comfortable living rooms.

The dimensions of the land plot are 7.35 meters wide and 40.4 meters long, with a total area of 296 square meters. The price of this townhouse is 4,995,000 Mexican pesos, which is approximately equivalent to 292,000 US dollars. This option is perfect for those looking for housing in a historic area with a rich culture.

Villas in Tulum: investing in nature for €565,527

Another enticing offer in the Mexican real estate market is a magnificent villa with an area of 155 square meters, which includes four bedrooms and three bathrooms. The property is located in stunning Tulum, surrounded by beautiful beaches and the crystal-clear waters of the Caribbean Sea.

The villas are located within the large hotel complex of Riviera Maya, called Bahia Principe, and are surrounded by tropical forests, creating an atmosphere of seclusion and tranquility.

There is an opportunity for online viewing of properties and conducting transactions remotely with payment in cryptocurrency, which makes this offer particularly relevant in the current circumstances.

New project in Costa Maya: villa for rent for €142,387

The following sentence describes a luxurious villa near Cancun, covering an area of 64 square meters, with two bedrooms and one bathroom. This is a new project on the market, currently in the initial sales phase, representing a residential complex located on the Caribbean coast, featuring stunning views and pristine beaches.

The complex offers the option to choose between various plots of land and residential houses (furniture can be provided additionally). Thisgreat opportunityfor investors looking to purchase property for rental.

Utility expenses and service payments

Purchasing an apartment in a condominium in Mexico entails the necessity of monthly payments for the maintenance of common property and utilities. These payments can vary depending on the consumption of electricity, water, and gas by the specific resident. Owners of private homes outside of complex developments are also required to pay for utilities based on meter readings, including internet and telephone services.

Housing maintenance fee

Every apartment owner in a condominium contributes fees for the maintenance of the buildings and the support of public infrastructure. These fees cover the costs of:

• cleaning of common areas;
• pool maintenance;
• gyms and elevators;
• security;
• parking services and garbage collection.

The average monthly costs for maintaining a condominium in Cancun range from 100 to 150 US dollars, which is significantly lower than in similar areas in the US or Europe. This makeslocal real estateespecially appealing to buyers from America and Canada.

Electricity tariffs

In various settlements, one can notice a diversity of electricity tariffs, and sometimes they even change within the same district. This situation is caused by the fact that the price of electricity is not regulated by government authorities. As a result, many intermediaries, who have their own distribution points and transformers, negotiate with the state company.Federal Electricity Commission (CFE).

This organization is the sole supplier of electricity and fully controls all power plants in its region. Private companies have the option to purchase electricity from CFE at wholesale prices and then offer it to local residents at higher rates.

Information for real estate buyers

Real estate buyers are required to study the current tariff system to better navigate when choosing areas with more affordable electricity prices.

Gas expenses in Mexico

In Mexico, the average costs for purchasing gas range from15 to 20 US dollarsFor a month. The need for heating, both central and local, is quite low, especially in regions on the Caribbean coast. Given the high temperatures in these areas, heating systems are not installed.

In mountainous areas and in the northern part of the country, there are also no developed heating systems, and in case of a drop in temperature, residents usually use electric or gas heaters to maintain a comfortable temperature in their homes.

Connection and internet

As for connectivity, various service packages are available in Mexico from several operators. The most well-known companies in this field areTelmexandIzzi TelecomThe average price for a service package that includes internet with a minimum speed20 megabitstelevision and phone calls account for about25-30 dollars a monthCable television is provided by an international company.Dish TV.

Mobile communication

Several major operators are represented in the mobile communications market:

• Telcel (owned by America Movil)
• Movistar (owned by Telefonica)
• AT&T Unidos (AT&T's division in Mexico)

All the mentioned operators offer different coverage options, but a wide network is mainly provided byTelcelThe most affordable mobile plan costs around15 dollarsand includes300 minutesconversations with unlimited internet. Many users prefer a more advanced package for26 dollarsthat offers500 minutesand unlimited access to the internet.

Features of the tariffs

It should be noted that there are no interregional tariffs in Mexico, and often the operator provides the option to make free calls to...U.S.andCanadaForeigners have two main ways to obtain a number in Mexico:

• acquisition of a prepaid SIM card
• conclusion of a mobile communication contract

A prepaid card offers more freedom in usage, while a contract can be a more economically advantageous option.

Internet speed

The mobile internet speed in the country is quite high thanks to the developed 3G networks. The cost of the data package for1 GBis about per month9-10 dollarsAdditionally, free Wi-Fi hotspots are often available in establishments and public places.Wi-FiHowever, the internet speed may be insufficient for streaming high-quality video, but it is quite adequate for work and standard conversations.

Real estate insurance

Regarding insurance, it is worth noting that there are no mandatory rules for home insurance in Mexico. Each property owner decides whether or not to insure their property. Homes and apartments located in coastal areas, where there is a risk of hurricanes and other natural disasters, are most commonly insured.

Payment of utility bills

To pay for utilities in Mexico, it is necessary to first sign the appropriate contracts with the providers. This can be done by the management company on behalf of the property owner or by the owner themselves. Payments for electricity and water can be made at most banks, large supermarkets, or directly with the companies that provide the utilities.

There is also the option to make calculations through the special online resources of these companies. Taxes can be paid via bank transfer, but it's important to keep an eye on the deadlines, as failure to make payments can result in a fine that only increases each year.

Modern changes in the international real estate market can be studied using current channels in messengers, particularly in Telegram. Let's consider a practical example of tax and utility payments in one of the favorite resorts — Cancun, where the apartment size is 100 square meters. It is worth noting that annual tax expenses range from 100 to 150 dollars.

In addition, property owners face an annual fee for managing the bank trust, which is approximately $500. Monthly utility expenses for maintaining the property range from $100 to $150. The main regular expenses include the following:

• The electricity expenses are about 50 dollars a month.
• Gas - from 15 to 20 dollars;
• Water supply - about 10-15 dollars;
• Telecommunication, television, and internet services cost about 25-30 dollars.

If we sum up all the expenses mentioned above, the total comes to about $265 per month, which adds up to $3,830 over the course of a year. It's important to note that this figure is relevant if the owner is living in the apartment permanently or renting it out regularly. However, if the apartment is not in use, the owners are exempt from utility costs, and in the case of long-term rentals, these expenses are covered by the tenant.

Rental features

Speaking of rentals, the main category of clients looking to purchase real estate in Mexico consists of foreign citizens, most often from Europe, the USA, or Canada. These owners typically spend only a limited amount of time in their apartments each year, and for the rest of the time, they rent out their properties with the help of professional management companies.

The rental business is thriving here. About 90% of foreigners who buy property in Mexico for vacation or as a second home rent it out for long-term leases. For example, a two-bedroom apartment priced at $100,000 in a building not on the beachfront can be rented for $1,000 a month. In the case of short-term rentals, the rate ranges from $50 to $60 per day in the low season and varies from $65 to $90 in the high season. During peak periods, such as Christmas, New Year, or Easter, the rental cost can reach up to $250 per day.

Short-term rental and return on investment

Most owners prefer short-term rentals. In some condominiums, there are restrictions on the minimum rental duration—it cannot be less than six months; however, in most cases, short-term rentals are allowed.

Return on investmentThe returns at Caribbean resorts are significantly higher than in European countries, ranging from 8 to 12% per year. For example, if an apartment costs 100 thousand dollars, it brings the owner a net profit of 12 thousand dollars per year.

In short-term rentals, the cost of utilities is covered by the apartment owner. Tenants are responsible for paying these costs only in long-term rentals. Owners are required to cover the expenses for condominium maintenance, as well as pay property taxes and taxes on rental income.

When deciding to rent out an apartment, many foreigners choose to work with a management company, which allows them to eliminate many concerns through professional management of their property.

Real estate rental services

In our company, we not only search for tenants for properties, but we also facilitate their move-in and, if necessary, eviction.

We provide paid receipts and oversee the process of collecting value-added tax, which is 16%. In addition, we handle a tourism tax of 2% and the payment of corporate tax, which is set at 30%.

However, it is quite possible to significantly reduce this tax to 10% if a loan is arranged. To do this, the property owner must provide the tax authorities with a written agreement stating that the property was purchased with a loan at an annual interest rate of 7%. This amount will be deducted from the profits annually.

When discussing the topic of transferring funds abroad, it is worth noting that such a mechanism is subject to a 10% tax. In order to be able to pay taxes independently, the owner needs to obtain an individual tax number and register it with the Mexican Treasury, also known as Hacienda.

Management companies in the Mexican market

In the Mexican real estate market, there are many management companies that offer a variety of property management services. Their main goal is to preserve assets and ensure stable investment returns throughout the year.

The services provided include:

• Market research and rental price analysis.
• Preparation of real estate for rental to tenants.
• Conducting advertising and marketing campaigns to attract customers.
• Searching for potential tenants and their subsequent selection.
• The process of onboarding tenants and supporting them throughout the entire rental period.
• Maintenance of facilities, including routine and capital repairs.
• Resolution of legal and financial issues, as well as maintaining accounting reports.

The prices for property management services can vary: for short-term rentals, it is 30% of the income received, while for long-term rentals, it is 20%.

Economic indicators and the standard of living in Mexico

As for the quality of life in the country, as of 2018, Mexico ranks 15th in the world in terms of gross domestic product (GDP) and second in Latin America. The country's economy largely depends on its northern neighbor and main trading partner, the United States, but shows steady growth.

According to data from the World Bank, economic growth was 2% in 2018. As for forecasts, GDP growth is expected to be 2.0% and 2.4% in 2019 and 2020, respectively.

The average monthly salary in Mexico ranges from $400 to $500, which is considered quite low.

Foreign citizens mainly choose resort areas for living, as they offer more business opportunities. The standard of living in these regions is at least twice as low as in the United States. When compared to Canada and several major cities in the U.S., this difference can reach up to three times.

At the same time, the quality of services and the state of infrastructure in Mexico are quite comparable to those offered in the United States and Canada.

In Mexico, there are many options for improving the quality of life. For example, for about $400 a month, you can hire a housekeeper who will not only keep your home tidy but also handle cooking, laundry, and other household chores. This significantly enhances the comfort of living here.

Trends in the real estate market

As for the real estate market, it continues to show positive trends for several years now. According to the Global Property Guide report, housing prices increased by 4.32% in 2018. Real estate experts note that the average selling period for properties usually ranges from three to six months.

However, if a quick sale is required, it can be completed in a couple of weeks, but in that case, the price may be 5-10% below market value.

Capital gains tax

The capital gains tax also plays a significant role in the process of selling real estate by foreigners. When selling their property in Mexico, a foreigner must consider the tax, which is set at a rate of 25% to 30%, depending on the chosen calculation method.

• The tax can be 25% of the transaction amount.
• Or 30% of the difference between the purchase price and the selling price.

For a more accurate tax calculation, it is advisable to consult professional advisors, which will help minimize costs.

Benefits for residents

If an investor has a tourist visa or a temporary residence permit, they will have to pay tax on the profit from the sale of their property in Mexico. People with permanent residency can expect certain benefits similar to those of local residents.

Realtors' fees and additional expenses

Please note the realtor's fee, which ranges from 4% to 6% of the total transaction amount. This depends on the complexity of the deal and its specifics.

All associated costs, such as notary fees and other payments, are usually borne by the buyer and amount to about 6-8% of the total sum.

Transaction processing without presence

It is also worth noting that personal presence in the country is not required to sign the purchase agreement. All formalities can be handled remotely by using a power of attorney for the realtor, which will cost about $200.

Purchase of real estate for foreigners

In conclusion, it is important to pay attention to a few key points:

• Foreigners can acquire real estate in coastal and border areas only through a bank trust (fideicomiso) or by registering a company in Mexico.
• A trust is established for each specific piece of real estate.
• Large investors should consider registering their real estate under a corporation in Mexico.

It is also worth mentioning that property taxes in Mexico are among the lowest in the world — only 0.12% of the cadastral value per year. Investments in real estate in Caribbean resorts can yield returns of 8% to 12% annually.

The expenses for managing a property vary:

• For short-term rentals, they will amount to about 30% of the rental cost.
• For long-term rental — about 20%.

Finally, it is important to consider the rental income tax, which is set at 30%. Thus, the real estate market in Mexico offers significant opportunities for profitable investments and comfortable living.

Conclusion of the article

As can be seen from the above, the process of owning real estate in Mexico is associated with a number of obligations and nuances that every potential investor needs to consider. It is important to remember that taxes and utility payments are constant companions of any property owner. As a foreigner, you should be particularly attentive to regulations and financial requirements, as the government of the country does not provide any benefits for foreign owners.

The first serious financial burden arises when purchasing a home —tax on change of ownershipIt amounts to 2% of the estimated value. Furthermore, the owners will have to pay annually.property taxThe (predial) tax is set at 0.12% of the cadastral value. This can become a significant amount, especially in the case of expensive properties.

It's interesting that setting up and managing a bank trust, although it may seem like a complex task, actually offers flexibility and protection for foreign investors.Annual maintenance fee for the trustwhich amounts to about $500, helps to avoid a number of legal risks associated with direct ownership of real estate in restricted areas.

It is also important to remember the need to register a legal company for large investors, which requires taking into account additional costs and regular reporting. Engaging local specialists, such as accountants and notaries, can help simplify this process, but it will also involve additional expenses.

Key points to remember:

• The tax on the change of ownership is 2% of the assessed value.
• The annual property tax is 0.12% of the cadastral value.
• The service fee for a bank trust is about $500 per year.
• The necessity of registering a legal company for large investors.
• Attracting local specialists to simplify the process.

Final thoughts

In general, investing in Mexican real estate can be quite attractive, considering the favorable climate, beautiful landscapes, and cultural attractions of the country. However, the importance of financial planning and understanding tax obligations cannot be overstated. Proper preparation and knowledge of all aspects related to ownership will help you avoid unpleasant surprises and make the ownership process as comfortable as possible.