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| *The Commerce Journal>>>Mexico Taxes |
In Mexican Capital Gains Taxes, if you rebuy another? |
I read that if you roll over a capital gain into another property in Mexico, you can avoid the 25 - 35% capital gains tax for non-primary residence. I do not see it contradicted or restated anywhere. Can you roll over a capital gains tax so you do not have to pay the high tax. Becoming a Mexican resident gets too complicated because they like to collect on international income. This works for American tax payers because we have something called "like kind exchanges". I'm not an expert in Mexican taxes, but they might have the same thing. The way it works is you trade your property for another property directly (no cash involved). It has to be two similar properties: real estate for real estate residential for residential commercial for commercial etc. If in the trade anything else trades hands (cash, debts, or other property), you're going to pay taxes on the value of the other stuff up to the amount of your total gain. For example, if you were paid $10,000 cash and you were relieved of $10,000 in debt, you'll pay taxes on the $20k if your gain was equal or more than that. ******************************... The way the deferred capital gain works is that you just keep your original basis in the property. If you originally paid $150k for land, and you trade it for another piece of land, you use the original cost as your cost basis for the new land regardless of what it's worth. If you get a good deal and trade for land worth $1 million, you'll eventually have a gain of $850k when you sell, but you defer the tax on that gain until the date you actually get rid of the property. (You could potentially trade land for land a dozen times and never pay a capital gain tax. You're not responsible to pay it until you finally sell.) ******************************... Sorry, have to edit: This site http://www.mexicolaw.com/lawinfo18.htm#n... says that Mexico doesn't even have a capital gains tax. When you sell anything, the gain is considered ordinary income. (I didn't see anything about like-kind exchanges, but you receive cash and then buy another property immediately, the rules don't apply anyway. You would be treated as if you had sold for cash.) |
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