ligui
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Mexican / American taxation
Hello everyone 🙂.
If I sold my home in Mexico and the capital gains are taken out at the closing.
I then transfer the funds I have left from the sale to my bank in the states .
What will I be taxed ?
Thanks Ligui
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mjs
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Not an accountant/ cpa or tax attorney so take this for what it is worth (my $.02).
My understanding is yes you owe US tax on any profit you may realize. You get credit for the tax paid to MX so that will offset some or all of your US
tax liability.
As a US citizen you should be aware that the US is one of only a few countries in the world that taxes its citizens on their income no matter where it
is earned. The US has quite a few financial regulations that affect US citizens living abroad. Including reporting earnings, financial assets and
holdings like bank accounts.
A tax professional can help you determine the tax consequences if any.
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Alan
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I'm curious too. Because of the fluctuation of the peso which has gone from 10 pesos to the dollar at the time of purchase to approximately 20 pesos
today if I were to sell at what I purchased it for. I'd owe capital gains to MX because I doubled my investment in their eyes but only break even in
the US 
In Memory of E-57
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BajaTed
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https://www.greenbacktaxservices.com/knowledge-center/foreig...
Es Todo Bueno
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BigWooo
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I've sold a few properties in Mexico. The U.S. and Mexico have a tax agreement. If the capital gain you paid in Mexico is equal to, or exceeds what
you would have been liable for in the U.S. on that same gain you owe nothing. If the capital gain you would have paid in the U.S. on that amount
exceeds what you paid in Mexico, you owe the difference.
Capital Gains in Mexico are much higher than in the U.S. so the odds you owe anything in the U.S. are about zero. You are however required to
document the income and taxes paid in Mexico on your U.S. tax return.
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ligui
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Thanks guys !
 I'll try to keep our make sure everyone gets their cut. 
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gnukid
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Laws change so you'll need to do your research.
Primary residential home sales have a 250k deduction (exclusion of gain) in USA per person, married couple is $500k
https://www.homelight.com/blog/tax-implications-of-selling-h...
In Mexico capital gains depend on the residential status of seller and are based on the purchase cost basis and sale price, though there are
adjustments possible for improvements.
Search these forums for more information on capital gain formulas for Mexico.
In order to have your residency status honored in Mexico you must have the notario and their accountant recognize your status as living fiscally in
mexico for a period of more than 18 months of the last 24 months. As well, one should be able to demonstrate that you lived in the Mexican home, for
USA IRS if questioned.
There is a no double jeopardy policy of taxation in general for USA, you don't pay twice. If your distribution is marked as real estate sale and sent
by notario to your usa account you generally wouldn't be taxed again if you lived as a resident in mexico. It is more clear if you are permanent
resident, Mexican or can prove that you lived in the home the preceding 24 month period.
Tax policies are different if your home is part of a Mexican corporation. You would need an accountant to file and generally the distribution goes to
the corporate account and exists as a profit/loss for that year.
The capital gain exemption is approximately the same in Mexico for residents as USA. This article may help. If you do your homework you should pay no
capital gains on less than 5 million pesos gain if you lived in the home as a resident not as a business and the notation agrees. Good luck
https://www.mexperience.com/the-costs-and-taxes-of-selling-p...
[Edited on 6-10-2023 by gnukid]
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SFandH
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I'm just curious. How would the IRS know about capital gains on a house you sold in Mexico if you don't spell it out for them?
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gnukid
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Quote: Originally posted by SFandH  | I'm just curious. How would the IRS know about capital gains on a house you sold in Mexico if you don't spell it out for them?
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It's better if they do, typically the money is distributed to your USA bank account and should appear as exempt residential home sale distribution.
Otherwise it appears as suspicious income deposit.
If you follow these policies you should be able to flip your residential house for a profit with no tax every 3 years in mexico.
Here is a USA IRS tax guide for expatriate tax. I'm not familiar with when this applies. https://www.irs.gov/pub/irs-pdf/p519.pdf
[Edited on 6-10-2023 by gnukid]
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