Understanding Mexican taxes is essential for expats who own property, work, or conduct business in Mexico. This comprehensive guide covers all major tax obligations for foreigners living in or earning income from Mexico in 2025.

Overview of Tax Obligations for Expats

Expats in Mexico may be subject to various taxes depending on their activities:

• Property taxes if you own real estate
• Income taxes if you work, run a business, rent property, or have interest-bearing bank accounts
• Value Added Tax (VAT/IVA) on purchases and services
• Capital gains taxes when selling property

If you have significant assets in both Mexico and your home country, consider consulting an international tax specialist to minimize your overall tax obligations.

Tax Residency in Mexico

Determining Tax Residency

You're considered a Mexican tax resident if:

• You spend more than 183 days in Mexico during a calendar year (days don't need to be consecutive)
• Mexico is your center of vital interests - meaning more than 50% of your income comes from Mexican sources, or Mexico is your primary place of professional activities
• You own property in Mexico (for tax purposes)

Worldwide Income Taxation

Important: Like the United States, Mexico taxes residents on their worldwide income. This means Mexican tax residents must declare income from all sources globally, not just Mexican income.

However, Mexico traditionally has a lenient approach toward enforcing worldwide income taxation for expats, though this policy could change in the future.

Property Taxes in Mexico

1. Property Acquisition Tax (2-5%)