Owning real estate in Mexico

Forum|Forum|4 years ago
May 23, 2021
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I've been thinking about buying an apartment in Mexico City which, once built (in like 3 years), will generate monthly dividends. In Mexico, what I've been told, is that you pay a 10% tax on these dividends. But will I have to pay extra taxes in the U.S.? If so, how much? Maybe if I already pay 10% in Mexico I'll only need to pay the difference, if there is any, in the U.S.? Of course, I'll have to declare this apartment in my U.S. tax returns. For context, I have both citizenships (U.S. and Mexican) and I reside in the U.S., where I work. Any advice would be helpful, so I make the correct investment decision with owning an apartment outside the U.S.

Not A Product Question

Opus 17

It's unclear how an apartment will generate dividends. This is a time share? Or a condo that you could live in but will be renting to others?

If you are a US taxpayer, you must report and pay income tax on all your worldwide income. If you pay foreign tax on the same money, that would be applied to your US tax return as a deduction or credit against your US tax, which reduces the potential for double taxation.

From your question, it is unclear how you would report the income. If you are renting out your property, that will generally be on a schedule E. If you are just sent a check as an "owner's share" of profits, that might be reported as "other income."