How to Live and Invest in Mexico: A Practical Guide for Expats

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Mexico, with its vibrant culture, breathtaking landscapes, and promising investment opportunities, is drawing the attention of people worldwide. Whether you’re considering a move or investing in Mexico, this simple guide will walk you through residency, investment options, and tax essentials, with insights from Mauricio Peña, a distinguished lawyer from Outbound Mexico. Mauricio has experience in administrative, corporate, environmental, and real estate law consulting and litigation. He has helped many expats relocate to Mexico and achieve their goals.

Residency: How to Get It and Keep It

Mexico has a simple and straightforward immigration system. It has two main types of residency: temporary and permanent. You can get either one depending on your purpose and situation.

Mauricio says that temporary residency is a good option for expats who want to test the waters (usually up to four years) and see if Mexico is the right fit for them. You can get it if you have a job offer from a Mexican employer, or if you have enough money to invest in Mexican assets. For example, if you want to buy a property in Mexico, you can get a temporary residency visa if you invest at least $204,000 USD. This amount is based on the original value of the property, not the current market value. The exchange rate also doesn’t matter; the embassy will use the rate at the time of the purchase.

Permanent residency is for people who want to stay in Mexico indefinitely. You can get it if you have a close family member who is a Mexican citizen or a permanent resident, or if you have lived in Mexico as a temporary resident for four years. You can also get it if you are retired and have a pension or income from outside Mexico.

Investment: How to Find and Make It

Mexico has a lot of investment opportunities for expats. You can invest in different types of assets, such as businesses, commercial real estate, and residential properties. These opportunities vary depending on the location, the price, and the asset type. You need to do your research and find the best option for your goals and budget.

Mauricio says that starting or buying a business in Mexico can be a rewarding and profitable venture, but it also requires careful planning and execution.

If you want to start or buy a business in Mexico, you need to consider the market, the competition, and the regulations. Some of the best places to do business in Mexico are the big cities, like Mexico City, Guadalajara, and Monterrey. These cities have large populations and high demand for goods and services. However, if you want to cater to tourists, you might want to look at the coastal regions, like Puerto Vallarta, Nayarit, and San Miguel de Allende. These cities have a lot of expats and visitors who are looking for entertainment, hospitality, and leisure.

If you want to buy a property in Mexico, you need to consider the location, the condition, and the potential. Some of the best places to buy a property in Mexico are expat-friendly towns, like Puerto Vallarta, Nayarit, and San Miguel de Allende. These towns have a lot of charm, culture, and amenities. They also have a strong real estate market and high rental demand. However, if you want to buy a property in a less crowded and more affordable area, you might want to look at other regions, like Oaxaca, Chiapas, and Yucatan. These regions have a lot of natural beauty, history, and culture. They also have lower prices and less competition.

Taxes: How to Pay and Save Them

Taxes are an important part of living and investing in Mexico. You need to understand how they work and how to pay them. Mexico has a federal tax system, which means that most taxes are paid to the national government. The main taxes that you need to know are:

  • Income tax: This is the tax that you pay on your income from any source, whether it’s from Mexico or abroad. The income tax rate ranges from 1.92% to 35%, depending on your income level and deductions. However, if you are a resident of a country that has a tax treaty with Mexico, you can avoid double taxation and pay income tax only in one country.
  • Value-added tax (VAT): This is the tax that you pay on the goods and services that you buy in Mexico. The VAT rate is 16% for most items, except for some basic goods and services that are exempt or have a lower rate. The VAT is usually included in the price, so you don’t have to pay extra.
  • Property tax: This is the tax that you pay on the property that you own in Mexico. The property tax rate varies by state and municipality, but it’s usually very low, around 0.1% of the property value. The property tax is paid once a year, usually in January or February.
  • Vehicle tax: This is the tax that you pay on the vehicle that you own or use in Mexico. The vehicle tax rate also varies by state and municipality, but it’s usually around $50 USD per year. The vehicle tax is paid once a year, usually in January or February.

 

Mauricio says that paying taxes in Mexico can be a complex and confusing process, especially for foreigners who are not familiar with the system and the language. You need to keep track of your income, expenses, and assets, and file your tax returns on time. He also says that you need to be aware of the tax benefits and incentives that you can take advantage of, such as deductions, exemptions, credits, and deferrals.

Location: How to Choose and Enjoy It

Mexico is a big and diverse country, with 32 states and hundreds of cities and towns. Each place has its own attractions, advantages, and challenges. When you choose your location, you need to consider your preferences, your lifestyle, and your budget.

Some of the most popular places for expats in Mexico are:

  • Puerto Vallarta: A coastal city in the state of Jalisco, known for its beautiful beaches, lively nightlife, and friendly expat community.
  • Nayarit: A state on the Pacific coast, known for its natural beauty, surfing spots, and laid-back vibe.
  • San Miguel de Allende: A colonial town in the state of Guanajuato, known for its artistic scene, cultural events, and charming architecture.
  • Mexico City: The capital and largest city of Mexico, known for its cosmopolitan atmosphere, cultural diversity, and endless entertainment options.
  • Guadalajara: The second-largest city of Mexico, located in the state of Jalisco, is known for its rich history, vibrant culture, and modern amenities.
  • Monterrey: The third-largest city of Mexico, located in the state of Nuevo Leon, is known for its industrial strength, entrepreneurial spirit, and mountainous scenery.

 

These are just some of the many places that you can choose from. You can also explore other regions, like Oaxaca, Chiapas, and Yucatan, which have a lot of culture, history, and nature. Wherever you go, you’ll find something to love and enjoy in Mexico.

Conclusion

Whether you’re seeking a change of scenery, exploring investment opportunities, or starting a new venture in Mexico, understanding residency, investment avenues, and taxes is crucial. This comprehensive guide offers insights into navigating Mexico’s immigration system, capitalizing on investment opportunities, and managing your tax obligations. By staying informed and seeking professional guidance, you can embark on a successful journey in Mexico while enjoying its vibrant culture, natural beauty, and business-friendly environment.

Listen to the Podcast:

Exploring Residency, Investment, and Business Opportunities in Mexico

Join me and Mauricio Peña, a lawyer from Outbound Mexico, in this informative video where we delve into the intricacies of living, investing, and doing business in Mexico. Whether you’re considering temporary residency, seeking investment opportunities, or planning to establish a business, this discussion covers essential topics. We examine various types of visas, including work and investor’s visas, share insights into investing in Mexican assets and real estate, and provide guidance on opening businesses in Mexico. Learn about the nuances of taxation, from global income to local and state taxes.

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Hi, I am Emily Bron.

After living and working in 4 countries (3 continents), experiencing several immigrations, changing several professional fields and being an avid traveler, I created International Lifestyle Consulting to help you to find the best matching place and to relocate abroad for a better quality of life, work, or retirement.

As a professional Baby Boomer and Remote worker, I am relocating again!

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