Discover the Tax Advantages of Owning a Home in Los Cabos

Are you a U.S. or Canadian citizen considering buying a property in Los Cabos? Your dream home by the sea could also offer significant tax benefits. Whether you plan to live in your new home full-time, use it as a vacation getaway, or rent it out, owning property in Mexico can provide compelling financial advantages.

Tax Benefits for U.S. Home Buyers:

✔ Mortgage Interest Deduction Deduct interest on your Mexico mortgage—just like on a U.S. home—if it’s your primary or secondary residence.

✔ Foreign Tax Credit If you earn rental income and pay taxes on it in Mexico, you can claim a credit on your U.S. tax return to avoid double taxation.

✔ Rental Expense DeductionsExpenses like property management fees, repairs, insurance, and platform fees (Airbnb, Booking.com)

✔ Depreciation Deduct 1/30th of your property’s value (excluding land) each year for foreign rental properties under IRS rules.

✔ Capital Gains Exclusion

 If your property has been your primary residence for at least 2 of the last 5 years, you may be able to exclude up to $250,000 ($500,000 if married) in capital gains.

Tax Benefits for Canadian Home Buyers:

✔ Foreign Tax Credit Canada allows a tax credit for income taxes paid in Mexico, avoiding double taxation on rental income.

✔ Capital Gains Exemption If your home in Los Cabos is your principal residence, profits from a future sale may be tax-free.

✔ Rental Deductions Mortgage interest, maintenance, insurance, property management fees, and other rental-related costs may be deducted.

✔ Depreciation (CCA)

 You can depreciate the property, but overuse may impact your eligibility for capital gains exemptions.

Owning a property in Los Cabos, Mexico may not only enhance your lifestyle, but it could also benefit you financially. Consult with a qualified tax advisor for personalized advice.

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Disclaimer:

The information provided in this blog is for general informational purposes only and does not constitute legal, tax, or financial advice. Tax laws and regulations may vary and are subject to change. We strongly recommend consulting a qualified tax professional or financial advisor familiar with the tax laws of your home country and Mexico before making any real estate or investment decisions. CK WARE does not accept liability for any actions taken based on the information provided in this blog.