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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15741
Experience:  15years with H & R Block. Divisional leader, Instructor
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We have a timeshare in Mexico, and if we sell it, do we pay

Customer Question

Hi, we have a timeshare in Mexico, and if we sell it, do we pay a tax on capital gains/loss in Mexico or file it in the US pay tax if due?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: We were told we had to wire the 20% tax to Mexico. I am very leary of sending money to Mexico. The amount was 20% on buyers price and any previous tax I had sent. My mistake.
JA: Is there anything else the Accountant should be aware of?
Customer: We have not received any money for the sale. I feel it is a scam.
Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 9 months ago.

If the property is in Mexico then Mexico has a right to tax on the sale. This is true even if the seller is not a resident of Mexico.

If you are a US citizen or resident alien, you are taxed on worldwide income but the US allows for a tax credit (form 1116) on the amount that is taxable in the US and another country.

To simplify, they both can tax but the US will allow you a credit for the tax you pay Mexico.

Customer: replied 9 months ago.
The amount they say I have to pay, does not allow for any previous tax I paid to Mexico and does not allow to deduct any of the expenses I have paid such as original cost and fees.
Expert:  Robin D. replied 9 months ago.

Let me see if I can get some specific info about Mexico and potential timeshare problems

Expert:  Robin D. replied 9 months ago.

Are you dealing with the same company you purchased from?

Expert:  Robin D. replied 9 months ago.

Any tax in Mexico would be withheld. Do not send any money.