Who taxes the sale of my Mexican house first?
The country the property sits in holds the first claim on a gain from it, and the country you live in taxes the same gain afterwards with relief for the first charge. On this corridor the complication is usually not the order but the holding structure: property held through a trust arrangement has to be characterised before anyone can say what was sold, and by whom, for the other country purposes. Do the characterisation before the sale if you can, because it decides both the computation and the relief claim that follows it.
Is my Mexican beach property held in a trust taxed in the US?
A US person position on that property depends on how the trust arrangement is characterised, and that is the piece of work people skip. The arrangement can be read as a holding mechanism for property you own, or as something with a life of its own, and the two readings give different answers about who is taxed, on what, and in which year. Characterisation also decides whether anything has to be reported in years when nothing happens. Settle it once, in writing, and both the annual position and an eventual sale follow from it.
If I retire to Mexico, which country taxes my pension first?
Income of that kind generally carries its first charge in the country it arises in, and then comes into the return of the country you live in with relief for what was taken. So retiring across the border changes which country holds the residual claim, not which one goes first. The residual is real cash and falls due on its own country timetable, which is why instalments come up early in the conversation. Your residence position needs to be established on dates rather than assumed from where you spend most of the year.
Does my Mexican factory pay tax in Mexico before the US?
Profit is claimed first by the country where the activity that earns it is carried on, so a manufacturing operation on one side of the border is normally taxed there before anything reaches the other country return. Two questions decide how much. Whether the activity amounts to a taxable presence in that country, which can arise in either direction on this corridor, and what the related parties charge each other for goods and services. Those answers set each country share, and both need documenting at the time rather than reconstructing later.
I commute across the border for work, which country taxes my pay?
The first claim on employment income generally follows where the duties are performed, not where the employer or the payroll sits. For a weekly commuter that means the pay is split by working days between the two countries, each country taxing its share first, with the country of residence bringing the whole amount into its return and relieving the other tax. The record that supports this is a day count kept as you go. Reconstructing a year of crossings from memory is the hard part of these engagements.
Does Mexican withholding on my rent settle my US tax?
Not for a US person. Tax taken at source in the country where the property sits satisfies that country first claim, wholly or in part, but the same rent still enters the other country return, where it is computed on that country own measure of profit and relieved by the tax already paid. Because deduction at source is usually applied to the rent rather than to the profit, the amount taken and the tax properly due can differ, and that difference has to be settled where it arose rather than through the relief claim.
Is double taxation illegal?
It is legal. Two countries can each have a valid claim on the same income — one because the income arose there, the other because you live there — and nothing prohibits both from exercising it. What exists instead is relief: tax treaties allocate the claim, and domestic law gives a credit for foreign tax paid. The relief is not automatic, though. It is claimed on a return, and unclaimed relief is simply lost. See how double taxation is relieved.
How does the treaty tie-breaker work when both countries say I am resident?
As a sequence, stopping at the first test that gives an answer: where you have a permanent home available; if in both or neither, where your centre of vital interests is; then habitual abode; then nationality; and if all of those tie, the two tax authorities decide by agreement. It is evidential rather than elective — you do not choose your treaty residence, you demonstrate it, which makes the record of homes, family and time the substance of the claim. See tie-breaking dual residency.
