# Capital Gains in Mexico



## gringotim (Jan 5, 2011)

Some friends are thinking of selling their condo in Puerto Vallarta, they have only had their temp visas for 2 years , has anyone in the same situation sold a property in Mexico recently, if so, did you still have to pay the full 35% capital gains on the difference between purchase and selling price, or is there a reduction for having temp visas even if only for two years? We have heard you must have temp or permanent for a minimum 5 years before you get any reduction in capital gains. Any info is appreciated, Gracias, And Yes, I know they could ask a notario etc, but that costs money, which they don't currently have alot of, hence the selling of the condo.


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## MangoTango (Feb 8, 2020)

I live no where near Puerto Vallarta, but when we purchased our house (years ago) we interviewed several notaries and received a free consultation. Even now - at the point of contemplating selling our house - the notary has given us a ton of free advice.


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## citlali (Mar 4, 2013)

The notario we used in Chiapas and the one in Ajijic gave us free consultation as well


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## eastwind (Jun 18, 2016)

Before buying my condo I tried to get answers on whether I could qualify for the cap gains reduction at all and I got a variety of answers. Some people said that you had to be a citizen to get it. It's going to depend on the notario who handles the sale, they are going to decide what deductions are allowed and you can't argue with them, but you can find another notario who will have a different understanding or interpretation of the law. Since the buyer chooses the notario, all you can do as a seller is stipulate that the notario they pick must allow the deduction. 

That happened in my purchase transaction, the seller had jointly owned the condo with his Mom, and both had lived in it for the minimum number of years (not at the same time), and the seller wanted both of them to get the deduction (so it was applied twice to their price, wiping out a ton of potential taxes). The seller stipulated that I had to choose a notario that would grant this double-deduction. So kind of the seller picked the notario in spite of everything. 

So I agree with the others, shop for a notario who will do it the way you want and make the buyer use that notario or another one that also gives the deduction. If in shopping around you can't find any notarios that will give the discount, then you've got your answer about whether you can get it, unfortunately.


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## MangoTango (Feb 8, 2020)

One other point I can make is, we keep using the term notary. But our notary's office is huge. It has valet parking for perhaps 50+ cars. I'm sure it is the notary's signature on all the official paperwork but there is no way he alone can prepare that paperwork. Rather, we meet with a lawyer - who is nice, intelligent and speaks excellent English. Now the notary may have standing orders for all of the people under his employ - but when we meet with the lawyer he never leaves the room nor uses the phone. Perhaps the laws of the state are very straight forward and followed to the letter. But, for example, we have never kept facturas for the expenses related to our house. When we mentioned that to the lawyer he said - don't worry about that - just give me an itemized list of your major expenses. I'm not clear how all that plays out if the buyer chooses a different notary - perhaps it is all a 'old boy's club'.

BUT - we are now citizens.

Edit : and maybe I should add, when we bought we used a big time realtor who represented both us and the seller. He spent a good part of his work week at the notary's office. I _know_ he helped get some things accomplished.


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## AlanMexicali (Jun 1, 2011)

MangoTango said:


> One other point I can make is, we keep using the term notary. But our notary's office is huge. It has valet parking for perhaps 50+ cars. I'm sure it is the notary's signature on all the official paperwork but there is no way he alone can prepare that paperwork. Rather, we meet with a lawyer - who is nice, intelligent and speaks excellent English. Now the notary may have standing orders for all of the people under his employ - but when we meet with the lawyer he never leaves the room nor uses the phone. Perhaps the laws of the state are very straight forward and followed to the letter. But, for example, we have never kept facturas for the expenses related to our house. When we mentioned that to the lawyer he said - don't worry about that - just give me an itemized list of your major expenses. I'm not clear how all that plays out if the buyer chooses a different notary - perhaps it is all a 'old boy's club'.
> 
> BUT - we are now citizens.
> 
> Edit : and maybe I should add, when we bought we used a big time realtor who represented both us and the seller. He spent a good part of his work week at the notary's office. I _know_ he helped get some things accomplished.


￼








Guía y pasos para exentar o deducir el ISR por venta de casa 2022


Deduce o exenta el % de isr por venta de casa. Entra en este articulo y descubre los requisitos, documentos y cálculos para deducir el ISR



www.lamudi.com.mx





Google Translation:

"Real Estate Training Guide to sell a house.

Guide and steps to exempt or deduct income tax for house sale 2021
By Lamudi
May 6, 2021

It is established in the Constitution, that it is the obligation of Mexicans to contribute proportionally and equitably to the country's public expenditures, this is done through the payment of taxes.

Taxes are a contribution (payment) in money, of a mandatory nature, with which citizens cooperate to strengthen the country's economy.

All the taxes that are paid serve to provide resources to the government so that it can achieve the objectives established in its planning.

There are many types of taxes such as federal, state and municipal. Each of them is governed under different circumstances but all are invested in the welfare of society.

Today we will tell you everything you need to know about Income Tax (ISR) and the guide of steps you must follow to exempt or deduct it for the sale of a house. But before we start, let's start with the basics.

What is ISR (Income Tax)?

Income Tax (ISR) is a federal tax. It is a direct tax burden that is applied to the income obtained that increases the patrimony of a taxpayer.

Who pays the ISR?

According to the Income Tax Law (LISR), payment is required to people who:

Reside in Mexico Reside abroad with an establishment in the country Residents abroad who receive income from sources of wealth in Mexico

If I sell my house, what taxes do I have to pay?

You should know that when you want to sell a house, you will have to pay certain taxes, such as:

Capital gains or state tax (on the gain from the sale of the property) ISR (Income Tax)

How much do you pay for capital gains tax on home sales?

In addition to the ISR that is paid to the federation, you must pay a 5% tax on the profit from the sale of the property, which will be withheld by a notary public, which will later be paid to the state through a declaration.

How much ISR is paid for the sale of a house in 2021?

Whoever sells must pay the% ISR for the sale of the house for the profit received from the sale, it will not always be the same percentage and can reach up to 35%.

If the house you sell exceeds 4 million pesos, you will have to pay taxes.

For instance:
If you want to sell it for 6 million, the first 4 million are tax-free, but the other 2 do generate% ISR for the sale of the house

￼How much ISR is paid for the sale of land?

For the sale of land, the same% ISR is applied for house sale, which varies and can be up to 35% on the value of your property.

The sale of land is never exempt from ISR. However, the calculation could show a loss.

￼How to exempt income tax on the sale of a house?

As a seller, you have the option of being able to exempt the% ISR for the sale of the house. The only requirements that you must meet are:

Be a natural person That the property you sell is your primary residence That the income from the sale is not greater than 700,000 investment units (Udis), which have a value of $ 6,793241, equivalent to 4 million pesos.

Requirements to exempt or deduct ISR for house sale in 2021

Documents that you must present:

Tax receipts for electricity payments Tax receipts for telephone payments Bank, business houses or non-bank credit card account statements Voting credential that has the address of the house being sold

Note: The documents presented may be in the name of the taxpayer, his spouse, his ascendants or descendants in a straight line. You can only exempt the% ISR for house sale once every 3 years

In the event that the% ISR for house sale cannot be exempted because it exceeds the amount established by law or because it is not the taxpayer's house, some concepts that a notary will take into account to calculate the corresponding tax may be deducted.

Documents to be delivered:

Proven cost of acquisition (with its proper deed) Construction invoices in the property, either due to remodeling and / or expansion, and must bring the notice of completion of work or an appraisal (only applicable to 80%) Notary expenses, verifiable taxes and duties Commissions and mediations paid

￼What is the alienation of a home?

Alienation is the sale, donation or transfer of the right or domain that one has over an asset or property. There are two types:

For consideration:

Disposal that is made for profit (sale of real estate)

Free of charge:

Disposals that are not made in order to generate a profit. This is the case of inheritances and donations

Calculation of ISR for the sale of real estate 2021

According to article 152 of the Income Tax Law (LISR) "Calculation of the annual tax", individuals will calculate the tax for the year:

Adding to the income obtained (after making the authorized deductions), the taxable income determined. The result will be reduced, where appropriate, the deductions.

￼

Example of how ISR is calculated for the sale of real estate

If the gain on the disposal was $ 1,200,000, and the person selling the property owned it for 12 years, the gain of $ 1,200,000 will be divided between the 12 years of holding, resulting in a gain of $ 100,000 for each year of holding.

According to article 152 of the LISR, the lower limit ($ 58,922.17) will be subtracted from the $ 100,000 and results in $ 41,077.83.

This amount will be multiplied by the percentage to be applied on the excess of the lower limit (10.88%) which results in $ 4,469.27.

Finally, to this amount will be added the fixed fee of $ 3,460.01 (also established in the LISR), resulting in $ 7,929.28.

In simple terms, it means that for each year that the transferor had the asset, it would cause an income tax of $ 7,929.28.

A notary or notary must make this calculation of ISR for the sale of real estate, therefore, if the transferor had the property for 12 years, the annual income tax of $ 7,929.28 must be multiplied by the 12 years of holding, resulting in $ 95,151.36 that must retain the notary in the provisional payment."


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## RVGRINGO (May 16, 2007)

eastwind said:


> Before buying my condo I tried to get answers on whether I could qualify for the cap gains reduction at all and I got a variety of answers. Some people said that you had to be a citizen to get it. It's going to depend on the notario who handles the sale, they are going to decide what deductions are allowed and you can't argue with them, but you can find another notario who will have a different understanding or interpretation of the law. Since the buyer chooses the notario, all you can do as a seller is stipulate that the notario they pick must allow the deduction.
> 
> That happened in my purchase transaction, the seller had jointly owned the condo with his Mom, and both had lived in it for the minimum number of years (not at the same time), and the seller wanted both of them to get the deduction (so it was applied twice to their price, wiping out a ton of potential taxes). The seller stipulated that I had to choose a notario that would grant this double-deduction. So kind of the seller picked the notario in spite of everything.
> 
> So I agree with the others, shop for a notario who will do it the way you want and make the buyer use that notario or another one that also gives the deduction. If in shopping around you can't find any notarios that will give the discount, then you've got your answer about whether you can get it, unfortunately.


The buyer always has the right to chose the Notaria......Always!


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## MangoTango (Feb 8, 2020)

RVGRINGO said:


> The buyer always has the right to chose the Notaria......Always!


But unless you are a big time developer or something - who does a ton of transactions with a particular notary who then reduces HIS fees - I don't see what difference it makes.

In our case the sellers were extranjeros and we were extranjeros. They wanted out. We wanted in. The notary we went with was recommended by the rather professional realtor (interestingly another extranjero). 

I did not get enough sleep last night to truly appreciate AlanMexacali's post. Yes this is Mexico and there are laws (and taxes). But with savvy (which I am not going to touch on here) agreements/concessions can be reached. 

Another aspect is - I do think we are looked upon favorably by the notary (and his employees) because of our relationships (and because we are nice people ). The lawyer can sit at his desk and pull up our deed, wills etc on his terminal. View the entire transactions. He scans them and instantly makes decisions/recommendations. And some of our recent meetings have been lengthy. I felt bad and offered to pay him - his response - no worries, my time is free to you.

Last point - kind of unrelated I guess - but we had a lot of idle time during the closing and the lawyer who was handling it offered - ya know, a lot of the taxes you are paying today are in dispute. Apparently a certain number of signatures are required to make a law a law. Well at the time of our closing we paid hundreds of thousands of pesos which we really should not have been required to. The notary's lawyer slipped me the contact info for another (external) lawyer who, for a percentage, recouped all those taxes. 

At the time we purchased our house the US/MXN exchange rate was around 13.60.


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## eastwind (Jun 18, 2016)

RVGRINGO said:


> The buyer always has the right to chose the Notaria......Always!


And everything is always negotiable if both parties are willing!


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## MangoTango (Feb 8, 2020)

eastwind said:


> And everything is always negotiable if both parties are willing!


Recently there was a solicitation (in Morelos) where someone was seeking a van similar to yours. Interested in unloading it ?


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## eastwind (Jun 18, 2016)

Depends on the price of course! But since I still need it for two more trips to Laredo, I'd need to make more than it's worth on it so I could then go buy another and have something for the hassle. There's a steady stream of them coming off of taxi service as the taxi companies retire them after 6 years. If they're looking for one 4 years old they won't find it, if they're looking for one 8 years old it will be hard to find. But if they will take one six years old they can find at least one each month.

If they are not looking specifically for a chevy and can drive a stick, there are lots and lots available (all six years old).

If you find one less than six years old, chances are it's a problem unit or an accident repair and the taxi company is ditching it early and you don't want it.


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## rckrckr (Jan 12, 2010)

Yes, it's the buyer's _right_ to choose the notario. But the seller can stipulate a particular notario as a condition of the sale. Been there, done that.


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## citlali (Mar 4, 2013)

and until the deposit is down the seller can back out.for whatever reason.


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