# Mexico tax on home sale



## eastwind (Jun 18, 2016)

If I buy a property to live in here in Mexico, and later sell it for a gain, how will that gain be taxed by Mexico? If the property is held by a bank trust does that make a difference?


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## lat19n (Aug 19, 2017)

eastwind said:


> If I buy a property to live in here in Mexico, and later sell it for a gain, how will that gain be taxed by Mexico? If the property is held by a bank trust does that make a difference?


I asked our realtor the same question in June 2016. I received the following response.

"The laws have changed in the past years. As of the laws today, you are able to apply for a ISR tax exemption when you can prove with documents (6 months of electricity bills or phone bills or bank account statements) that you have lived in the property and you have not applied for the exemption in the past 3 years. And you need to be a permanent resident. 

This exemption is limited to the first $3,900,000 pesos. Example: If you sell your property in $8,000,000 and apply for the exemption your tax calculation would be based on $4,100,000."

I have no idea regarding bank trusts.


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## citlali (Mar 4, 2013)

ALso if you own the property with your spouse, she owns 50 and you own 50 and each of you can apply for the exemption.


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## eastwind (Jun 18, 2016)

Thanks, is the tax applied to the gain or the whole sale value (less the exemption in either case)?
Anyone have an idea what the tax rate is?


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## citlali (Mar 4, 2013)

From what the notario told me the exemption is taken away from the sales price . From qhat I got they calculate the difference of the net sale price minus the cost according to the deed( if you bought years ago the real price of the house was not recorded on the deed) is what you pay tax on.. I was told it is something like 30% and when I complained, and asked how it was calculated the notario lost me.. so I will have to ask again when I sell.
From what the notario said there are 2 ways to calculate what you owe but I lost interest and figured that I would find out when we sold as that the rules may be different by then so I dropped it.. sorry.
The notarios will tell you free of charge so ask one if you want to know about a current situation.


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## eastwind (Jun 18, 2016)

thanks - just needed some idea to think about when wondering whether to buy or rent if I decide to stay here longer. What it sounds like you're saying is it's 30% of the gain over 3,900,000. For modest properties you'll never hit that. For high-priced condos, if you hold too many years you might eventually.

It sounds sort of comparable to the US, where gains over $250,000 are taxed at your income tax rate.


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## TundraGreen (Jul 15, 2010)

eastwind said:


> thanks - just needed some idea to think about when wondering whether to buy or rent if I decide to stay here longer. What it sounds like you're saying is it's 30% of the gain over 3,900,000. For modest properties you'll never hit that. For high-priced condos, if you hold too many years you might eventually.
> 
> It sounds sort of comparable to the US, where gains over $250,000 are taxed at your income tax rate.


In the US, if you have lived in the house for the two of the previous five years, you are eligible for the $250,000 exclusion mentioned above. For couples, each get the exclusion, so the first $500,000 of capital gain on a sale is tax-free. The capital gains tax rate is generally much lower than the earned income tax rate.

Caveat: I am neither an attorney nor a tax expert.


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## surabi (Jan 1, 2017)

If you have a Mexican tax # (RFC #) you can ask for facturas (official receipts vs counter receipts) in your name for purchases and improvements you make for the home, which can also be used as deductions on the capital gains if you need a further reduction. Local Mexican workers will not issue these (they are not even reporting their income) but you can ask for them at building supply stores for materials purchased, etc.


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## lat19n (Aug 19, 2017)

surabi said:


> If you have a Mexican tax # (RFC #) you can ask for facturas (official receipts vs counter receipts) in your name for purchases and improvements you make for the home, which can also be used as deductions on the capital gains if you need a further reduction. Local Mexican workers will not issue these (they are not even reporting their income) but you can ask for them at building supply stores for materials purchased, etc.


The only time we visited SAT was to confirm that we did not need to visit SAT.

We have never been issued RFC's - but it seems that a lot of people have fabricated them for us.

The ONLY place we frequent where it even comes up is a rather large electrical supply store. I have never thought about it before - but I wonder if asking for a factura would affect the cost ?


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## TundraGreen (Jul 15, 2010)

lat19n said:


> The only time we visited SAT was to confirm that we did not need to visit SAT.
> 
> We have never been issued RFC's - but it seems that a lot of people have fabricated them for us.
> 
> The ONLY place we frequent where it even comes up is a rather large electrical supply store. I have never thought about it before - but I wonder if asking for a factura would affect the cost ?


It doesn't affect the cost in "orthodox commercial" establishments, like Home Depot, Soriana, etc. It can definitely affect the cost in small "mom and pop" family run businesses. I had some tables and chairs made. When I asked for a factura, they said the cost would go up by the 15% +/- of the IVA tax.


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## surabi (Jan 1, 2017)

lat19n said:


> The only time we visited SAT was to confirm that we did not need to visit SAT.
> 
> We have never been issued RFC's - but it seems that a lot of people have fabricated them for us.
> 
> The ONLY place we frequent where it even comes up is a rather large electrical supply store. I have never thought about it before - but I wonder if asking for a factura would affect the cost ?


Those fabricated RFC#s are generic and cannot be used for deductions. The RFC has to be in your name with your official RFC# from SAT to be eligible.


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## citlali (Mar 4, 2013)

Yes it affects the cost in pa an ma places.. in Chiapas I was on a project where I had to have facturas for everything ..one item was 20 pesos 650 with factura because the guy had to run the paperwork through someone else ´s and that other person charged a fee...


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