Tax exemptions and Deductions in the sale of your Casa in Mexico.

Tax Exemptions and Deductions in the Sale of your Casa in Mexico – Baja Legal Advice

Selling your Casa in Mexico

If you own a home here and you plan to sell it and you are not a resident then you will NOT be able to benefit from tax exemptions pursuant to article 93, fraction XIX, subparagraph (a) of the Act of the INCOME TAX LAW. Thus, public notaries will follow the provisions of article 26, section I of the Fiscal Code, and shall calculate and pay the corresponding tax in the terms of the provisions of article 160 of the Income Tax Law.

So after reading this, wouldn’t it be a good idea to upgrade your tourist card to Temporary or Permanent Resident? I mean, what is there to lose, only 35% of the profit!

The notary can also apply the following deductions.
Article 93 (Income Tax Law).Exemptions to Capital Gains:
XIX. First, you need to have the right Agent of real estate. The income resulting from the sale of:

  1. a) The taxpayer’s house, provided that the amount obtained does not exceed seven hundred thousand units of investment, known as UDIS (**) and the transfer of the property is formalized before a notary public. By surplus it shall be understood as the gain and the tax will be calculated based under the terms of Chapter IV of this Title, considering deductions are the proportion resulting from dividing the surplus between the amounts of the deduction obtained. The calculation and tax withholding shall be made by the notary public.

The exemption provided for in this subsection shall be applicable provided that during the five years immediately prior to the date of sale of the property the taxpayer has not sold another house for which he obtained the same tax exemption.

The Notary Public shall consult the Tax Administration Service in accordance with the rules, if the taxpayer had previously sold another house during the five years prior to the date of the sale in question, for which he obtained the exemption provided for in this paragraph and shall notify the agency of such sale, indicating the amount of the exemption and, in its case, the amount of tax withheld.

UDI´s worth January 2016: 1.63 pesos
700,000 Udis:  1´141,000 pesos.Exchange Rate 17X1: $67,117 US dollars.

This means that if you sell a house and the agreed price is $300,000 dollars, you would be able to apply a deduction of $67,117 dollars, plus the following:

Deductions:

  1. An updated cost of acquisition (purchase).
  1. Investments made in improvements (not including repairs or maintenance nor taxes and duties paid).
  1. Legal and notary fees, Income taxes, appraisals.
  1. Commissions paid to an established realtor at the time of purchase and when the property sold.
  1. Fiscal losses, if any, for the previous three fiscal years.

You may not be able to enjoy any of the above-described exemptions and deductions if you do not have the proper legal status in Mexico.

If you require further clarification or need to discuss your particular situation, call me.

LEARN MORE ABOUT SELL YOUR HOME IN ROSARITO BEACH


Rafael Solorzano - Baja Legal Advice

Rafael Solorzano
Attorney at Law / Licensed Exclusively in Mexico
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