Capital Gains Tax!  

In Mexico, when selling property, if there is a profit made the goverment wants a part of the action. This is a big deal. One that can cost you thousands of dollars. This amount can be as high as 30% of the gain. But all hope is not lost. Buyers need to find out all about this tax at the time of buying real estate in Mexico. This is because it is easier to exempt this tax at the time of selling if you get prepared at the time of buying. There are ways of reducing the capital gains tax, and keeping more funds in your pocket. Consult with us or other professionals before listing a property.

There is one and only way to exempt capital gains tax. The property being sold has to be primary residence. In order to prove this, the notario will request the following.

1. In the case of a non-mexican national. Seller needs to have fm2, or fm3 with working permit. If you do not have a working permit, you need to have an RFC (Registro Federal de Contribuyentes), or tax identification number.

2. Utility bills have to be in the name of the seller, exactly as it appears on the passport. The seller will be asked by the notario to provide the six months prior to selling of electricity, phone service, or Mexican bank accounts. They need to have the exact address as well.

3. Only one expemption is allowed per person every five years.

4. Raw land and comercial properties have to pay capital gains tax. There is no way to exempt when selling one of these properties. Also, if you own a small house on a huge lot, only a portion of the property will not pay capital gains tax.

5.If the selling price of your real estate exceeds $500,000.00 usd, in order to exempt capital gains tax, you must have owned the property at least five years.

The requirements to exempt capital gains tax change every year. It is important to keep in touch with your Real Estate agent to find out about these changes. Another great source would be to go straight to the notary's office and request information.

If you decide to sell your property in Puerto Vallarta or Riviera Nayarit, we can get an estimate of how much taxes would have to be paid if any. This is one of our great services, we can help you prepare, and if there is a way to exempt, we will find it for you. Our lawyers can help you save thousands of dollars!