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 28% 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 is one and only way to exempt capital gains tax. The property being sold, has to be the place where the owner lived in for the last six months prior to selling. The best way to get prepared for this, is to request an FM-3 right after buying the real estate. Make sure the electricity, phone service, or bank accounts have the exact address of your new property in Mexico. This is because at the time of selling, the Notario is going to ask for these as proof that you were living there for the past six months. Some notarios are pickier than others.

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.

If you are a foreigner, it gets harder to exempt this tax. So here it goes. If you are a foreigner and you don't have an FM-3, there is no way you can exempt. There are only a couple of Notaries that are allowing exemption to foreigners with an FM-3, but there are some requirements on top of that. If you have an FM-3, you need to have a working permit. If you do not have a working permit, you need to have an RFC (Registro Federal de Contribuyentes), or tax identification number. Your Real Estate Agent should be able to tell you all about how to request this number. If you have an FM-2, there should be no problem in exempting capital gains tax.

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 have the necessary experience to give great advice, advice that can save you thousands of dollars.