Selling in Mexico

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We highly recommend hiring a professional to represent your selling in Mexico. Typically, there are three main questions every Seller has when they are ready to sell: How much will it sell for?; How long will it take?; What it is going to cost? Get to know the answers.

The Three Main Costs to Sell a Property in Mexico:

1
Selling Fees
2
Professional Fees
3
Taxes on the Sale of Your Home in Mexico

Selling Fees

A good realty agent provides a marketing service, a conduit between the negotiating parties, and someone who will help to work through the paperwork to bring a property sale to successful completion. The best Real Estate agents in Mexico typically charge between 6% and 8% of the sale price in commission. This is why it is important to hire someone with connections and a vast network. Most likely the Buyer is not next door!

Professional Fees

In Mexico, the role of the Notary Public is paramount in property transactions. A Notario is a legal professional with very important statutory roles. The fees for the Notario are paid for by the buyer.

Taxes on the Sale of Your Home in Mexico

First, it is important to disclose to you, our client that is understood we are not Accountants. We highly suggest meeting with a professional in this field, we are happy to make introductions and arrangements and provide our office to meet. 
Taxation on residential property sales is a complex area of Mexican tax law and every case will be slightly different depending on the circumstances. Also, keep in mind that tax laws are subject to reform and because house purchases tend to be long-term investments, the tax laws which apply today might apply entirely, in-part, or not at all when you come to sell your property years from now.
We recommend that you seek professional advice from a Notary Public, tax accountant, or other professional/legal service firm in Mexico to get a detailed appraisal of your situation.
Note also that if you are not a Mexican national then you might also be liable for substantial Capital Gains taxes, we can help connect you to the right professional to help you. Please see below:

Tax Calculations

Taxes due on the sale of residential property are calculated by the Notary Public, who also withholds these amounts for direct transfer to the Mexican Treasury. The tax law makes each Notary Public fully liable for taxes due, so they will absolutely ensure that the rules have been followed and certify that sellers qualify for any exemptions and deductions they are claiming for tax relief.

Taxes on the Sale of Your Home in Mexico

Mexico applies a capital gains tax on residential property of 25% on the gross sales value of the transaction without any deductions OR between 1.92% and 35% on the value of the gain (purchase costs less allowable exemptions and deductions): the percentage is calculated on a sliding scale in relation to the gain and we recommend you assume 35% as residential property sales with a gain above $250,000 pesos (c.$13,000 US dollars) will be subject to this rate.

A one-time tax allowance exemption is available, although you and the property must meet certain criteria to qualify for the exemption:

  • you must be resident in Mexico* Permanent Residency or Temporary Residency.with a Mexican tax ID (known as a RFC, or Registro Federal de Contribuyentes)
  • the property you’re selling must be your primary residence in Mexico
  • the land subject to the sale must not exceed three times the size of the construction on that land (measured in square meters); and
  • You can only claim this exemption once every three years.

You can deduct the costs of any capital improvements (e.g. building extensions, new flooring, swimming pools, new rooms) while you own the property, as well as some closing costs commonly incurred when purchasing a home.  You need official receipts —in Mexico, these are known as ‘facturas’— for all services and building work to claim these allowances when you sell, so be sure to take advice from your Notary Public and/or accountant on how to account for these—and follow it.

Any capital improvements made using a firm or builders who didn’t issue you with facturas for the work cannot be deducted.  General maintenance and home improvements, like remodeled kitchens or new bathrooms, do not count as capital improvements.

Selling Your Mexican Home as a Non-resident

If you are not a resident in Mexico and/or you don’t have a Mexican tax ID, you cannot claim the one-off allowance exemption explained above, although you can claim qualifying deductions, so long as you have the official receipts (facturas) to prove the expenditures which can be deducted.

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Reneé Davy

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+1.713.456.9861

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Phone

+52.415.152.5220

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Agave | Sotheby’s International Realty Sollano 19 Centro Historico San Miguel de Allende GTO MX 337700

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