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 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.
Know Your Home's Value
18 years and counting. Your partner in buying or selling. Professional, experienced, and reliable!