Typically sellers are responsible for capital gains taxes. Mexico currently has created three levels of capital gains taxes: total exemption, partial exemption, and no-exemption. As within any other country, Mexico levies these taxes and also continually changes these tax codes, and always will. It is important that you discuss with your Global Team member your specific property and qualifications in order to understand where these types of taxes may directly affect you. But, in a nutshell and for a general understanding, here is an overview of the current types of capital gains taxes here in Mexico.
No Exemption: Basically, if you do not qualify for either of the other types of capital gains taxes, and you are a foreigner (non Mexican) you must pay 35% of the net gain after the application of deductions that include brokerage fees, a small amount of your purchase fees you paid when you bought the property, capital improvements that are verified with “facturas” (official receipts) or an independent appraisal, and an allowance for inflation.
Total Exemption: If you reside in the property for 5 years or more, have a Permanent or Temporary Visa (formerly FM2 or FM3), working status with an RFC number, an escritura and receipts of electricity (CFE) or telephone bills that have matching addresses, you could qualify for total exemption on a limited amount of gain on the sale of your property. This exemption is intended to be for residents and the requirements for it are meant to prove to the Notario and to Hacienda, Mexico’s taxing authority, that you are indeed a resident of Mexico.
Partial Exemption: Under this classification, only a portion of the gain is taxable under a very complex calculation that must be determined by a Notario since the factors of it change almost daily. The same requirements apply as with the Total Exemption, but the property can be held for a little as 6 months or more. Because of the intricacy of the calculations, it is important to work closely with your Global agent to insure that the process is complete and that you receive the most exemption that you can qualify for.
Understanding what your realtor does is important. At Global we go “the extra mile”for each and every one of our clients. We will do extensive research into comparable properties, the minute aspects of the market in the area and what has / may affect in the near future in order to help price your property so it is both attractive to buyers and advantageous for you. With extensive advertising, both locally and internationally, you can be sure that your property will be marketed professionally and completely. You will receive consistent updates on the progress of your property, from number of online views, to physical tours and offers.
Fred Ayotte is the Managing Broker for Global Real Estate Group. Fred is a fully licensed AMPI Broker Associate meeting all the licensing guidelines from AMPI the Accredited Real Estate Association that governs real estate sales licensing for Mexico, and ensures all realtors working with the company adhere to elevated standards.
As a member of AMPI, our Global Real Estate team works within the guidelines of the association and perform both ethically and legally in all manners. The realtors at Global Real Estate Vallarta pride themselves on being members of AMPI and on being completely professional, understanding the laws and regulations that may affect your transactions in Mexico.
Fred also an active member in good standing on the following boards and services committees for AMPI and other accrediting bodies:
- Vice President of the the AMPI Compostela Real Estate Board
- AMPI MLS Compliance Board of Realtors ( 2013 – Present)
- AMPI MLS Education Committee Board of Realtors (2014 – Present)
- AMPI Honour and Justice Committee Board of Realtors (2014 – Present)
- Member of the Multiple Listing Service Committee
- NAR, International Member (U.S. National Association of Realtors 2011 – Present)