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Capital Gains Tax In Mexico

Capital Gains on Property Sales

Capital Gains Taxes in are determined from the profit received from selling a property or home in Mexico.   When you have sold a property you may have to pay the Mexican government Capital Gains Tax.  There are two options for determining Capital Gains Tax on a property sale:

Gross Sales Amount:  Where 25% of the “gross sales amount” is paid without deductions.

Net Value:  Where 35% of the “net value” is paid which includes a number of deductions. Net value refers to the difference between the original recorded property value – at the time you bought it – and the value at sale and includes several considerations as deductions including Property Improvements (must have original Facturas), Real Estate Commissions and Other allowable expenses.

It is important to note that property values are officially recorded in Pesos even though you will transact in US Dollars.  This makes Capital Gains Tax seem complicated by recognizing exchange rates and calculating taxes based on the gain in Pesos.

We have a tax accountant on retainer to assist our clients in understanding their capital gains tax exposure in Mexico. 

Primary Residence Tax Exemption

There is a provision for foreign residents of Mexico to be excluded from capital gains tax for their primary residence.  The requirements to establish residence in Mexico can include:

  • Status of Residente Permanente
  • Longevity owning and residing at your property – including proof by having documents in your name (ie CFE Bills, Telmex Bills)
  • Mexican Bank Accounts
  • Mexican Drivers License and Mexican Registered Vehicles