Capital Gains and Closing Costs for Sellers of Property in Mexico.

Part I

Capital Gains Tax Overview for Selling your home in Mexico

One of the habits of highly effective people is to begin with the ending in mind. As you are buying an investment property Riviera Maya, think first of your exit strategy, for the time when you sell your Mexico vacation property.

As a brief synopsis, the tax laws change frequently in Mexico and the capital gains tax situation does also, especially as Mexico is catching up to the rest of the world.

Mexico government applies ISR, “impuestos sobre rentas”, capital gains taxes, differently when selling a primary residence in Mexico and selling a vacation home in Mexico.

Mexico and Canada and United States have a tax treaty and recognize taxes paid in each others’ countries so you are not double taxed.

In very basic format, a residence that is deemed a primary residence can be sold exempt of ISR, (capital gains taxes), if certain conditions apply. This is advice can be further clarified by a public notario/lawyer to make your selling process smooth and understandable. We at Living Riviera Maya Real Estate Services will make sure you get this consultation.

If selling a home that is not your permanent residence, there are other tax applications for selling a second home in Mexico. When selling Playa del Carmen vacation real estate, capital gains is tax 30%. It is calculated by the difference between the price on the current title of the property and new sale price that will be declared on the new title.

There are some ways to mitigate this, however It is not the purpose of this website to give detailed tax advice. As part of listing our service I will arrange for consultations, in which you can discuss various tax options with a couple of good lawyers/Public Notarios.

Ultimately when selling a property in Mexico, it is the joint responsibility of the owner and Public Notario/lawyer to pay capital gains tax to the Mexican government.

Public Notarios are the ultimate authority on ISR (capital gains taxes) and transfer of title when you list and sell your home in Mexico.

Part II

Seller Closing Costs When Selling a Property in Mexico A Public Notario, who has the ultimate authority of land title transfers in Mexico and all things related this, will give you a proposal a budget for what it will cost you to sell you home in Mexico.

Over and above the ISR (capital gains taxes) previously discussed, there are several documents a seller has to provide for a property to be ready to transfer to a new owner. These are to ensure from the state and municipality and Title Registry that there are no debts and liens on the property.

These permits and costs are the responsibility of the current titleholder not the buyer. Below is a brief synopsis of expenses that a seller covers when selling a home in Mexico.

The owners' expenses for selling a house or condo in Mexico begins with knowing what value is being declared on sales contract. We can see the costs of various forms a seller must provide before a property can be sold and clear title transferred to new owners, when do a sample of seller’s closings expenses on a property with declared value of:

2,900,000 pesos (245,000 usd)

  • 200 mxn (Mol)** =17 usd
  • 210 mxn ( Mol)=18 usd
  • *6000 mxn (Mol) = 500 usd

*(=equal one year property taxes, so this varies with every property)

  • 800 mxn ( Mol)= 70 usd
  • 80 mxn ( Mol)= 5 usd
  • 300 mxn ( Mol) = 25 usd
  • =400-1200 usd (Mol)

Closing costs for seller on property $245,000 usd is approximately 1,835.00 usd including lawyer fees.

Your notario will give a budget for exact closing costs in advance so there are no surprises. We will make sure that you received a consultation for this.

*Permit costs vary depending on Municipality in which property is located and which notario is used to close.

**( Mol = more or less)