Capital gains on the sale of property in Mexico
As some of you are aware, when a homeowner sells its primary residence in Mexico, considered that the seller has a temporary or permanent visa and has not sold a home within the past 3 years, the seller is able to exempt, for capital gains purposes, up to 700,000 UDIS. Just in case you are wondering what is a UDI, it is a factor used for loans and mortgages, its value fluctuates based on the rate of inflation and is published during business days by the Federal Journal (Periodico Oficial de la Federacion).
Qualify for a tax exemption on your capital gains and save up to $235,609 dollars.
The Income Tax Law (ISR) allows the resident homeowner a savings of up to 700,000 (per homeowner), thus the following numbers are for May 07, 2021. Exchange Rate: $20.1838 Savings: 700,000 Udis. Value of the Udi: 6.793528 pesos. Multiply 700,000 udis by 6.793528 results in $4,755,496 pesos $4,755,496 pesos divided by $20.1838 pesos results in: $235,609 dollars.
The exchange rate on March 17, 2021, was $21.15, so the savings was $222,782 USD.
As of May 07, 2021, the savings is $235,609 USD.
This tax exemption is limited to homeowners thus it does not apply to vacant lots nor to corporations.
Before you buy or sell a condominium or a home in Mexico, make sure to invest in the right advice and not forfeit a sizable chunk of the gain for listening to unreliable sources.
No, my services are not cheap, and yes, you may save on legal fees by taking the lowest quote possible to transfer your property, but this may cost you tens of thousands of dollars for not getting the right legal and tax advice beforehand. Retain the services to prepare the right strategy for you! About the Author:
Rafael Solórzano, of the Law Offices of Rafael Solórzano, is a Tijuana-based Real Estate lawyer that serves the ex-pat community throughout the Baja California Peninsula with a practice extending back to 1988. Federal Attorney License # 1859060.