Mexico - Real Estate Taxes
The transfer of real estate in Mexico is encumbered under sundry taxes and duties. Some of these taxes are federal and others are local (either State or Municipal).
For the person transferring/selling the property, Federal Income Tax is applicable, arising from the profit on the operation (difference between the cost of acquisition and the selling price). This tax is calculated by updating the acquisition cost (with official inflation indexes) of the property, and can amount to up to 35% of the profit. Calculation and provisional payment of the tax is made by the Public Notary.
Certain acquisitions of properties are exempt from this tax, such as those arising under an inheritance, a donation among ascendants and descendants in a straight line (grandparents, parents, grandchildren) and between spouses; or that relating to a property which has been inhabited for the last two years by the person transferring same.
Another important tax is the Property Acquisition or transfer of dominion tax, which is of a local nature (State or Municipal) and is established under the different laws of the States of Mexico. This tax can vary from 2% to 4% of the commercial value or price of the property. The Public Notary is also responsible for withholding and paying this tax.
In addition to these taxes, dues are payable for recording the operation in the Public Property Register of the property's location. These dues are established under local laws and can consist of a fixed amount, or a percentage of the value of a property (usually between 0.5%-1.5%).
In general, the cost of operations related to the sale-purchase of a property, amount to 4%-8% of the value of the property. This includes taxes, dues, expenses and notarial fees. The variation depends on the State where it is located and some other circumstances.