The buyer pays an acquisition tax (ISAI). Its amount varies from 1 to 4% depending on the region. For example, in Cancun it is 3% of the property value and/or assessed value.
Property tax in Mexico (predial)
Every year the owner pays a property tax (predial). In Mexico, it is small and not fixed. It is calculated based on the cadastral value and condition of the property. And the calculation formula depends on the municipality in which the property is located.
An example of two real properties in the state of Quintana Roo, the municipality of Benito Juarez, the city of Cancun. For a property with a market value of $700 thousand, the tax is $576. And a property worth $110 thousand is taxed at $80. And even real estate with a similar value can have different tax amounts.
Therefore, when buying, it is worth asking in advance what the predial is in a particular case. The seller will be able to name the exact amount for the last year.
Capital Gains Tax
When selling, the owner pays capital gains tax. There are many nuances to calculating the tax. Therefore, it is best to contact a professional, such as a realtor, who will advise which method is more profitable to use when paying the tax in a particular case, and will help to legally minimize the final amount.
In Mexico, the tax can be calculated in two ways:
- 25% of the transaction value;
- up to 35% of the difference between the cost of the property when buying and the transaction value. The taxable amount can be reduced by the amount of expenses for repairs and reconstruction.
Residents and citizens of Mexico can claim an exemption from paying capital gains tax.
Unfortunately, it is impossible to pay predial and other taxes remotely on your own. To save yourself from having to specially come to Mexico, you need to use the services of a property manager who will be authorized to pay all taxes. Average rates for property management services: 10-15% for long-term leases, 25% for short-term leases.