When you buy a property in Mexico, you’ll be presented with a range of ‘closing costs’ in addition to the property price; these costs usually range between 5% and 10% of the property’s sale price. When you eventually come to sell your Mexican property, the buyer will pay most of the closing costs, but there are also selling costs and taxes.
If you decide to hire a Real Estate agent to sell your condo/house, remember that Realty agents in Mexico typically charge between 5% and 8% of the sale price in commission—and you need to add Mexican sales tax (IVA) to this (16%), so if the agent’s commission is 5%, the tax-inclusive payment will be 5.80%; and if the agent’s commission is 8%, the tax-inclusive payment will be 9.28%.
Profesional Fees (Bank trust)
If you are the owner of a condo/house in a tourist city (Puerto Vallarta, Nuevo Vallarta, Los Cabos, Cancun, etc.) you must have a bank trust. If the property you are selling is held in a Bank Trust (fideicomiso), then you will also need to budget for a ‘trust cancellation fee’ that is levied by the bank; the amount varies, but you should budget for around US$1,000.
Taxation on residential property sales is a complex area of Mexican tax law and every case will be slightly different depending on the circumstances. Also, keep in mind that tax laws are subject to reform and because house purchases tend to be long-term investments, the tax laws which apply today might not apply in the future when you decide to sell your property.
Capital Gains Tax: Mexico applies a capital gains tax on residential property of 25% on the gross sales value of the transaction without any deductions OR between 1.92% and 35% on the value of the gain (purchase costs less allowable exemptions and deductions): the percentage is calculated on a sliding scale in relation to the gain and we recommend you assume 35% as residential property sales with a gain above $250,000 Mexican pesos will be subject to this rate.
At Vallarta Law, you can find more answers to your questions. We can provide you the right way to sell your property in Mexico and try to find the best way not to pay more taxes than you need. Send an email to firstname.lastname@example.org