As in most countries, when you sell a property in Mexico, you will be required to pay the capital gains tax. How much you pay depends on things like your residency status, whether you made improvements, and have the legal documentation to prove it. The legal documents are called facturas or invoices and are issued by suppliers and are issued using your RFC (Mexican tax id) and your name.
“I´m not a Mexican citizen, I own property and I want to sell it. Do I have to pay taxes? How much do I have to pay?
The answer depends on whether you are registered with SAT, the Mexican tax authority, and have obtained your RFC.
Yes, I have my RFC
If you have an RFC, either as an Individual or as a Legal Entity, your taxes are declared in your Monthly Provisional Income Tax Payments and in the Annual Income Tax Return. Profits from the sale of property must be calculated as taxable income and at the same rates for commercial activities: for individuals from 2% to 35% and for corporations from 30%.
We strongly recommend having a lawyer to guide you during the process of buying and selling property since there are quite a few legal documents that must be drawn up and you will need to work closely with a Notary Public who will generate the deed for the closing process. A lawyer will not only ensure that all the legal documents are in order but they ensure all deductions are applied and you are paying the least amount of taxes as required by law.
No, I don’t have my RFC
If you do not have an RFC, you can sell your property without any problem. However, the taxes are calculated differently from those who have RFC.
Selling a property in Mexico without having an RFC greatly limits the benefits and deductions that may apply. By law, by not having an RFC and not being able to send tax returns, the Notary Public is obligated to determine the VAT and ISR; which is often on the total sale value; withhold the total taxes generated, declare them and pay them directly to the government. These taxes are not creditable to the owner since there is no registration (RFC) with the government.
Are you planning to sell your property and need more information? Contact us today for expert accounting advice in Mexico.