Essential points to consider when acquiring a real estate property in Mexico
By Prof Sergio Guerrero Rosas, Guerrero y Santana, S.C.
It is becoming increasingly common that foreigners wish to acquire real estate in Mexico, and it is essential to keep in mind some of the peculiarities and considerations that must be taken into account when acquiring a property in Mexico. Although Mexico is known for having a friendly and familiar market compared to other foreign markets, it is necessary to make a good plan when acquiring real estate to ensure the protection of such property and to obtain the best tax benefits in accordance with Mexican law. Some of the points to be considered by foreigners when acquiring a property in Mexico are:
- An analysis of the way in which the property will be acquired: Some of the effective ways for foreigners to acquire property are through trusts or through the incorporation of a company which would be the owner of such property.
- To evaluate the effect, in the case of leasing a house. Within the Mexican legislation there are different taxation schemes, derived from various sources of wealth. Therefore, when a foreigner seeks to acquire a property, he/she has three options:
1. To be taxed as a foreigner,
2. To register in the Federal Taxpayers Registry, or
3. To designate an attorney-in-fact for legal and tax purposes in order to comply with the fiscal or legal obligations in Mexico.
Depending on the option you acquire, you can have certain tax benefits.
The last aspect to consider is the capital gain. The capital gain is calculated at the time of selling the property: the sale price, minus the house initial cost (deducting improvements, maintenance, or other aspects) is the basis used for the payment of the tax. Therefore, it is essential during this process to verify all applicable deductions and whether there are any tax exemptions that may apply.
Finally, the notary public (notario público) plays an important role when acquiring a property in Mexico, as it is necessary for the formalisation of the purchase and sale of any property in Mexico. However, our recommendation is to always be under the supervision of a tax/legal advisor in order to have a good advice.
Prof Sergio Guerrero RosasGGI member firm
Guerrero y Santana, S.C. Advisory, Auditing & Accounting
Corporate Finance, Law Firm Services, Tax
Tijuana, Baja California, Mexico
T: +52 333 120 05 38
Guerrero y Santana, S.C. provides its clients with a wide range of tax, legal, and consulting services. The firm has been helping clients – from individuals and small local businesses to major corporations and multinationals – to achieve their smallest aims and grandest ambitions. They are committed to providing specialised, personalised services to all those seeking reliable and up-to-date tax, legal, and business support.
Prof Sergio Guerrero Rosas, Managing Director at Guerrero y Santana, has over 25 years’ experience advising companies from SMEs to multinationals, as well as individuals, on tax and estate planning. He is also Global Vice Chairperson of the Trust and Estate Planning Practice Group and Latin American Chairperson of the GGI International Taxation Practice Group (ITPG).
Published: Real Estate Newsletter, No. 14, Summer 2022 l Photo: jorge - stock.adobe.com