TAXES AND EXPENSES ON THE PURCHASE AND SALE OF A PROPERTY IN 2024.

Acquiring a home is a dream and goal for many people, so guiding our clients towards the correct procedure is our main objective. The purchase of a home is one of the most significant moments. However, in addition to the emotional process, it is crucial to understand the financial aspects and, in particular, the taxes associated with the purchase and sale of a property in Mexico in 2024.
When purchasing real estate, obligations are generated that all taxpayers must comply with, in order to have all their documents in order and be able to obtain the rights over any property, whether land or real estate. Below we present some taxes and expenses that should be considered when purchasing a property in Mexico:

• Tax on Real Estate Acquisition (ISAI) on Sale
The ISAI or Property Acquisition Tax is a charge that is generated in the majority of cases in which a property is being purchased. This tax is calculated on a 2% basis in almost the entire national territory, but there are also entities in which it can be adjusted or increased according to what the state government stipulates; just as is the case in Zihuatanejo:

The ISAI is also known as Domain Transfer, because it also includes the rights that buyers pay to change the owner’s name and put it under their own. The only cases in which this payment is exempt for buyers is when the transaction is made by donation of the property between family members or for civil associations.
The payment of the tax is determined taking into account the value of a property in its entirety, both the commercial appraisal and the cadastral value and the price at which the property is being sold, of which the highest of these is taken.

• Income Tax (ISR) on Sale

For both the seller and the buyer, the ISR is a key aspect to consider. For the seller, the gain made on the sale of the property may be subject to taxes.
In 2024, ISR rates may vary depending on how long the seller has owned the property. It is essential to understand the exemptions and deductions available to minimize your tax burden.

In cases where the ISR cannot be exempt, some concepts may be deducted that the notary will take into account to calculate the corresponding tax.
To do so, invoices and tax receipts must be delivered. ZihuaBello highlights that some of these documents are obtained at the time of purchase and others during the time the property is inhabited, so they cannot be recovered if they were not requested at the time:

• Proven acquisition cost (what it cost the seller to acquire the property). It is accredited for properties acquired before April 2014 with the corresponding deed. It is important to make sure you have the notary invoice from the purchase of the property, otherwise it cannot be deducted at the time of sale.
• Investments in constructions, improvements and expansions. They are accredited with the corresponding invoices with the notice of completion of work or with an appraisal (in the latter case only 80%).
• Notarial charges.
• Commissions and mediations. Invoice with the amount paid to real estate mediators or “brokers.”
  Finally, we recommend asking the notary everything related to the exemption and deduction of ISR from the acquisition of the property, in order to have the pertinent requirements. And always leave the notary office with the deed and the complementary invoice for said procedure.

• Property tax

Although it is not directly related to the sale, the property tax is an annual obligation that new owners must take into account.
When purchasing a house, the buyer assumes responsibility for this tax, which is calculated based on the cadastral value of the property and the rates established by the municipality.

• Notary fees

Notarial expenses are the taxes and expenses related to the registration and registration of a property at the time of its acquisition. Notarial rights are another essential financial component in the sale and purchase of a home.
It is practically the cost that the notary office charges for doing the deed. Each notary office has specific rates for this, although they all move within a very similar range. Payments for these expenses are usually agreed between the parties and the most common thing is that it is with an advance payment of 50% and the other 50% upon signing the deed.
These fees are paid to the notary public in charge of formalizing the transaction.

• Registration Expenses

Deed is a legal process that involves the transfer of property. The expenses associated with this process include the payment for the preparation of the public deed and its registration in the Public Property Registry.
The deed is the document that certifies you as the owner of the property you are acquiring. According to information from the National College of Notaries Public, the cost of the deed is between 4% and 7% of the total value of the property.

It´s crucial to know these costs, since they are an integral part of the purchase and sale.
Ideally, you should reserve about 10% of the total value of the property to be prepared to face these costs.

At ZihuaBello we accompany you in this process from beginning to end. We specialize in fast, efficient sales, in the shortest time and without problems.