If you sell a home in Mexico, the only taxes you will pay are the capital gains tax which is a federal tax known as “Impuesto Sobre La Renta” (ISR). This tax is subject to change and you need to verify the current rules.
Capital gains tax is levied on the increased equity value of the property at the time of sale. This means the increased value between the original property price and the actual sales price. The increase in value is updated according to inflation rates, all of this in Mexican Pesos.
Currently (2010) there are some exemptions. If the seller can prove that the property was used as his household for the last 5 years, there will not be a tax obligation.
This can be proven with any of the following documents:
Mexican ID issued by the IFE (Federal Electoral Institute)
Proof of payment for the following services: Water, Electric and Home Phone
Account statements provided by any commercial institution or non-bank credit cards
If you are a party to a real estate sale you should make sure that you understand the current law and how it will affect you in Mexico.
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