The In-Depth Answer

Mexico's capital gains taxes are assessed at the federal level and are retained and paid by the notario at closing. It is the notario who determines the capital gains that are due for each property. 

Capital gains are always calculated in Mexican Pesos (MXN) and typically range from 20% - 35% of the gain. The maximum tax can not exceed 25% of the value of the whole transaction.

Here’s a simplified explanation of how capital gains are calculated:

-Your basis is the price you paid for your property in pesos on the day you purchased. 

-The notario will adjust this basis for inflation, using software that accounts for the official government inflation rate during the period that you owned the property.

-This adjusted basis will be subtracted from the sales amount, represented in pesos.

-If you or others named on the deed qualify for a capital gains exemption, then the exemption amount will be subtracted.

-Sales commissions paid to your real estate agent (without IVA) can also be deducted.

-The balance is the amount of your gain and what you will be taxed on.

Note: Assuming you purchased in dollars and are now selling in dollars, these calculations more than likely will not produce the same results when calculated in pesos. The tax basis is always calculated in pesos.

Helping sellers understand and minimize the tax consequences of selling is something that all of our agents have been trained in. Connect with an agent if you need help. It is important that you understand how the sale of your property will affect your taxes before you start the selling process.