Essential points to consider when acquiring a real estate 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:

1. 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.
   
   
2. 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.

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