V, I gave my lawyer a laundry list of things to do, including this matter. Will follow up if I don't hear from her in another day or so. Stay tuned.
Here's a couple of links to some decent articles on the changes that went into effect in 2010: Capital Gains Taxes on Mexican Properties | Surviving Yucatan Capital Gains in Mexico
I'm not sure how authoritative that article from Yucalandia is, as every time I've looked at the law itself, it speaks of the exemption as being available to residents, without distinguishing the category of residency. I am sure, as the article points out, that notaries vary in the rigorousness with which they examine the question, and ours was not very rigorous, as I've mentioned. __________________________
venta de habitacion I've researched this considerably and read the law in spanish. It states that, if you can prove that it was your residence over the previous five years, there is no tax due. The law was 2 years, but was changed in 2010. Proof is up to the notario. Usually, a load of utility bills from CFE and water, in your name, should do it. Basically, it doesn't matter whether you have an FM2 or FM3 or whatever. It matters what notario you get. So, shop around.
Tristan, can you give us a cite to that law? Some of us are quite interested in getting to the bottom of this, and would read it.
I recently posted info about this on my blog: Puerto Morelos Blog: Understanding Capital Gains (ISR) Tax in Mexico Hope it helps!!
These things are complicated, and I do think something got lost in the translation! Looking over the article Amber provided, I see confirmation of some of what has been under discussion, here, that the foreigner would need to be a resident of Mexico, and the habitation- the subject of the sale- be their residence. There is no requirement that the property have been lived in for the five years prior to the sale, unless the amount of gain exceeds the limit established by the rules the tax authorities tried to explain to T.J.; then, the excess will be taxed, unless the tax payer can show five years of continuous use of the property as his residence. As for the documentation required to establish the exemption, I still think the person claiming the exemtion would have to have a tax number. The tax laws state that there must be a report of the sale by the 17th day of the month following the sale, and the gain must be reported in the annual tax declaration as "exempt from tax", or the exemption is lost. This is in keeping with practice in the U.S., where certain categories of exemptions are lost if not reported and claimed in the tax return.
Isr Everything I've read on the subject agrees with the link that a.pierce posted, except that I've never heard of the "fiscal resident of Mexico" stipulation. I've read many articles on the matter. If you read Spanish, check this one out, which is dated March, 2011. This agrees with everything I've read before. The first part is about buying a house. The last 4 paragraphs are pertinent to sale of a house. For those who don't read Spanish, it basically says you must prove you lived in the house for the previous 5 years, showing an FM2 with the same address, along with utility receipts in your name. Also, you can't have taken the exemption during the previous five years. This is the part I can't really claim to understand completely, because it doesn't make sense. Si el enajenante, no comprueba haber habitado dicha casa, entonces el límite exento se topa a 1,500,000 UDIS ($6,450,000 aprox.) y por el excedente el Notario Público hará el cálculo y la retención correspondiente. It says if you can't prove you lived in it for 5 years, you only get a 6.45M peso exemption. How many people own a house worth that much? Proceso de compra-venta de inmuebles en México | balamgroup.com.mx
Tristan, the Spanish Language text you quote comports with what I wrote in my last post: Convoluted, perhaps, but I think restates the law you quoted, and is in keeping with the chart APierce provided, unless I'm mistaken; and, yes, you're right, most of those who can meet the residency, occupancy and tax registration requirements can claim the exemption, and will owe no capital gains taxes, or ISR, on the gain. Following the sale of the condo we bought, the Notary filed a report of sale/tax declaration required of notaries (not the declarations the buyer and seller must file) which showed the entire purchase price to fall within the exempt category established by Mexican Law.
