ISR deductions, depreciation, solar incentives, IMMEX, free trade zones. Tax strategies for property investors in Mexico.
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ISR deductions, depreciation, solar incentives, IMMEX, free trade zones. Tax strategies for property investors in Mexico. We handle everything from design to completion, including all permits and inspections.
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Frequently Asked Questions
Depreciation deduction: 5% annual on buildings (20-year schedule). Construction costs are capitalized and depreciated. Equipment inside the building: 10–20% annual depreciation. If building through a corporation (SA de CV), all construction costs, permits, and professional fees are deductible against rental income.
Annual predial: 0.1–0.3% of government-assessed value (valor catastral) — which is typically 30–50% below market value. A $5M MXN home pays $5,000–$15,000/year in predial. Early payment (January) gets 10–15% discount. This is dramatically lower than US/Canada/Europe property taxes.
Capital gains tax (ISR): 25–35% of profit. Calculated on: sale price minus original purchase price minus documented improvements minus inflation adjustment. Holding 5+ years and documenting all construction costs significantly reduces taxable gain. Primary residence exemption available for Mexican tax residents.
If building 2+ properties for rental income: probably yes. SA de CV benefits: deduct ALL expenses (construction, maintenance, management, utilities, depreciation), VAT recovery on construction (16%), professional image for investors. Costs: setup $2,000–$5,000 USD, annual accounting $3,000–$8,000 USD.
Construction services charge 16% IVA. If you build through an SA de CV that rents properties, you can recover this IVA as a tax credit. On a $3M MXN construction project, that's $480,000 MXN in recoverable IVA. Individual fideicomiso owners cannot recover IVA — it's a cost.