What taxes must I pay when purchasing a property?
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WHEN SELLING OR BUYING A HOME IT IS COMMON TO LEAVE THE TAXES TO BE PAID OUT OF THE BUDGET, BUT MEET THESE OBLIGATIONS KEEP YOUR TAX SITUATION IN ORDER AND YOUR HERITAGE WILL BE FREE OF LEGAL PROBLEMS. DO NOT STOP READING THIS.
At Vivanuncios , the real estate marketing islamabad, we spoke with José Antonio Manzanero, former president and dean of the National College of Mexican Notaries, to find out what taxes must be paid on the sale of a property and the importance of having notarial advice .
When buying a house, what tax must be paid?
At the time of the sale of a house there are two acts: a person buys (acquires) and another sells (disposes of their property). Each one must cover their taxes, whoever buys is in charge of the Real Estate Acquisition Tax (ISAI) or Domain Transfer Tax.
This is collected by the different states, normally it is 2% and is calculated on the highest value of the operation. It is very important to note that this changes from state to state, for example, in Mexico City it can be as high as 5.8%. In entities like Quintana Roo, the rate changes to 1.5% or 2.5% depending on the municipality.
If you buy a property whose value is one million pesos, and the value of the ISAI in your entity is 4.5%, you will pay 45 thousand pesos for said tax.
When you sell a property, what tax must be paid?
Whoever sells must pay Income Tax (ISR) for the dha peshawar form profit they receive from the sale (the difference between what they paid for the property and the price at which it sold). That tax only applies to profits.
Individuals who sell a home cause ISR for the sale of a house. But the law recognizes that this payment can be exempted if the maximum sale value is 700,000 Udis, approximately 4 million 376 thousand pesos.
This benefit can be enjoyed once every three years. The requirement for the seller is to accredit the notary with documentary elements that he is indeed the owner of the house that he sells.
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How do these taxes work? And how do they affect when buying and selling a home?
The payment of both taxes must be proportional to the value of the operation being carried out, in an act the amount is determined. At the time the property is purchased, the notary has the obligation to withhold that tax from the person who buys it, to subsequently report it and pay it to the corresponding authority.
In the previous example, if you buy a property with a value of one million pesos, that property generates a tax (ISAI) of around 45 thousand pesos. The notary is required to withhold that tax, give you a receipt, and then pay it to the city government. Then it must show you that it has already made the payment to the government.
The use of land at blue world city islamabad and the sale price will determine the payment or exemption from this tax.
They do not pay taxes:
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The sale of a house that 1) can prove to be yours and 2) whose price does not exceed 700,000 Udis.
They do pay taxes:
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The sale of a land is never exempt from ISR. However, when selling land, the calculation can yield a loss.
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If the house you are selling exceeds four million pesos. For example, if you are going to sell your property for six million pesos, the first four million are tax free, but the rest does cause ISR.
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When it comes to the purchase of an office, a commercial premises, a factory, etc., in addition to the deed and the ISR in charge of the seller, the buyer has the obligation to pay the Value Added Tax (VAT), which is the order, always 16% on the value of buildings not intended for residential use.
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When selling a house with the use of commercial land, for an office or a consulting room, from that sale, the amount that corresponds to the land will not generate taxes, but the buildings destined for the office do generate.
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When the property you sell is for residential use but you had it for rent. So, not being able to show that it is inhabited by you, from the profit you receive, you will have to pay a tax, which is like the one that any of us pays for the income we receive.
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A house with a small business, does cause VAT for the value of the buildings that correspond to the premises. But the value of the constructions destined to the home and the land, does not generate this tax.
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Is it necessary for a notary or a lawyer to attest to these types of transactions in contracts from the beginning?
Yes it is necessary because doing this type of operations before a notary, implies that things are done legally well. The lawyer is optional, since he is an advisor so that the operations are oriented to the benefit of his client.
Impartially, the notary has to give a translation of ownership of a real estate to certify that he sold who had to sell and bought who had to buy; It rectifies that the seller had the ability and the possibility to do so without depending on someone else and that the buyer acquired the property without any problem. All this is seen in the content of the writing.
In addition, it guarantees that you as a seller, will not have post-sale problems. And to the buyer, who will have no problems with the property.
Is it necessary for the person who buys to be registered with the Treasury?
Yes, because that tax is declared by the notary, but it has to prove that you are the one who paid it, and to prove to the government that it was you who generated this tax you need to be registered.
Where can I find more information on these topics to be sure that my transaction will be legally well done?
It is very simple, go to the page of the National College of Mexican Notaries where they can give you free advice. Their telephones are 01 (55) 5514-6058, 01 (55) 5525-6452 / 6415/6254.
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