MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
depending on the type of entity or individual receiving the income, as well as their residency status (Mexican or foreign). For example, flat fees of 20% or certain deductions may apply. 8.5 Tax Benefits Owners of real estate in Mexico are eligible for tax depreciation of fixed assets, mainly con - structions, and can deduct certain expenses from their income tax liabilities. These include: • the proven cost of acquisition; • certain construction and improvements costs; • notary fees and commissions.
While there is no tax depreciation allowed for land, a portion of the sale price will be allocated to the land when the real estate is sold. These tax benefits serve to reduce the amount of income tax owed on the sale of the real estate. Further, based on the purchase price allocated to land, no VAT should be paid for the portion of the price applied to the land.
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