Ready to cash in on your Riviera Maya investment? This guide explains the legal and tax implications for foreigners reselling property in Mexico, ensuring a smooth and profitable exit.
The Riviera Maya’s allure is undeniable, attracting investors who purchase a slice of paradise. But market dynamics, lifestyle changes, or the desire to realize a profit mean that many owners eventually consider selling. For foreign investors, the process of reselling your Riviera Maya property involves specific legal and fiscal steps that are crucial to navigate correctly. Whether you’re looking to sell a pre-construction unit before taking title or a long-held vacation home, understanding the rules is key to a successful and legally compliant transaction.
At PeninsuLawyers, we primarily focus on dispute resolution, but we believe that a well-informed client is a protected client. This guide, drawing from our extensive experience, will walk you through the two primary methods of resale and the critical tax considerations involved.
The Pre-Title Flip: Selling Your Promise with an Assignment of Rights (Cesión de Derechos)
It’s a common scenario in the fast-moving Riviera Maya market: you’ve invested in a pre-construction project, signing a promissory contract (Contrato de Promesa), and an opportunity arises to sell before the property is even finished. In this case, you aren’t selling the physical property; you’re selling your contractual position. This is achieved through an “Assignment of Rights” (Cesión de Derechos).
What Does It Involve?
When you assign your rights, a new buyer (the “assignee”) steps into your shoes, taking over both your right to receive the property upon completion and your obligation to make any remaining payments to the developer. Think of it as selling a golden ticket—the new holder gets the prize, but they also have to follow the rules that came with it.
Key Steps and Considerations:
- Check Your Contract: Your original promissory agreement with the developer is the first place to look. It should specify whether an assignment is allowed, what conditions apply, and, most importantly, if the developer’s prior written consent is required—which it almost always is. Developers may also charge a fee for this process.
- Get Developer Approval: You must formally request the developer’s consent for the assignment. Do not assume you can flip your contract without their explicit, written permission.
- Formalize the Agreement: You and the new buyer will sign a formal Contrato de Cesión de Derechos. For maximum legal security, this should be formalized before a Notary Public. This document details the rights being transferred, the price the new buyer is paying you, and the status of payments to the developer.
This method of reselling your Riviera Maya property before completion requires careful coordination with the developer and meticulous legal paperwork to ensure the transfer is valid and all parties are protected.
The Traditional Sale: Selling After Receiving Your Title Deed (Escritura Pública)
This is the more standard scenario: you are the fully registered owner of the property, your name is on the title deed (Escritura Pública), and you’re ready to sell.
The Notary’s Central Role
Just as when you purchased the property, a certified Mexican Notary Public must formalize the sale. The Notary acts as an impartial official of the state to ensure the transaction is legal, calculates and withholds the appropriate taxes, and ensures the title is transferred correctly.
As the seller, you will need to provide a host of documents, including your original title deed, proof of paid property taxes (Predial), utility bill clearance, and, if applicable, your Fideicomiso (bank trust) documents. The Notary will handle the due diligence, draft the new deed, and, critically, calculate and remit your Capital Gains Tax to the Mexican tax authority (SAT).
The Taxman Cometh: Fiscal Implications of Reselling Your Riviera Maya Property
Selling property in Mexico inevitably involves the tax authorities. Understanding your obligations regarding Capital Gains Tax (Impuesto Sobre la Renta – ISR) is paramount.
Calculating Your Capital Gains Tax (ISR)
As a foreign seller, the Notary will typically calculate your ISR using two methods and apply the one that results in a lower tax payment for you:
- 25% of the Gross Sale Price: This is a simple, straightforward calculation with no deductions. The tax is a flat 25% of the declared sale price in the Escritura.
- 35% of the Net Profit: This method allows for deductions but requires meticulous record-keeping. The net profit is the sale price minus your deductible costs, which can include your original purchase cost (adjusted for inflation), proven capital improvements (backed by official invoices or facturas), Notary fees and taxes you paid upon acquisition, and real estate agent commissions from the current sale.
The Primary Residence Exemption Myth
While Mexican tax law offers an exemption from ISR on the sale of a primary residence, this is generally only available to official tax residents of Mexico, which can include foreigners who have formally established their tax residency and meet strict requirements. For most non-resident foreign sellers, this valuable exemption is not available. You should never assume you qualify without confirmation from your lawyer and accountant.
AML Compliance is Still Key
Remember the Anti-Money Laundering Law (LFPIORPI)? It applies to sales just as it does to purchases. Real estate sales are a “Vulnerable Activity,” and the Notary must identify both you and the buyer, verify the source of the buyer’s funds, and report the transaction to the authorities.
Successfully reselling your Riviera Maya property hinges on navigating these legal and fiscal requirements with precision. Proper professional guidance from a firm that understands the intricacies of Mexican real estate law for foreigners is not just a benefit—it is essential protection for your investment.
Facing a real estate dispute in the Riviera Maya? Don’t navigate it alone. Contact PeninsuLawyers to protect your investment and secure your property rights.
