Investing in the Riviera Maya’s booming real estate market is exciting. Many buyers get in early on pre-construction projects. They see an opportunity to sell their contract before the unit is even finished. This is often called a “flip.” This is a popular strategy for investors in fast-moving markets like Tulum or Playa del Carmen.

However, this “flip” is a formal legal action. In Mexico, it is called an “Assignment of Rights” or Cesión de Derechos. This transaction is not a simple handshake. It has major legal and tax consequences. Furthermore, recent AML (Anti-Money Laundering) reforms have made the process much stricter.

Before you flip your contract, you must understand the rules. This includes developer consent, income tax for you, and new compliance rules for everyone involved.

What Is an Assignment of Rights?

When you buy a pre-construction property, you first sign a promissory contract. This document is your promise to buy the unit, and the developer’s promise to build and sell it to you.

An Assignment of Rights is the process of selling your position in that contract. You are not actually selling the physical condo yet. Instead, you are selling your “place in line” to a new buyer.

In this deal, you are the “assignor”. The new buyer is called the “assignee”. The assignee steps into your shoes. They gain your rights to the future property. They also take over your obligations, such as making any remaining payments to the developer.

This entire transaction is only valid with the developer’s prior written consent. Almost every promissory contract has a clause about this. Developers often charge a fee, sometimes 2-5% of the property value, to approve the assignment.

The Seller’s Tax: Income Tax (ISR) on Your Profit

Here is the part that surprises most investors. When you assign your rights, you must pay income tax on your profit.

Mexico’s Fiscal Code (Article 14) is very clear on this. It treats the assignment of contractual rights as a property sale for tax purposes. This means your profit is taxable, even if you never held the final title deed.

How does it work? Let’s use an example.

• You signed a promissory contract for a condo with a total price of $300,000.
• You paid $100,000 in deposits and installments so far.
• The market value has increased. You find a new buyer willing to pay you $150,000 for your contract.
• You have a $50,000 profit ($150,000 from the new buyer minus your $100,000 paid).

This profit is subject to Mexican Income Tax (ISR). The Notary Public involved in the final transaction will calculate and withhold this tax. Ignoring this can lead to serious problems with the SAT, Mexico’s tax authority.

The New Buyer’s Tax: Acquisition Tax (ISAI)

The original seller is not the only one who pays taxes. The new buyer (the assignee) also has a tax responsibility, but it comes later.

The new buyer is responsible for paying the Property Acquisition Tax (ISAI). This is a state-level tax. This tax is not paid when they sign the Assignment of Rights. Instead, the ISAI is paid at the very end of the entire process. It is due when the developer finally finishes the property and the final title deed (Escritura Pública) is issued in the new buyer’s name.

The 2025 Update: How New AML Laws Change Everything

The biggest recent change is the 2025 Anti-Money Laundering (AML) reform. This new law has added a major layer of scrutiny to all real estate deals, especially an Assignment of Rights.

In the past, some flips were informal. Today, that is impossible and dangerous. The new AML law makes the process stricter for everyone.

1. Developers are Now Responsible The new law explicitly names real estate developers as “obligated entities”. This means the developer cannot simply “look the other way.” They are legally required to conduct full Know Your Customer (KYC) due diligence on the new buyer. They must identify the new buyer and report the transaction.

2. Notaries are Stricter Notaries Public have also been given a stronger role as gatekeepers. They will demand flawless paperwork from all parties. They will verify the identities of the original buyer, the new buyer, and the developer. They will also report the transaction to the authorities.

3. All Parties Need Proof of Funds This is the most important change. Everyone involved must prove the lawful origin of their funds. The new buyer (the assignee) will face the most scrutiny. They cannot just show a bank transfer. They must provide supporting documents like tax returns, pay stubs, or letters from their accountant to prove their money is clean.

In short, the simple “contract flip” is now a complex legal and financial transfer. It requires full transparency and cooperation from the original buyer, the new buyer, and the developer.

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Facing a dispute over an Assignment of Rights, developer fees, or contract issues in the Riviera Maya? Don’t navigate it alone. Contact PeninsuLawyers to protect your investment and secure your property rights.