Capital Gains on sale of property acquired by inheritance

Articles 119, 121, 124 y 126 of Capital Gains Law (LISR) establish that the calculation of the Capital Gains for the sale of a property that was inherited has to be done over the “calculated profit”, which must be divided by the number of years since the date of acquisition from the author of the inheritance, without exceeding the superior limit of 20 years. To such calculation of the profit, there is a rate established in article 96 of said law and published in the Official Journal of the Federation. 

Income for sale and calculation of profit

Article 119 of the LISR considers the income for selling a property the amount of the price obtained by the sale.

Article 121 of LISR authorizes the following deductions for such income:

  1. The cost of acquisition or 10% of the selling price, whichever is higher.
  2. The cost of investments done in the property.
  3. The notary expenses, taxes and fees.
  4. The commissions and mediations

There are other exemptions available depending on special characteristics of the sale. For any of them, we recommend hiring us.

Provisional payments and date of acquisition

The profit (income minus deductions and exemptions) is taxed by a different rate depending of the date of acquisition. For property acquired by inheritance, the date of acquisition is the one when the deceased owner bought the property, as if that person was selling (article 124 of LISR).

The Mexican Institute of Public Accountants (IMCP) claim that this criteria follows the need to make taxes transparent to the inheritance, that is, that the sellers pay with the available deductions the original owner would have used.

» For a complete tax strategy on the selling of inheritance assets, use the following form for our Tax Strategy Product.

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