buyer's capital gains tax, really​?

by connie meyerhoff

After finding your prized property of choice, the next step to purchase this Real Estate is the negotiation between a buyer and seller. The real and fair value of the property is what a buyer is willing to pay and what a seller is willing to accept.  In some cases the seller is in need of cash or the buyer negotiates a great deal or maybe the market dictates a lower price. 

In Mexican Real Estate each transaction has a government approved appraisal that is part of the closing process.  This is not a mortgage related or the tax appraisal required by law appraisal, as most transactions in our vacation oriented Real Estate market in Los Cabos are cash sales. Most often the appraisal comes in lower than the negotiated purchase price.  However, in the case of the "quick sale cash selling price" or the "great deal" the appraisal comes in higher than the purchase price.  This triggers, what is called “reverse capital gains” that is calculated as a buyer expense. 

Really??  The buyer pays capital gains.  When the appraisal is 10% over the agreed purchase price the buyer is responsible to pay 25% Capital Gains Tax on the overage or amount above the purchase price. In all real estate closings, there is a 2% acquisition tax that is calculated on the purchase price as part of the buyer closing costs. There are two options to this process. Pay the 25% gain calculation AND pay the 2% acquisition tax on the higher value, the appraised value and then record your final value in your deed at that higher appraised value.  In the end the benefit is when you sell in the future your seller’s capital gains tax base is higher than the great deal you negotiated. 


By Connie Meyerhoff,  Elkers/ENGEL & VÖLKERS SNELL REAL ESTATE. Contact Connie at 480-393-0639 or write her at c.meyerhoff@snellrealestate.com.

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