Jump to content
Chapala.com Webboard

Recommended Posts

Real Estate Appraisals in Mexico.

Here in Mexico we have three types of real estate appraisals. They are Tax (Catastral), Bank (Bancaria) and Commercial (Comercial). All appraisers must be licensed and most are engineers or architects who have postgraduate courses and state licenses and are also "peritos" or experts.


The Tax or Catastral appraisal is used to calculate transfer taxes and fees as well as notary fees. In years past they used to only use this value as the sales price on the deed instead of the real sales price that the buyer paid to the seller.

This had certain consequences such as the value being low the buyer paid less in closing costs and less in property taxes but with changes in the tax laws in 2010 people could only exempt capital gains once every 5 years.

Furthermore notarios became stricter and required foreigners to have an FM2 immigration document and later a residente permanente (now one can have either a temporary resident or permanent resident to qualify for the capital gains exemption 8/2014). Some people could not qualify for the new documents. This meant paying capital gains on the gain. Many people did not have a real gain but had a "phantom" gain due to upon sale they would use the lowball catastral tax appraisal value and for sale use the new real value. In many cases people actually had a loss, i.e. paid $2,500,000 pesos for a home in 2006 and in 2014 sold that same home for $2,000,000 pesos while the original deed shows they paid $800,000 pesos or the amount of the catastro tax appraisal. While technically selling at a loss, they would have a paper gain of $1,200,000 pesos and pay tax on that gain amount of 20-30%.

The catastral appraisal is based upon tax tables published by the municipality where each city block is assigned a value per square meter for the land. Then there are tables to value the square meters of construction depending on age of the property, style and condition.


The bank appraisal or avalo bancario is used when someone is buying a piece of property with a bank loan. It is similar to the US with comparable sales and a justification for the sales price.


The commercial appraisal or avaluo comercial is not widely known about but has many tax advantages when used properly.

One objective of this type of appraisal (Avaluo Comercial I.V.A) is to attack and modify the value of commercial construction on a property to save on the IVA sales tax.

Another objective of this type of appraisal (Avaluo Comercial I.S.R. Adquisicion) is to justify that the property has a lower market value than that obtained in the catastral or tax appraisal. This is usually necessary for properties being sold under value. If someone purchase a property for more than 10% under its value then the purchaser pays the I.S.R. income tax as they are receiving a benefit. This is the one exception to the rule where the seller always pays income tax in a sales transaction. Typical cases where this may arise are foreclosed properties, fire sales, vandalized properties or properties being constructed and not finished where some tax offices consider a property with a roof finished while there are no walls or anything else inside.

Here the appraiser tries to justify the lower value showing that the value really is lower due to the aforementioned circumstances thereby reducing or eliminating the I.S.R. income tax that a buyer may have to pay.

The last type of commercial appraisal is the Avaluo Comercial, con Mejoras I.S.R. Enajenacion. This appraisal is underutilized and can be a great way to lower your capital gains liability. Many people have done remodels to their properties but do not have official tax facturas to justify the work. This type of appraisal can be used to justify the work done on the property to raise your tax basis and lower or eliminate your I.S.R. tax liabilities. You will only get benefits from remodeling and improvements done to your property, not simple repairs because something broke. They will take 80% of the value of the improvements for purposes of calculating the I.S.R. (capital gains) tax liability.

Items your appraisal will need

1) Copies of your property deed with registration receipt

2) Copy of most recent property tax bill / receipt

3) Copy of most recent water bill / receipt

Link to post
Share on other sites

Great explanation of the various valuation methods that "might" be used on the sale of ones property. As you mentioned initially the seller can in fact owe "Capital Gains" on the sale of a property that is a net loss based on the deeded value as opposed to their actual amount paid. The bogus sales price on the purchaser deed was a common practice for many years but has but all but disappeared locally in the last couple of years.

The 5 year rule for selling a property below the 3,500,000UDI valuation and still being responsible for "capital gains" taxes and meeting the other requirements seems counter intiuative with production of sales tax revenue,etc..Initially it was meantto reduce speculators flipping properties during the boom times, especially on the coasts, but after the housing bust in 08-09 it would appear that this rule stynies the turnover of properties and decreases tax and realtor revenue..Or am I missing something?

Again, thanks for your seminar..

Link to post
Share on other sites
  • 1 year later...

City Hall is now questioning the size of construction on our property, and saying that the metric figure on our Property Taxes Statement, e.g. 730 metres, is incorrect.  City Hall records show the home being 477 meters. 

If that is true, we should be paying less Property Taxes, but now they are saying the formulae that was used is incorrect, and that we owe them money - sounds fishy to me!  Anybody got any similar experiences.

We would like to get a private appraisal - are there licences appraisers that do that in Lake Chapala?


Link to post
Share on other sites

Irenein... did you build the house?   I ask only because I have seen a house of X sq m purchased then made bigger in sq m without ever having a permit thus notifying catastral of the larger sq footage.  The house was sold and when checked by the notario to close the deal monies were owed in taxes.

Link to post
Share on other sites

They were showing a much larger property on the tax bill so we paid higher taxes for several years years but when I caught it I asked the catastro to come and remeasure, they did, The taxes went down but we never got our money back for past overpayment..

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...