Role of The Notario

Notarios approve wills, contracts, articles of incorporation, take depositions and approve the transfer of real property. Their income is insured by the fact that the number of Notarios is controlled by population census figures.

Notarios in Mexico vary in their interpretation of property transfer requirements and costs. A majority of Notarios are very conservative in establishing taxes due at the time of sale. They will charge a foreign seller the maximum capital gains tax. Twenty six percent (26%) of profitability. Yet they will only charge a Mexican seller 5% of the sales amount. If a property was purchased for $100,000.00 and sold for $200,000.00 the capital gains tax paid by the foreigner would be $26,000 as opposed to no sales tax, only a small seller transfer fee.

The argument for charging capital gains is based on a tax law that states that if the Mexico real estate property you are selling is not your primary residence then you are subject to the 26% capital gains tax whether the seller is a foreigner or a Mexicano. Conservative Notarios believe that a U.S. citizen is a temporary resident by definition. Notarios who are less conservative argue that a foreigner can have his primary residence in Mexico; as long as he or she proves primary residency with an FM-3 immigration document and a light bill or telephone bill of the residence in their name.

If a property owner, either a foreigner or Mexican citizen, does not use the property as a primary residence, the sale is subject to the 26% capital gains tax.