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Buying real estate, whether for domestic or commercial use, in any municipality within Mexico City, requires, among other things, being aware of the tax effects that could impact the cost of the acquisition, which could have an adverse effect on the buyer's assets.
This is so, since the Tax Code of Mexico City, which regulates all local taxes, establishes the obligation, both for individuals and corporations, to pay the Real Estate Acquisition Tax or, better known as "ISAI", when acquiring real estate located in the City.
It should be clarified that this tax will not only be triggered at the time of a real estate purchase and sale transaction, but will also have to be paid in the case of a donation, contribution, assignment of rights, dation in payment, adjudication, among others, that is, for any other legal act that results in the transfer of ownership of the real estate involved.
The amount to be paid for such tax will vary depending on the lower or higher value of the property being acquired, to which a rate will be applied that will determine the final amount of the ISAI, which is calculated in the terms specified in the local Tax Code.
However, in most of the occasions people are unaware that they are paying the aforementioned tax, since in all cases, without exception, the Notary Public to whom they go to celebrate the acquisition transaction has the obligation to calculate, withhold and pay to the Local Treasury the amount that the buyer must pay, so it can have an imperceptibility character for those who are not familiar with this type of transactions.
In strict theory, the tariff would guarantee that persons who acquire real estate with a higher value pay a higher tax than those who acquire real estate with a lower value; however, in the calculation and determination of such tax, the Tax Code for Mexico City violates the fundamental tax rights of taxpayers, purchasers of real estate, which directly transcend to their legal sphere.
Thus, it is important to know that, through the execution of several legal procedures, it is legally possible to obtain the total refund of the amount of ISAI that the Public Notary paid, but that the buyer of the real estate paid with charge to his patrimony.
In this context, our team of professionals has advised several individuals and companies that have entered into transactions to acquire real estate in Mexico City, promoting the corresponding means of defense, achieving positive results and forcing the local tax authority to return the amount they have paid for ISAI, which has been reflected in the restitution of their assets by obtaining back the amount unduly paid for this concept.
Article written in collaboration with Lic. Diego Uriel Ortíz García.
