Mexican real estate transactions, particularly between domestic buyers and sellers, have taken a dip due to new anti-money laundering legislation and a capital gains exemption ceiling that both took effect in January, say real estate professionals.
The new laws now oblige all transactions above 540,000 pesos to be reported to the Mexican Tax Department (SAT). Effectively, buyers must provide proof of the source of the income that is used for the property purchase. Not all Mexicans looking to buy property are willing to do this, says the Mexican Association of Real Estate professionals (AMPI).
According to AMPI, sales have also been affected by the imposition a capital gains ceiling on primary residence exemptions. The amount of gains that can be exempted is capped at 700,000 UDIs (Unidad de Inversion or index unit of funds often used in Mexico rather than the peso because of its stability). This translates roughly to 3.5 million pesos. Any gain over this amount is now taxed.