Capital Gains Taxation in Mexico
In Mexico, capital gains are subject to taxation under the Income Tax Law (Ley del Impuesto sobre la Renta, or LISR). The LISR defines capital gains as the profit obtained from the sale, exchange, or other disposition of assets, including:
- Real estate
- Stocks and bonds
- Business assets
- Intellectual property
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The acquisition cost includes the original purchase price, as well as any expenses incurred in acquiring the asset, such as brokerage fees or legal fees.
Adjustments or deductions may be allowed in the calculation of the gain, including:
- Expenses related to the sale, such as brokerage fees or legal fees
- Improvements made to the asset during ownership
Tax Rates
Capital gains are taxed at a flat rate of 25% in Mexico. However, certain types of capital gains may be eligible for preferential tax treatment, such as:
- Gains from the sale of real estate used as a primary residence, which are exempt from tax up to a certain amount
- Gains from the sale of stocks and bonds held for more than one year, which are taxed at a reduced rate of 10%
Legal Framework
The taxation of capital gains in Mexico is governed by the following articles of the LISR:
- Article 10: Defines capital gains as the profit obtained from the sale, exchange, or other disposition of assets
- Article 11: Specifies the formula for calculating taxable capital gains
- Article 12: Outlines the tax rates applicable to capital gains
- Article 13: Provides for exemptions and preferential tax treatment for certain types of capital gains
Policy Objectives
The Mexican government's policy objectives behind the taxation of capital gains include:
- Generating revenue for the government
- Encouraging investment and economic growth
- Promoting fairness and equity in the tax system
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