In MexicoInheritances may be subject to specific taxes and regulations, so being informed is essential to making informed decisions. Virginia Ríos, an expert from the College of Public Accountants of Mexico, explains when you should pay taxes and when not in the case of inheritances.
Importance of making a will
When a person dies without leaving a valid will, they are said to have died “intestately.” In this case, the distribution of his assets and properties is governed by the laws of his country and jurisdiction. In Mexico, for example, the Federal Civil Code and the state civil codes establish the rules for intestate succession.
In an intestate succession situation, the law determines who will be the legal heirs and how the deceased’s assets will be divided. These heirs are usually spouses, children, parents and other close relatives according to an order of priority established by law. If there are no legal heirs, the assets can be transferred to the State.
Intestate probate can be more complicated and can take longer compared to probate where a valid will has been left. Furthermore, in the absence of a will, the specific wishes of the deceased regarding the distribution of his assets are not taken into account.
Are there inheritance taxes?
Yes, in Mexico there are taxes related to inheritances and legacies. The expert highlights that “If the total income for the year in question, including the inheritance, exceeds 500 thousand pesos, it must be declared to maintain the exemption”. This means that if the inheritance exceeds that figure, it is necessary to file a declaration.
When do I have to pay taxes and when do I not?
Inheritance tax is applied based on the value and type of assets inherited. If you receive property such as real estate, vehicles, or bank accounts, they may be subject to tax. The expert mentions that “normally, if it exceeds 500,000 pesos, any property, depending on the city we are in, will exceed that amount and we would have to present the annual declaration for that inheritance to be exempt.”
The Income Tax (ISR) exemption applies when the declaration is filed at the appropriate time, before the Tax Administration Service (SAT).
What to do if I receive an inheritance with debts?
If you inherit real estate that has debts on it, these debts will also become your responsibility. In the interview it is mentioned that “if the real estate has debts of property, water, etc., then the purchaser will have to pay said debts.”
In situations where debts exceed the value of assets, some heirs choose to repudiate the inheritance, that is, reject it to avoid carrying the debts.