Tax Assessment

What is the Fiscal Appraisal?

He tax appraisal It is an official appraisal carried out by the competent authority on a property in order to determine its value for tax purposes. This appraisal is essential for calculating taxes such as Income Tax (ISR) and the Real Estate Acquisition Tax (ISAI)Unlike a commercial appraisal, which is based on the market and seeks to establish a sales price, a fiscal appraisal focuses on specific tax criteria and regulations, establishing a taxable base for the contributions that the owner must pay.

The Fiscal Appraisals They can be classified into three:

Appraisals for tax deduction for improvements (ISR)
Appraisal for Acquisition of Real Estate
Property Valuation

The main objective of a fiscal appraisal is to set a territorial tax, which in Mexico is known as contributions, the values are set by public entities for tax purposes.

What is a tax appraisal used for?

Fiscal Appraisals are used to calculate the Acquisition Tax (ISAI) and ISR. It can be conceptualized that by means of the physical value of the real estate, the tax lien or the corresponding deductible is intended to be measured, as the case may be, they are useful for the tax authorities and/or the user in particular.

When real estate is going to be sold, a mandatory ISR payment is incurred, according to the ISR law in article 205 It is possible to make a deductible and therefore lower the tax payment to ISR for selling a property when investment expenses on the subject real estate are verified.

When the investment in real estate is carried out in terms of improvements, the cost of the investments that have been incurred through the improvements and extensions to the property must be calculated, for this the total cost must be given in the opinion of value in the notice of completion of work. This as mentioned in the article 121 of the ISR law section II;

The tax authorities may take into account the appraisal as part of the investment costs when it has a value less than 10% with respect to the value of the investment contained in the notice of completion of work.

Who can make a tax appraisal?

The fiscal appraisal in Mexico City must be carried out by certified appraisers registered with the competent authorities. This includes both individuals and legal entities. To ensure the validity and accuracy of the appraisal, it is essential that the appraiser meets certain requirements.

Certified Appraisers: Appraisers must have a professional license issued by the Ministry of Public Education (SEP) in the area of Real Estate Valuation. This certification ensures that the appraiser has the academic training and knowledge necessary to perform accurate and reliable appraisals.
Registration with the Federal Mortgage Society (SHF): Both individuals and corporations must be registered and have their registration in force with the SHF. This registration is crucial, as it guarantees that the appraiser has complied with the established standards and is officially recognized to carry out tax appraisals.
Regulatory Compliance: Appraisers must be familiar with the tax rules and regulations that govern the appraisal process. This includes the Income Tax Law (ISR), the Federal Tax Code, and other local provisions that may be relevant.
Experience and SpecializationIt is advisable that the appraiser has specific experience in the type of property being appraised. For example, the appraisal of commercial properties may require a different approach than the appraisal of residential properties or land.
Transparency and Professional Ethics: Appraisers must act transparently and ethically, presenting a detailed report justifying the value assigned to the property. This is essential not only for compliance with tax obligations, but also to maintain the trust of owners and authorities.
Valuation Institutions: In addition to individual appraisers, there are institutions and companies dedicated to the valuation of real estate that have qualified personnel and the necessary records. These organizations can offer a more structured approach and additional resources to carry out complex appraisals.

When choosing a property appraiser, it is essential to verify their registration and certifications, as well as consult reviews and references from other clients to ensure that you are selecting a reliable and competent professional. An accurate property appraisal is not only important for complying with tax obligations, but can also influence significant financial decisions related to the property.

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When choosing a property appraiser, it is essential to consider the following aspects:

Experience and References: Make sure the appraiser has experience in the type of property you need appraised and check references from previous work.
Certification and Registration: Confirm that the appraiser is registered with the SHF and has the necessary certifications.
Transparency in the Process: Ask about the appraisal process, what factors will be taken into account and how the final value is determined. A good appraiser should be able to explain their methodology clearly.

When is a tax appraisal necessary?

When the ISAI and ISR domain transfer is going to be carried out. For example, when a property is acquired for:

Buy and sell
Probate Judgments
Awards
Mergers or Divisions

It can also be used to set the condominium regime property specific. This must be under the format linked and necessary to the procedure and in any case with the relevant federal or municipal authority.

Practical examples of Tax Appraisal

Buying/Selling a Property: When purchasing a property, it is mandatory to carry out a tax appraisal to determine the ISAI that must be paid. For example, if a person buys an apartment, the appraisal will help establish the amount of this tax.

Successions:In an inheritance process, the tax appraisal is essential to determine the value of the assets that are being transferred to the heirs, and thus calculate the ISR that they may have to pay.

Probate Judgments: During the execution of a will, an appraisal is required to correctly value the assets that will be distributed among the beneficiaries.

What aspects are taken into account?

To make a Fiscal Appraisal, the following points are taken into account:

Urban environment.
Location.
Use of the property.
Types of real estate in the area.
Physicals conditions.
Type of finishes and their conditions.
Taking photographs for the fiscal appraisal report.
Services in which the property is counted.
The profitability of the real estate.

If it is a Fiscal Appraisal from a date prior to the one performed, the following procedure will be carried out:

The value of the asset to the current date will be determined.

The value will be adjusted to the National Consumer Price Index of the month immediately prior to the one in which the appraisal was made between the index of the month for which it is required.

This result will be the value of the property on the date it was requested.

How long is a tax assessment valid?

In accordance with Article 3 of the Regulations of the Federal Tax Code, which indicates:

Article 3: “The appraisals carried out for tax purposes will be valid for one year, counted from the date on which they are issued, for which, the Tax Authorities will accept the appraisals in relation to the assets that are offered to guarantee the tax interest or when it is necessary to have an appraisal in terms of the provisions of Chapter III of Title V of the Code.”

The appraisals referred to in the preceding paragraph must be carried out by the following appraisal experts:

The Institute of Administration and Appraisals of National Assets
credit institutions
Public brokers that have current registration with the Ministry of Economy
Companies dedicated to the sale or auction of goods

Validity of appraisals for tax purposes is valid for 1 year as long as the property has not undergone structural modifications or changes in economic conditions.