When inheriting a house in Mexico City, many families are unaware of a significant benefit that could allow them to pay 0% in Property Acquisition Tax (ISAI). The Mexico City Tax Code outlines specific conditions under which spouses, cohabitants, and direct descendants or ascendants can be exempt from this tax, especially during the 2026 Will Month. Understanding these requirements can save inheritors thousands of pesos.
What is the Property Acquisition Tax (ISAI)?
The Property Acquisition Tax (Impuesto Sobre Adquisición de Inmuebles, or ISAI), also known as the Domain Transfer Tax, is typically around 2% of the property’s value in Mexico City. This amount is determined by a notary based on the highest value among the cadastral, commercial, or deed values. However, article 115 of the Mexico City Tax Code offers an exemption under certain circumstances.
How to Qualify for 0% ISAI When Inheriting a Home
To avoid paying the ISAI when inheriting a house in Mexico City, three key conditions must be met simultaneously. These conditions are designed to support direct family members and ensure timely processing of inheritances.
1. Relationship to the Deceased
- The property must be adjudicated in favor of a spouse, cohabitant, or a direct descendant or ascendant.
- Collateral heirs (such as siblings, aunts, uncles, or cousins) do not qualify for this exemption.
2. Property Value Limit
- The value of the property must not exceed 27,185 times the Unit of Measurement and Actualization (UMA).
- As of 2026, this translates to approximately $3,189,072.35 Mexican pesos.
- Properties exceeding this value will not qualify for the 0% tax rate, though partial reductions may still apply.
3. Timely Registration
- The family must request the registration of the property within five years of the original owner’s death.
- Failure to meet this deadline will result in the loss of the 0% tax benefit.
It is crucial that all three requirements are fulfilled without exception. The Mexico City Tax Code does not offer partial exemptions for those who only meet one or two of these conditions for the 0% rate.
What if Your Case Doesn’t Meet All Requirements?
If your situation does not fully meet the three conditions for the 0% ISAI rate, you may still be eligible for partial reductions. The Mexico City Tax Code provides for updated partial reductions each fiscal year. It is highly recommended to consult with a notary to review your specific case before signing any documents, as the percentage of reduction varies depending on which requirements are not met.
The Importance of a Will and Notary Services
The process of inheriting a property, with or without a will, is handled by a notary if all heirs are adults and in agreement. If there is no consensus, the matter is referred to a Family Court in the deceased’s last domicile. A well-planned process with a notary can prevent conflicts and save families thousands of pesos.
September marks the 2026 Will Month, during which the College of Notaries of Mexico City and affiliated notaries offer discounted fees for drafting wills. While this benefit covers the preparation of the document, it does not cover the ISAI payment at the time of inheritance. Therefore, it is advisable to plan both processes separately.
Having a will in order reduces family conflicts when distributing a house in Mexico City and makes it easier for direct heirs to identify the 0% ISAI rate in time. The notary process, with proper documentation of death and property, expedites the entire adjudication process.
Required Documents for Inheritance Processing
If you are inheriting a house in Mexico City, you should bring the following documents directly to your notary before the five-year deadline:
- Death certificate of the original owner.
- The will, if one exists, or the declaration of heirs.
- An appraisal of the property.
By preparing these documents and understanding the tax regulations, families can navigate the inheritance process more smoothly and potentially avoid significant tax burdens.
Contact Information:
For more information, consult the Mexico City Tax Code or contact the College of Notaries of Mexico City.
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