The Supreme Court of Justice of the Nation (SCJN) dealt a blow to Mexico City’s (CDMX) tax system by ruling that the collection of the property acquisition tax has flaws that negatively impact taxpayers, and ordered refunds for those who overpaid.
The Supreme Court’s ruling on Monday focuses on Article 113 of the CDMX Tax Code, in effect since January 1, 2024, which regulates the calculation of the property acquisition tax.
According to the Court, although the tax rate was intended to be progressive, in practice it generated distortions. Specifically, people who bought lower-value properties could end up paying more tax than those who acquired slightly more expensive properties. This occurs due to the way in which the tax brackets, fixed rates, and applicable percentages are combined.
The result, according to the ruling, violates the principle of tax proportionality, as it does not guarantee that those with greater economic capacity pay more.
Mexico City: Tax Not Eliminated, Calculation Corrected
Despite the irregularities detected, the Court clarified that the tax is not being eliminated. The problem lies solely in the calculation formula.
Therefore, it ordered that an adjustment be applied in the analyzed cases: using the immediately preceding property value bracket to determine the amount to be paid, thus correcting the regressive effect.
Furthermore, it instructed Mexico City authorities to refund the amounts overcharged to the affected taxpayers.
Mexico City: Fees at the Public Registry Also Overturned
In the same ruling, the Court analyzed Article 196 of the local Tax Code, related to fees for services of the Public Registry of Property and Commerce.
The regulation established two rates:
A general fee of $2,302
A fee of up to $23,061 for transactions related to real estate
The court concluded that there is no real difference in the service provided that justifies this increase, and therefore it also violates the principle of tax fairness.
The decision opens the door for thousands of people in Mexico City to claim refunds if they overpaid under this scheme.
Furthermore, it compels local tax authorities to adjust their collection mechanisms to prevent further distortions.
With this ruling, the Supreme Court reinforces the principle that taxes must be clear, proportional, and equitable, especially in high-impact economic transactions such as home purchases.
Source: ambito
