Unconstitutionality of property tax in Mexico City, applicable for 2024

On December 26, 2023, the Official Gazette of Mexico City published the Decree amending various provisions of the Fiscal Code of Mexico City. Among these amendments is the annual update to Article 130 of the legal framework concerning the rates and fees applicable to Property Tax.

This table annually updates property values and establishes the applicable percentages, placing each property in a range from A to P, with P corresponding to the highest property value. Legislators aim to make the calculation of this tax progressive and proportional as mandated by our Constitution. In theory, properties of higher value should pay a proportionally higher tax than those of lower value.

Upon analyzing the table, we have observed an imbalance, causing properties of lower value and range to pay more taxes than properties of higher value and range. This imbalance makes the Property Tax rate for 2024 disproportionate and in violation of taxpayers’ fiscal guarantees, regardless of the property’s use.

Given this situation, we recommend seeking protection through legal recourse against laws governing the calculation and payment of Property Tax. This legal action must be initiated within the next fifteen days following the payment.

This means that the filing of the defense requires an initial act of application, which is constituted by the payment of Property Tax for 2024.

The definitive resolution time is estimated to be approximately 10 to 12 months. Once a final judgment is obtained, authorities will refund the amounts paid to taxpayers, duly updated.

The filing of such protection has allowed us to provide benefits to our clients in the previous year. Additionally, it enables the legal action to be processed for all types of properties, regardless of their use, whether residential, industrial, mixed, or office spaces.

It is worth mentioning that this criterion was adopted by the Plenary of the Collegiate Courts of the First Circuit in relation to the Real Estate Acquisition Tax, through which it was declared unconstitutional. We trust that the protection orders will be granted, resulting in savings in Property Tax payments.

For further inquiries or assistance, please feel free to contact us.

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ECIJA Mexico

socios.mexico@ecija.com

+52 55 5662 6840

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