Developers can deduct land in the year of purchase: experts

Taxpayers who are dedicated to real estate development and have made the immediate deduction of a piece of land and have not disposed of it after the third fiscal year immediately following the one in which it was acquired, must consider as cumulative income the cost of said property in an updated manner, the specialists Rafael Chapa, general director of the firm CAF Contadores Públicos and Grupo SIAC, and the lawyer, Enrique Iglesias Elizondo, general director of Iglesias Abogados.

“The land deduction at the time of purchase is exclusive for real estate developers, as long as their purpose is the construction and sale of the property. In addition, the tax requirements to apply said deduction are more flexible,” they indicated.

Additionally, they explained that the figure of estimated deductions has a tolerance of five percent so as not to cause surcharges and there is no provision if the estimate is favorable.

“Do not include in the estimate, investments, subordinate services, operating and financial expenses,” they concluded.

Both specialists participated in the event “Real Estate Developments: reflections on the financial effects and their Tax and accounting treatments” organized by Training 3H.

In their participation, they explained all the tax advantages of real estate developments in terms of Income Tax through the deferral of the accumulation of income received from the project.

At the event, they also addressed tax and legal issues in the real estate sector such as associations, financing, construction and operation, return on investment, performance and deductions, among others.