Selling a house below appraisal — is it legal?

You've been offered an amount lower than the cadastral or commercial appraisal of your house. Maybe you need to sell quickly, there's a family agreement, or the property has defects. The question arises: can you record the deed below appraisal without the SAT taking notice? The answer: technically yes, but with consequences.

Three "appraisals" not to confuse

• Municipal cadastral appraisal: set by local cadastre and used to calculate property tax. It's typically well below market value.
• Bank appraisal: requested by the bank to grant a mortgage loan. It reflects a conservative collateral value.
• Commercial or fiscal appraisal: issued by a state-authorized or SAT-authorized expert and is the one used in the deed.

When people talk about "selling below appraisal," they usually compare the agreed price with the commercial appraisal requested by the notary.

Why the value in the deed matters

The notary is required to take, as the basis for calculating taxes, the greater of:

• The agreed price.
• The commercial appraisal value.
• The cadastral value.

In other words, even if the deed records a lower number, ISR and ISAI are calculated on the greater. You don't save on taxes by simply writing a smaller figure.

Implications for the seller (ISR)

The seller pays ISR on disposal of real estate on the gain, under articles 119 to 128 of the LISR. If you set an artificially low price:

• The SAT can recompute the deal at market value and demand the missing ISR with adjustments and surcharges.
• You lose the ability to correctly apply the primary-home exemption, whose cap is updated annually in UDIs.
• The risk of a tax discrepancy goes up: if you later buy another property with money from the sale, your spending level won't match your declared income.

Implications for the buyer

The buyer doesn't escape either:

• Pays state ISAI on the greater of price or appraisal.
• In the future, when selling, their acquisition cost will be the low one declared, which raises the taxable gain.
• If the SAT considers the gap with market value to exceed 10%, donation is presumed and other rules apply, or the source of funds is questioned.

When recording for less does make sense

There are legitimate cases:

• The property has documented structural defects or legal issues.
• It is occupied or has squatters.
• It's a dación en pago between relatives with prior agreement.
• There's a judicial settlement setting the price.

In those cases, the deed is accompanied by appraisals, expert reports and, where applicable, judgments or settlements that justify the difference.

Example: $4,000,000 house in Querétaro

Imagine a house with a commercial appraisal of $4,000,000 MXN. They agree to sell it for $3,200,000 MXN due to urgency. The notary will calculate taxes this way:

• Seller's ISR base: $4,000,000 (the greater).
• Buyer's ISAI base: $4,000,000.
• The buyer pays the state's ISAI (1.6% to 4.5% depending on the state).

Result: the seller effectively receives $3,200,000 but pays tax as if they had received $4,000,000.

How to protect yourself if you're going to sell low

• Request two appraisals: a cadastral one and a recent commercial one.
• Document the property issues that justify the discount (expert report, repair estimates).
• Keep evidence of negotiations, prior offers and listing history.
• Ask the notary to expressly mention the reasons for the price in the deed when relevant.
• If it's a transaction among relatives, evaluate whether it's better to formalize it as a donation with its own requirements.

Risks of "faking" a low price

Some deals settle part of the price in cash "off the books." That is:

• Tax fraud if it exceeds legal thresholds.
• Grounds for the buyer, if a conflict arises, to prove the real price was different and demand the difference.
• A massive problem if the property later enters a succession or divorce: the calculation base is distorted.

Tip before closing

Before accepting an offer below appraisal, compare the price with recent deals in the same neighborhood. An updated automated valuation gives you an objective benchmark and saves you from losing money or fighting with the SAT later.

Want to know what your apartment is worth? Get a free Realio valuation in under a minute.