Mexico's Lower House Passes the 2027 Income Tax Reform, Halving Company Loss Relief

Mexico's Chamber of Deputies passed the 2027 Income Tax Law reform in its article-by-article vote on 14 October, by 322 votes to 115, rejecting every reservation tabled on the floor, and sent the package to the Senate. The approved text halves the share of a company's fiscal profit that prior-year losses can absorb, from 100 percent to 50 percent, and sets a hard ceiling on authorised deductions for companies reporting accumulable income above 50 million pesos.

What it means for a foreign buyer

If you hold Mexican rental property through a Mexican company, the arithmetic on your holding structure changes next year. A persona moral with accumulable income above 50 million pesos a year can no longer deduct its way to a small tax base: where authorised deductions stay at or below 96.67 percent of accumulable income, only 99 percent of those deductions may be applied, and where they go above that line, the deduction is capped at 96.67 percent of accumulable income outright. Loss relief tightens at the same time. A bad year no longer shelters a good one in full, because carried-forward losses can offset only half of a year's fiscal profit. The compensation is a longer runway: the window to use those losses extends from ten years to twenty. Leveraged structures take a second hit, with the limit on net interest deductions cut from 30 percent to 20 percent.

Most individual foreign landlords sit well below the 50 million peso line, and for them the live numbers are different ones. The ceiling for staying inside RESICO, the simplified trust regime, rises from 3.5 million pesos of annual income to 5 million for individuals, which keeps a larger share of short-term rental operators in the low-rate regime rather than pushing them into the general one. If you let through a platform, the withholding schedule the bill carries into 2027 puts lodging services at 4 percent of gross income, taken at source by the platform. Where the platform holds no RFC for the person earning the income, that withholding jumps to 20 percent, with IVA withheld in full.

What changed

The deduction ceiling applies to companies with accumulable income over 50 million pesos that report a fiscal profit for the year. New companies and certain activities are carved out.

Loss amortisation falls from 100 percent of the year's fiscal profit to 50 percent, with the application period doubling from ten years to twenty. The net interest deduction limit drops from 30 percent to 20 percent.

RESICO thresholds rise to 5 million pesos a year for individuals from 3.5 million, and to 50 million from 35 million for companies. RESICO companies also gain a larger deduction on machinery and equipment investment, while the special regime for groups of companies is eliminated.

Digital platform withholdings for 2027 are set at 2.1 percent for passenger transport and delivery, 2.5 percent for sales of goods, and 4 percent for lodging platforms. The 2.5 percent rate carries over from the annual revenue law, and the 20 percent rate applies where no RFC is on file. These are withholdings at source, not necessarily the final tax owed.

The mechanism

This is an amendment to the Ley del Impuesto sobre la Renta, moving through ordinary legislative procedure rather than by administrative rule, which is why the numbers are visible before they bite. The Comisión de Hacienda of the Chamber of Deputies approved the dictamen on 12 October by 26 votes to 9 in the general vote and 23 to 8 on adjustments. The floor approved it in general on 13 October by 349 to 118, then in particular on 14 October by 322 to 115.

The bill now sits with the Senate, which has to take it alongside the Ley Federal de Derechos and the 2027 Ley de Ingresos de la Federación before 31 October. Senate amendments would send the text back through procedure. Entry into force is set by the decree itself, published in the Diario Oficial de la Federación after the process closes, so nothing here is settled law yet.

One committee-stage item is worth watching for property investors specifically. A PT proposal would restrict the stacking of fiscal incentives with other tax treatments for maquila operations and for trusts that acquire or build real estate, the vehicle class that includes Mexico's listed property trusts.

Context

Foreign buyers cannot hold residential title directly within 50 kilometres of the coast or 100 kilometres of a land border, so coastal purchases run through a bank trust, the fideicomiso, while inland and commercial holdings are often placed in a Mexican company. That split is what makes a corporate income tax reform a property story here: the structure the restricted-zone rules push a foreign owner into is the same structure the deduction and loss caps now constrain. The interest deduction cap was already in the bill when it was introduced in September; the Chamber vote is the point at which it became a text the Senate must accept or amend rather than a proposal. Banco de México held its policy rate at 6.50 percent on 26 September, so financing costs are not moving to offset a tighter deduction base.