The purpose of this article is to contribute to reflection on whether or not current policies exempting government-owned real estate from paying property tax are appropriate, from the perspective of Mexican municipal finance laws. This source of public revenue was given to Mexican municipalities in February 1983, so for the past 34 years it has been and remains an unfulfilled promise in terms of tax collection. A number of studies have been published on the economic determinants of property tax in Mexico, but exemptions from this tax have not been studied from a regulatory standpoint; this issue is still unexplored and unaddressed by experts in the field. This paper seeks to answer the following questions: What are the municipal finance laws regarding exemptions of government real estate from property tax? How do property tax exemptions for government real estate limit municipal revenue potential? What other factors have contributed to limiting the revenues generated by this tax?