When you sell Mexican property you pay ISR — income tax on the gain. Non-residents are commonly withheld about 25% of the gross sale price, or roughly 35% on the net gain if they elect that route and can document deductions. Residents may qualify for a conditional primary-residence exemption. The notario withholds and remits.
I run Selvadentro, and this is a page I would rather you read before you buy than after you sell. Read everything below as a description of how the Mexican system generally works — typical treatment, not your calculation. Confirm every number with a Mexican accountant, and if you are not a Mexican taxpayer, with an accountant at home as well. Two accountants is not caution; it is the standard cost of owning across a border.
Which tax are we actually talking about?
Two different taxes bracket a Mexican transaction, and buyers routinely confuse them. The buyer pays an acquisition tax at closing — ISAI or ISABI depending on the state — typically 2–4.5% of the value, inside the 6–8% closing bundle common in the Riviera Maya. The seller pays ISR (impuesto sobre la renta) on the gain from the sale.
The mechanism matters as much as the rate. In Mexico the notario público is the withholding agent by law: at closing he calculates the tax, withholds it from your proceeds, and remits it to the SAT. Nobody "forgets" this tax and nobody negotiates it at the closing table. What you can influence — years earlier — is the base it is calculated on.
How much does a non-resident typically pay?
Two routes are commonly available, and they produce very different bills.
The gross route withholds roughly 25% of the total sale price, with no deductions. It is simple and it is brutal on a property that barely appreciated, because tax is charged on the whole price rather than the profit.
The net-gain route taxes roughly 35% of the net gain — sale price minus your documented acquisition cost (indexed for inflation), improvements backed by facturas, notary fees, the acquisition tax you paid, commissions and the appraisal. Choosing it commonly requires an RFC (Mexican tax ID) and a designated legal representative in Mexico, and it only helps if your paperwork is intact.
Which is cheaper depends entirely on how much the property actually gained, so the useful move is arithmetic, not opinion: have an accountant run both numbers before you sign a sale, and confirm the current requirements, because elections and thresholds are set in law that changes.
How does resident treatment differ?
| Tax resident in Mexico | Non-resident | |
|---|---|---|
| Typical basis | Net gain, at progressive ISR rates | ~25% of gross price, or ~35% of net gain if elected |
| Primary-residence exemption | Available, but conditional | Generally not available |
| Deductions | Acquisition cost (inflation-indexed), improvements with facturas, closing costs, commissions | Same — but only under the net-gain route |
| RFC required | Yes | Yes for the net route, plus a legal representative in Mexico |
| Who withholds | The notario, at closing | The notario, at closing |
| Reporting at home | Mexican annual return | Worldwide-income reporting for US and Canadian taxpayers; a foreign tax credit may apply |
One warning about that first column: tax residency is a technical test about where your home and centre of vital interests sit — it is not the same thing as holding a residency card, and it is not something to assume. Ask an accountant which side of the line you are on before you plan around it.
Can the primary-residence exemption save you?
Sometimes, and it is heavily conditioned. Mexico exempts gain on the sale of a casa habitación — a dwelling that was genuinely your home — subject to a cap on the exempt amount, a limit on how often the exemption can be used, and documentary proof that you actually lived there, typically utility bills, bank statements or official ID at the address. Each of those conditions is where claims fail in practice.
Two honest limits. First, vacant land is not a dwelling: a lot with nothing built on it does not qualify for the casa habitación exemption, so the gain on land is ordinary taxable gain. Second, the exemption belongs to the person selling, not to the property — your accountant should confirm eligibility in the year you sell, not the year you buy.
What paperwork decides your tax bill years before you sell?
- The value declared in your escritura. That figure becomes your acquisition cost. Under-declaring it to shave the acquisition tax today inflates your taxable gain later — and it is not legal in the first place. Declare the real price.
- Facturas for construction and improvements, issued with your RFC and the property's address. A pool, a wall, a whole house: no factura, no deduction. Cash-paid builders are a discount today and a tax bill tomorrow.
- Your closing file. Notary fees, the ISAI receipt, the appraisal (avalúo), commissions — all of it is deductible under the net-gain route and useless if it is lost.
- Trust records if you own through a fideicomiso. Keep the trust deed and the annuity receipts, along with the rest of your annual ownership costs paperwork.
- Proof of payment for every transfer, which is one more reason to move money the way the payments guide describes: bank to bank, receipt for each one.
Owners who keep this file well are often surprised at how much of a sale is not taxable gain at all. Owners who kept nothing pay tax on their own money.
What if you are a US or Canadian taxpayer?
Then Mexico is only half the calculation. US and Canadian tax residents report worldwide income, so the sale goes on your home return as well, and a foreign tax credit commonly offsets some or all of the Mexican tax already withheld. Currency adds a wrinkle most people miss: your home country computes the gain in its own currency, so exchange-rate movement between purchase and sale can create a gain or a loss that the peso figures never show.
None of that is exotic, and none of it is something to solve from a website. A cross-border accountant will model your specific case in an hour, and the good ones tell you what to keep before you need it. That conversation is also worth having on the buying side: our own lawyer-versus-notario guide explains who in a Mexican transaction is actually working for you, and it is not the person calculating the withholding.
Tax is a reason to plan, rarely a reason to decide. If you want the other half of the picture — what the land has done and what carrying it costs — the appreciation data and our investment page lay both out, with the same rule as here: our numbers are ours, market ranges are labelled as ranges, and your accountant has the last word.