Capital Gains Tax When You Sell Property in Mexico Explained

Capital gains tax in Mexico: the short answer

When you sell property in Mexico, capital gains tax (ISR) is calculated and withheld by the notario at closing. How much you pay depends mostly on one thing: whether you are a Mexican tax resident or not.

• Non-residents generally choose between paying 25% of the gross sale price or 35% of the net gain, according to PwC's Mexico tax summary (reviewed August 2026).
• Residents pay tax on the gain, after deductions, using the regular income tax table. If the home is your primary residence and you meet the requirements, part or all of the sale can be exempt.

We help buyers plan for the sale on the day they buy, because the paperwork you keep (or lose) over the years decides how much you pay later. Here is how it works.

How capital gains tax works for non-residents

If you own a condo in Playa del Carmen or Tulum but live in the US or Canada and visit on a tourist permit, you are most likely a non-resident for Mexican tax purposes. PwC describes the two options as a flat 25% of the gross proceeds or 35% of the net gain.

The 35% option is not automatic. As BDO explains (November 2025), paying 35% on the net gain applies only if the non-resident has a Mexican legal representative and proper documentation. If your gain is small compared to the sale price, the 35%-on-gain route can cost far less than 25% of the whole price, so it is worth setting up early.

A simple way to see the difference: on a US$400,000 sale with a US$60,000 documented gain, 25% of the gross would be US$100,000, while 35% of the gain would be US$21,000. Your real numbers will depend on your deed, exchange rates and deductions, so ask the notario for a written estimate before you sign.

How it works for Mexican tax residents

Residents are taxed on the gain, not on the full price. According to Praxium Consultores (updated September 2026), the gain is the sale price minus authorized deductions, and the cost of the property and improvements is adjusted for inflation. The tax result is then spread over the number of years you owned the property to soften the progressive rates, and the notario withholds a provisional payment at closing that is settled in your annual return.

Deductions you will want to document, as listed by El Imparcial (May 2026):

• The updated acquisition value (what you paid, adjusted for inflation)
• Improvements and renovations backed by invoices (facturas)
• Notary expenses
• Appraisals
• Documented real estate commissions

The top personal income tax rate for residents in 2026 is 35%, per PwC.

The primary residence exemption

This is the big one for retirees who move here full time. El Imparcial (May 2026) lists four conditions for the exemption:

• The property is your actual home
• The sale does not exceed 700,000 UDIs, which the article puts at about 6,185,974 pesos
• The sale is formalized before a notario
• You have not used the exemption in the past three years

If the sale is above the cap, only the excess may be taxed, with deductions applied proportionally. The notario will usually ask for proof that you lived there, such as utility bills, bank statements or tax certificates showing the same address as the property.

Non-residents, including owners who come and go on tourist permits, generally do not qualify, and the exemption does not apply to vacation homes, rental investments or land, as Mexico News Daily explains (December 2025).

Why the price on your deed matters

Some sellers suggest writing a lower price on the deed to save on closing costs. It can backfire twice. First, a lower recorded purchase price means a bigger taxable gain when you sell. Second, in March 2026 Mexico's Supreme Court upheld the rule that when the appraisal is more than 10% above the price in the deed, the buyer pays ISR on that difference, as reported by El Imparcial. Our buyer checklist covers this and other red flags.

What to do now, years before you sell

• Keep your deed (escritura) and fideicomiso documents in a safe place, digital and paper. If you are new to bank trusts, read our fideicomiso guide.
• Ask for proper facturas for renovations and other improvements.
• Decide early whether you will become a resident. It changes the math.
• If you will stay a non-resident, ask your attorney about appointing a legal representative so the net-gain option is available.
• Talk to your US or Canadian accountant about how tax paid in Mexico is treated at home.

Taxes are only one part of a good sale. In this MyCasa video we cover how to sell your property for the highest price in the Riviera Maya:

Thinking of selling? Our step-by-step guide on how to sell your property in the Riviera Maya covers the process. Still buying? Our Try Before You Buy program lets you stay in the developments you are considering and talk to owners before you commit.

FAQ

Who calculates and collects the tax?

The notario handling the sale calculates the ISR and withholds it at closing.

Do I pay capital gains tax if I sell at a loss?

Residents are taxed on the gain, so a documented loss generally means no gain to tax. Non-residents who pay 25% of the gross price pay regardless of the gain, which is why the 35%-on-gain option and good records matter.

Can a foreigner get the primary residence exemption?

Yes, if you are a Mexican tax resident, the property is your actual home and you can prove it. Owners on tourist permits generally do not qualify.

This is general information, not legal or tax advice. Confirm your situation with an independent attorney, notario or tax accountant before you buy or sell.

Questions? Message Raúl on WhatsApp and we will connect you with the right professionals.