Capital Gains Tax When Selling Property in Mexico as a Foreigner

In short, yes — capital gains tax applies if you sell your property at a profit.

If you are not a full-time resident and registered taxpayer in Mexico, you are subject to tax at the time of closing. Full-time residency generally requires a Permanent Resident Card or Mexican voter ID, along with utility bills in your name as proof of residency.

How Capital Gains Tax Works in Mexico

Mexico does not calculate capital gains in the same way as the United States.

Instead, the tax is assessed as up to 35% of the net gain.For example, if a property is sold for $200,000 USD and was originally purchased for $100,000 USD, the resulting tax could be $35,000 USD, depending on deductions applied.

Allowable Deductions

To determine the taxable gain, several costs and expenses can be deducted from the official sale price, including:

• Original land value and depreciated construction cost, adjusted for inflation using official consumer price indexes

• Documented additions, renovations, and improvements (excluding maintenance), adjusted for inflation

• Real estate broker commissions paid by the seller

• Closing costs, including taxes, notary fees, and related expenses paid by the seller

Payment and Compliance

The Notary Public calculates the taxable gain, withholds the corresponding tax, and remits it directly to the Mexican tax authorities at closing.

This amount can later be claimed as a tax credit against the seller’s annual tax return in the United States, subject to U.S. tax regulations.

Professional Support

To ensure the tax is calculated correctly and avoid overpayment, we work with qualified legal tax accountants who guide our clients through a process that is fully compliant, transparent, and efficient.